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Item 2. Management’s Discussion and Analysis

2026-07-28 compared with 2026-04-28 · 120 added, 86 removed, 473 unchanged (30% of the section changed)

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

The following discussion of our financial condition and results of operations as of and for the three months ended March 31, 2026 should be read in conjunction with the unaudited condensed consolidated financial statements and notes to those statements included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements as of and for the year ended December 31, 2025 included in our Annual Report on Form 10-K for the year ended December 31, 2025 previously filed with the SEC.

The following discussion of our financial condition and results of operations as of and for the three and six months ended June 30, 2026 should be read in conjunction with the unaudited condensed consolidated financial statements and notes to those statements included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements as of and for the year ended December 31, 2025 included in our Annual Report on Form 10-K for the year ended December 31, 2025 previously filed with the SEC.

Forward-Looking Statements

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These forward-looking statements include, among other things, statements as to:

• the discovery, development, formulation, manufacturing and commercialization of our compounds, our drug candidates and JAKAFI ® /JAKAVI ® (ruxolitinib), PEMAZYRE ® (pemigatinib), ICLUSIG ® (ponatinib), MONJUVI ® (tafasitamab-cxix) / MINJUVI ® (tafasitamab), OPZELURA ® (ruxolitinib) cream, ZYNYZ ® (retifanlimab-dlwr) and NIKTIMVO TM (axatilimab);

• the discovery, development, formulation, manufacturing and commercialization of our compounds, our drug candidates and JAKAFI ® /JAKAFI XR TM /JAKAVI ® (ruxolitinib), PEMAZYRE ® (pemigatinib), ICLUSIG ® (ponatinib), MONJUVI ® (tafasitamab-cxix) / MINJUVI ® (tafasitamab), OPZELURA ® (ruxolitinib) cream, ZYNYZ ® (retifanlimab-dlwr) and NIKTIMVO TM (axatilimab);

• our collaboration and strategic relationship strategy, and anticipated benefits and disadvantages of entering into collaboration agreements;

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• the expected impact of recent accounting pronouncements and changes in tax laws;

• expected losses;

the fluctuation of losses;

the currency translation impact associated with non-U.S.

• expected losses, the fluctuation of losses and the currency translation impact associated with non-U.S.

operations and collaboration royalties;

• our profitability;

the adequacy of our capital resources to continue operations;

our expectations with respect to the need or ability to raise additional capital;

• our profitability, the adequacy of our capital resources to continue operations and our expectations with respect to the need or ability to raise additional capital;

• the costs and other financial impacts associated with resolving matters in litigation and governmental proceedings;

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Hematology, Oncology, and Inflammation and Autoimmunity (“IAI”).

Our hematology franchise includes four approved products, JAKAFI (ruxolitinib), ICLUSIG (ponatinib), MONJUVI (tafasitamab-cxix)/MINJUVI (tafasitamab) and NIKTIMVO (axatilimab-csfr), as well as multiple clinical development programs.

Our hematology franchise includes five approved products, JAKAFI (ruxolitinib), JAKAFI XR (ruxolitinib), ICLUSIG (ponatinib), MONJUVI (tafasitamab-cxix)/MINJUVI (tafasitamab) and NIKTIMVO (axatilimab-csfr), as well as multiple clinical development programs.

Approved Products

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The FDA has granted JAKAFI orphan drug status for MF, PV and GVHD.

In addition, ruxolitinib phosphate qualifies for the Small Biotech Exception from the Centers for Medicare and Medicaid Services (“CMS”) under the Inflation Reduction Act.

Because of these orphan designations, the ORPHAN Cures Act extended the period before ruxolitinib phosphate becomes eligible for selection for Medicare drug price negotiation under the Inflation Reduction Act.

Myelofibrosis.

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These patents, including applicable extensions, currently expire in mid and late 2028, respectively.

JAKAFI XR (ruxolitinib)

In May 2026, the FDA approved JAKAFI XR (ruxolitinib) extended release tablets for the treatment of adults with intermediate- or high-risk MF, adults with PV who have had an inadequate response to or are intolerant to hydroxyurea, as well as adults and children aged 12 years and older with steroid-refractory acute GVHD or chronic GVHD after failure of one or two lines of systemic therapy.

ICLUSIG (ponatinib)

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or who have the T315I mutation.

In July 2026, the European Union approved ICLUSIG for the treatment of pediatric patients 6 years of age or older with chronic phase CML who are resistant to dasatinib or nilotinib;

who are intolerant to dasatinib or nilotinib and for whom subsequent treatment with imatinib is not clinically appropriate;

or who have the T315I mutation.

MONJUVI (tafasitamab-cxix) / MINJUVI (tafasitamab)

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In August 2021, the European Commission granted conditional marketing authorization for MINJUVI (tafasitamab) in combination with lenalidomide, followed by MINJUVI monotherapy, for the treatment of adult patients with r/r DLBCL who are not eligible for ASCT.

In June 2026, MINJUVI was approved by Japan’s Ministry of Health, Labour and Welfare (“MHLW”) for the treatment of adults with r/r DLBCL in combination with lenalidomide.

Follicular Lymphoma.

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In December 2025, MINJUVI (tafasitamab) was approved by the European Commission in combination with lenalidomide and rituximab for the treatment of adult patients with r/r FL (Grade 1-3a) after at least one line of systemic therapy.

Also in December 2025, MINJUVI (tafasitamab) was approved by Japan’s Ministry of Health, Labour and Welfare (“MHLW”) in combination with rituximab and lenalidomide for adult patients with r/r FL (2L+ FL).

Also in December 2025, MINJUVI (tafasitamab) was approved by the MHLW in combination with rituximab and lenalidomide for adult patients with r/r FL (2L+ FL).

NIKTIMVO (axatilimab-csfr)

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Clinical Programs in Hematology

We are developing a once-a-day formulation of ruxolitinib for potential use as monotherapy and in combinations.

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

In March 2023, the FDA issued a complete response letter (“CRL”) for ruxolitinib XR tablets for QD use in the treatment of certain types of MF, PV and GVHD.

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

In early 2025, we announced that a bioequivalence study of ruxolitinib XR was completed and the bioequivalence criteria were met.

A response to the CRL has been submitted and we anticipate a regulatory decision and potential commercial launch in mid-2026 .

INCA033989 (mutCALR)

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In December 2025, we announced that the FDA granted Breakthrough Therapy designation to INCA033989 for the treatment of patients with ET harboring a Type 1 CALR mutation who are resistant or intolerant to at least one cytoreductive therapy.

Based on positive feedback received from the FDA during the first quarter of 2026, a Phase 3 registrational study evaluating INCA033989 in Type 1 and non-Type 1 mutCALR positive patients with ET is on track to initiate in mid 2026.

Based on positive feedback received from the FDA, a Phase 3 registrational study evaluating INCA033989 in Type 1 and non-Type 1 mutCALR positive patients with ET was initiated in mid-2026.

Myelofibrosis.

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In the first quarter of 2026, a Phase 1 study evaluating the pharmacokinetics, safety and tolerability of INCA033989 as a subcutaneous (“SC”) administration in healthy adult participants was initiated and completed.

A Phase 1 study evaluating INCA033989 as a SC administration in mutCALR positive patients is anticipated to initiate mid-year 2026.

A Phase 1 study evaluating INCA033989 as a SC administration in mutCALR positive patients was initiated in the second quarter of 2026.

INCA035784 (mutCALRxCD3 bispecific)

INCA035784 is a novel, equipotent T-cell redirecting mutCALR x CD3 bispecific antibody being evaluated for patients with mutCALR positive MPNs.

INCA035784 is a novel, equipotent T-cell redirecting mutCALR x CD3 bispecific antibody developed by Incyte using Merus N.V.’s licensed bispecific platform and is being evaluated for patients with mutCALR positive MPNs.

Phase 1 data evaluating INCA035784 in MF and ET patients with a CALR mutation are anticipated in 2027.

INCB160058 (JAK2V617Fi)

INCB160058 is an Incyte-discovered, novel JAK2V617F mutant-specific inhibitor being evaluated in patients with MPNs harboring a JAK2V617F mutation.

In the first quarter of 2026, we initiated dosing of the amorphous solid dispersion (“ASD”) formulation of INCB160058 in the Phase 1 trial.

Results from the Phase 1 trial evaluating INCB160058 in MPN patients with a JAK2V617F mutation are anticipated in the second half of 2026.

INCB160058 is an Incyte-discovered, novel JAK2V617F mutant-specific inhibitor for patients with MPNs harboring a JAK2V617F mutation.

Following a comprehensive review of available data, we discontinued further development of INCB160058 to prioritize our next-generation JAK2V617F-targeted pipeline.

Axatilimab-csfr

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Additional frontMIND data will be presented at an upcoming scientific meeting.

Based on these positive results, we expect to file a supplemental Biologics License Application for tafasitamab and lenalidomide in addition to R-CHOP for the first-line treatment of adult patients with newly diagnosed DLBCL in the first half of 2026.

Global regulatory submissions for tafasitamab and lenalidomide in addition to R-CHOP for the first-line treatment of adult patients with newly diagnosed DLBCL we submitted and accepted in the second quarter of 2026.

A potential approval and launch in the U.S.

is anticipated in the first quarter of 2027.

Latarcibart (formerly VGA039)

In July 2026, we completed the acquisition of Vega Therapeutics, a wholly owned subsidiary of Star Therapeutics, which has been developing latarcibart, a novel investigational monoclonal antibody that modulates Protein S to restore hemostasis.

Latarcibart has received Breakthrough Therapy, Fast Track, orphan drug and rare pediatric disease designations from the FDA and is currently in Phase 3 development for patients with von Willebrand disease (“VWD”)

In July 2026, data from the Phase 1/2 multidose study of latarcibart in patients with VWD were presented at the 2026 International Society on Thrombosis and Haemostasis (ISTH) Congress, demonstrating that once-monthly SC treatment with latarcibart resulted in an 81% median reduction in annualized bleeding rate (“ABR”) across all bleeding categories and VWD types.

Latarcibart is currently being evaluated in a global, Phase 3, single-arm crossover study (VIVID-6) assessing the safety and efficacy of once-monthly SC administration of latarcibart as prophylaxis for bleeding in patients with all types of VWD.

Topline data from the VIVID-6 study are anticipated in early 2029.

Our oncology franchise includes two approved products, PEMAZYRE (pemigatinib) and ZYNYZ (retifanlimab-dlwr), as well as several clinical development programs.

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In the first quarter of 2026, a Phase 3 study (DAWN-303) was initiated, evaluating INCB161734 as a first-line treatment in patients with metastatic PDAC in combination with standard-of-care chemotherapy (mFOLFIRINOX or GEMNabP) versus chemotherapy alone.

Additional data from the ongoing Phase 1 trial evaluating INCB161734 in combination with standard-of-care chemotherapy as a first-line treatment in patients with metastatic PDAC are anticipated in the second half of 2026.

INCA33890 (TGFβR2xPD-1)

INCA33890 is a TGFβR2xPD-1 bispecific antibody developed by Incyte using Merus’s licensed bispecific platform to avoid the known toxicity of broad TGFβ pathway blockade by specifically blocking TGFβ signaling in cells co-expressing PD-1.

INCA33890 is a TGFβR2xPD-1 bispecific antibody developed by Incyte using Merus N.V.’s licensed bispecific platform to avoid the known toxicity of broad TGFβ pathway blockade by specifically blocking TGFβ signaling in cells co-expressing PD-1.

Microsatellite Stable Colorectal Cancer.

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In the fourth quarter of 2025, a Phase 3 study evaluating INCA33890 in combination with standard-of-care chemotherapy and bevacizumab as a first-line treatment in patients with MSS CRC was initiated.

Additional data from the ongoing Phase 1 study evaluating INCA33890 in combination with bevacizumab and/or chemotherapy in patients with solid tumors is expected in the second half of 2026.

Additional data from the ongoing Phase 1 study evaluating INCA33890 in combination with bevacizumab and/or chemotherapy in patients with solid tumors is anticipated in the second half of 2026.

Inflammation and Autoimmunity

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OPZELURA was approved for continuous use and no limits to duration as a treatment for nonsegmental vitiligo.

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

In October 2024, OPZELURA cream 1.5% was granted a Notice of Compliance by Health Canada for the topical treatment of both mild to moderate AD and nonsegmental vitiligo in patients 12 years of age and older.

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Atopic Dermatitis.

In July 2025, we announced positive topline results from the Phase 3 (TRuE-AD4) study evaluating ruxolitinib cream in adult patients with moderate atopic dermatitis.

In July 2025, we announced positive topline results from the Phase 3 (TRuE-AD4) study evaluating ruxolitinib cream in adult patients with moderate AD.

The study met the co-primary endpoints at Week 8, with a statistically significant proportion of patients achieving both Investigator’s Global Assessment Treatment Success and EASI75, which is defined as a 75% or greater improvement in the Eczema Area Severity Index score from baseline.

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Ruxolitinib cream was well tolerated with no new safety signals.

At the end of 2025, a Type-II variation application for the treatment of adults with moderate AD was submitted in Europe and we anticipate a potential approval in the second half of 2026.

In June 2026, the CHMP issued a positive opinion recommending the approval of Opzelura (ruxolitinib) cream for the treatment of moderate AD in adult patients for whom topical corticosteroids and topical calcineurin inhibitors are inadequate or inappropriate.

We anticipate a regulatory decision from the European Commission in the third quarter of 2026.

Hidradenitis Suppurativa.

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In June 2025, two Phase 3 studies (TRuE-HS1 and TRuE-HS2) evaluating ruxolitinib cream in mild to moderate HS were initiated, with topline results anticipated in the fourth quarter of 2026.

Prurigo Nodularis.

In January 2026, we received FDA feedback indicating that an additional clinical study would be required to support registration in mild to moderate prurigo nodularis (“PN”).

Based on this feedback we have decided to pause further development of ruxolitinib cream in PN at this time.

Povorcitinib, an oral small molecule selective JAK1 inhibitor, is being evaluated for the treatment of HS, nonsegmental vitiligo, PN and asthma.

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Proof-of-concept data from this study is anticipated in the second half of 2026 .

INCB00928 (zilurgisertib)

In April 2026, we entered into an agreement granting a third party worldwide commercialization rights for zilurgisertib.

Collaborative Partnered Programs

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Out-License Agreements

In April 2026, we entered into an exclusive license agreement with Mirum Pharmaceuticals, Inc.

granting Mirum worldwide rights to zilurgisertib, an ALK2 inhibitor in development for fibrodysplasia ossificans progressiva.

Under the terms of the agreement, we received an upfront payment and are eligible to receive a Priority Review Voucher, and additional development and regulatory milestone payments, as well as sales-based milestones and tiered royalties in the mid-to-high single digit percent range on worldwide net sales.

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

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Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2025.

There have been no significant changes to our critical accounting policies or estimates during the three months ended March 31, 2026.

There have been no significant changes to our critical accounting policies or estimates during the six months ended June 30, 2026.

Recent Accounting Pronouncements and Regulatory Updates

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Results of Operations

We recorded net income of $303.3 million and basic net income per share of $1.52 and diluted net income per share of $1.47 for the three months ended March 31, 2026, as compared to net income of $158.2 million and basic net income per share of $0.82 and diluted net income per share of $0.80 in the corresponding period in 2025.

We recorded net income of $585.6 million and basic net income per share of $2.92 and diluted net income per share of $2.81 for the three months ended June 30, 2026, as compared to net income of $405.0 million and basic net income per share of $2.09 and diluted net income per share of $2.04 in the corresponding period in 2025.

We recorded net income of $888.9 million and basic net income per share of $4.45 and diluted net income per share of $4.28 for the six months ended June 30, 2026, as compared to net income of $563.2 million and basic net income per share of $2.91 and diluted net income per share of $2.84 in the corresponding period in 2025.

Three Months Ended

(in millions)

June 30, Six Months Ended

2026 2025 2026 2025

(in millions) (in millions)

JAKAFI net sales 1

$ 816.7 $ 763.8 $ 1,574.4 $ 1,473.2

OPZELURA net sales 2

449.7 164.5 592.8 283.2

ICLUSIG net sales 34.4 32.7 69.9 62.3

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Total revenues $ 1,674.0 $ 1,215.5 $ 2,946.7 $ 2,268.4

The increase in JAKAFI for the three months ended March 31, 2026 as compared to the corresponding period in 2025 was primarily driven by a 6% increase in paid demand and growth across all indications.

JAKAFI inventory levels were within normal range at the end of the first quarter of 2026.

The increase in OPZELURA net sales for the three months ended March 31, 2026 as compared to the corresponding period in 2025 was primarily due to increased patient demand in the U.S.

1 Second quarter 2026 net sales include JAKAFI and JAKAFI XR following the launch of JAKAFI XR in the second quarter of 2026.

2 Second quarter 2026 OPZELURA net sales includes $246.0 million related to our agreement with CMS to resolve our litigation related to the application of Medicaid rebate rules to OPZELURA .

Refer below for further information.

The increase in JAKAFI net sales for the three months ended June 30, 2026 as compared to the corresponding period in 2025 was comprised of a volume increase of $66.3 million, offset in part by a price decrease of $13.4 million.

The increase in JAKAFI net sales for the six months ended June 30, 2026 as compared to the corresponding period in 2025 reflected a volume increase of $128.8 million, offset in part by a price decrease of $27.6 million.

The volume increase was primarily driven by an increase in paid demand of 9% and 8% for the three and six months ended June 30, 2026, respectively, reflecting continued demand growth across all indications.

JAKAFI inventory levels were within normal range at the end of the second quarter of 2026.

We brought a lawsuit against CMS alleging that a regulation issued by CMS on the definition of “line extension” for purposes of the Medicaid rebate program was too broad and had the unintended consequence of treating OPZELURA as a “line extension” of JAKAFI under this program.

In the second quarter of 2026, we reached an agreement with CMS to resolve our litigation related to the application of Medicaid rebate rules to OPZELURA (ruxolitinib) cream.

Under the agreement, CMS will not apply the line extension regulation to OPZELURA as if it were a line extension of JAKAFI (ruxolitinib).

In the second quarter of 2026, we recorded a one-time, non-cash benefit of $246.0 million in net sales on the condensed consolidated statements of operations, associated with the reversal of previously established accrual balances through March 31, 2026, related to liabilities associated with the potential application of the line extension regulations to OPZELURA.

We will no longer accrue for the potential application of the line extension regulations to OPZELURA and we expect an improvement to OPZELURA’s gross-to-net on a go-forward basis.

Excluding this $246.0 million impact discussed above, the increase in OPZELURA net sales for the three months ended June 30, 2026 as compared to the corresponding period in 2025 was comprised of a volume increase of $48.2 million, offset in part by a price decrease of $9.0 million.

Excluding this $246.0 million impact discussed above, the increase in OPZELURA net sales for the six months ended June 30, 2026 as compared to the corresponding period in 2025 reflected a volume increase of $93.1 million, offset in part by a price decrease of $29.5 million.

The volume increase was primarily due to increased patient demand in the U.S.

in both atopic dermatitis and vitiligo.

Additionally, $36.7 million of net sales during the first quarter of 2026 were from outside of the U.S.

as compared with $23.5 million during the first quarter of 2025, with the increase driven by continued uptake in Canada and Italy.

OPZELURA inventory levels were within normal range at the end of the first quarter of 2026.

The increase in other hematology and oncology net sales for the three months ended March 31, 2026 as compared to the corresponding period in 2025 was primarily driven by increased demand of NIKTIMVO, MONJUVI/MINJUVI and ZYNYZ.

The increase in total royalty revenues for the three months ended March 31, 2026 as compared to the corresponding period in 2025 was primarily driven by growth in JAKAVI royalty revenue.

Additionally, OPZELURA net sales from outside the U.S.

were $42.9 million and $79.6 million during the three and six months ended June 30, 2026, respectively, as compared to $32.3 million and $55.8 million for the three and six months ended June 30, 2025, respectively, with the increase in both periods primarily driven by continued uptake in Canada and Italy, as well as entry into new markets.

OPZELURA inventory levels were within normal range at the end of the second quarter of 2026.

The increase in other hematology and oncology net sales for the three and six months ended June 30, 2026 as compared to the corresponding period in 2025 was primarily driven by increased demand of NIKTIMVO, MONJUVI/MINJUVI and ZYNYZ, reflecting continued strong uptake of these products in the U.S.

and their entry into new markets outside of the U.S.

The impact from changes in price was not material.

The increase in total royalty revenues for the three and six months ended June 30, 2026 as compared to the corresponding period in 2025 was primarily driven by growth in JAKAVI royalty revenue.

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

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

Three Months Ended March 31, 2026 Discounts and

Six Months Ended June 30, 2026 Discounts and

Fees Commercial & Government

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Credits/payments for prior period sales (35,203) (214,767) (14,161) (5,915) (270,046)

Balance at March 31, 2026 $ 38,556 $ 640,568 $ 18,131 $ 32,839 $ 730,094

Balance at June 30, 2026 $ 42,409 $ 445,386 $ 13,822 $ 32,138 $ 533,755

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

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We adjust our estimates for government rebates and chargebacks based on new information regarding actual rebates as it becomes available.

We brought a lawsuit against the U.S.

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.

As of March 31, 2026, we have accrued approximately $245.9 million within accrued and other current liabilities on the condensed consolidated balance sheet, relating to the incremental rebates that would be owed were OPZELURA considered a line extension of JAKAFI.

The impact on OPZELURA gross to net deductions for the quarter ending March 31, 2026 is approximately 8.4%.

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.

Claims by third-party payors for rebates and chargebacks are frequently submitted after the period in which the related sales occurred, which may result in adjustments to prior period accrual balances in the period in which the new information becomes available.

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

Our milestone and contract revenues for the three months ended March 31, 2026 were primarily derived from developmental milestones received from our third party collaborators.

Our milestone and contract revenues for the three and six months ended June 30, 2026 were primarily derived from developmental milestones received from our third party collaborators, as well as out-licensing arrangements with our third party collaborators.

Our milestone and contract revenues for the three and six months ended June 30, 2025, was derived from a $5.0 million development milestone upon approval of tafasitamab in treating follicular lymphoma.

Cost of Sales

Three Months Ended

(in millions)

June 30, Six Months Ended

2026 2025 2026 2025

(in millions) (in millions)

Product costs $ 28.4 $ 30.7 $ 69.4 $ 58.1

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

The increase in cost of sales for the three months ended March 31, 2026 as compared to the corresponding period in 2025 was driven by primarily driven by growth in net sales, NIKTIMVO profit share and increased manufacturing related costs.

The increase in cost of sales for the three and six months ended June 30, 2026 as compared to the corresponding period in 2025 was primarily driven by growth in net sales and NIKTIMVO profit share.

Contract Dispute Settlement

As described further in Note 7 of Notes to the Condensed Consolidated Financial Statements, during May 2025, we and Novartis entered into a settlement agreement with respect to litigation initiated by Novartis relating to the duration of royalty payments owed by us to Novartis under the our Collaboration and License Agreement.

As of March 31, 2025, we had approximately $537.1 million of accrued royalties relating to the dispute with Novartis included in accrued and other current liabilities on our condensed consolidated balance sheet.

Under the settlement agreement, we paid Novartis $280.0 million as the settlement of disputed royalties on net sales of JAKAFI in the United States through December 31, 2024, and agreed to reduce by 50% the royalty rate payable by us on future net sales of JAKAFI in the United States beginning January 1, 2025.

The reduced royalty paid for the quarter ending March 31, 2025, was approximately $14.9 million.

The difference of $242.2 million between the total accrued royalties and the total amount paid by us to Novartis as disclosed above was recorded in contract dispute settlement on our condensed consolidated statement of operations for the three and six months ended June 30, 2025.

Operating Expenses

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Three Months Ended

(in millions)

June 30, Six Months Ended

2026 2025 2026 2025

(in millions) (in millions)

Salary and benefits related $ 146.2 $ 131.5 $ 300.5 $ 264.0

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

The increase in salary and benefits related expense for the three months ended March 31, 2026 as compared to the corresponding period in 2025 was due primarily to increased headcount to sustain our development pipeline.

The increase in salary and benefits related expense for the three and six months ended June 30, 2026 as compared to the corresponding period in 2025 was due primarily to increased headcount to sustain our development pipeline.

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

The increase in clinical research and outside services expense for the three months ended March 31, 2026 as compared to the corresponding period in 2025, was primarily due to continued investment in our late-stage development assets.

Research and development expenses include upfront and milestone expenses related to our collaborative agreements of $12.6 million and $15.5 million, respectively, for the three months ended March 31, 2026 and 2025.

Research and development expenses for the three months ended March 31, 2026 and 2025 were net of $4.4 million and $2.6 million, respectively, of costs reimbursed by our collaborative partners.

The increase in clinical research and outside services expense for the three and six months ended June 30, 2026 as compared to the corresponding period in 2025, was primarily due to continued investment in our late-stage development assets.

Research and development expenses include upfront and milestone expenses related to our collaborative agreements of $0.0 million and $12.6 million, respectively, for the three and six months ended June 30, 2026.

Research and development expenses include upfront and milestone expenses related to our collaborative agreements of $12.6 million and $28.1 million, respectively, for the three and six months ended June 30, 2025.

Research and development expenses for the three and six months ended June 30, 2026 and 2025 were net of $4.4 million, $8.8 million, $3.9 million and $6.5 million, respectively, of costs reimbursed by our collaborative partners.

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

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Three Months Ended

(in millions)

June 30, Six Months Ended

2026 2025 2026 2025

(in millions) (in millions)

Salary and benefits related $ 107.7 $ 94.2 $ 216.4 $ 192.0

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Total selling, general and administrative expenses $ 351.7 $ 331.0 $ 679.8 $ 656.7

The increase in salary and benefits related expense for the three months ended March 31, 2026 as compared to the corresponding period in 2025 was due primarily to increased headcount.

The increase in salary and benefits related expense for the three and six months ended June 30, 2026 as compared to the corresponding period in 2025 was due primarily to increased headcount.

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During the three months ended March 31, 2026, we sold these downtown properties, and recognized an additional $23.2 million of expenses relating to disposal costs, which are included in Asset impairment and related disposal costs in the condensed consolidated statements of operations.

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

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

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

The change in fair value of the acquisition-related contingent consideration for the three months ended March 31, 2026 and March 31, 2025 was a gain of $0.2 million and loss of $11.6 million, respectively, which is recorded in (gain) loss on change in fair value of acquisition-related contingent consideration on the condensed consolidated statements of operations.

The change in fair value of the contingent consideration during the three months ended March 31, 2026 and 2025 was due primarily to updated projections of future net sales and related royalties of Iclusig, including the impacts from fluctuations in foreign currency exchange rates, and the passage of time.

The change in fair value of the acquisition-related contingent consideration for the three and six months ended June 30, 2026 was a loss of $2.5 million and $2.3 million, respectively, which is recorded in loss on change in fair value of acquisition-related contingent consideration on the condensed consolidated statements of operations.

The change in fair value of the acquisition-related contingent consideration for the three and six months ended June 30, 2025 was a loss of $22.8 million and $34.3 million, respectively, which is recorded in loss on change in fair value of acquisition-related contingent consideration on the condensed consolidated statements of operations.

The change in fair value of the contingent consideration during the three and six months ended June 30, 2026 and 2025 was due primarily to updated projections of future net sales of Iclusig, including the impacts from fluctuations in foreign currency exchange rates, and the passage of time.

Non-operating Income and Expenses

Interest income

Interest income for the three months ended March 31, 2026 and 2025 was $33.7 million and $22.9 million, respectively.

The increase in Interest income for the three months ended March 31, 2026 is primarily due to higher cash and cash equivalent balances in the first quarter of 2026 as compared to the corresponding period in 2025.

Interest income for the three and six months ended June 30, 2026 was $38.1 million and $71.8 million, respectively.

Interest income for the three and six months ended June 30, 2025 was $25.1 million and $48.1 million, respectively.

The increase in Interest income for the three and six months ended June 30, 2026 is primarily due to higher cash and cash equivalent balances in the first half of 2026 as compared to the corresponding periods in 2025.

Gain (loss) on equity investments

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Three Months Ended

(in millions)

June 30, Six Months Ended

2026 2025 2026 2025

(in millions) (in millions)

Syndax (2.1) (4.2) $ 1.2 $ (5.5)

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Provision for income taxes

The provision for income taxes for the three months ended March 31, 2026 and 2025 was $40.3 million and $76.0 million, respectively.

Our effective tax rate for the three months ended March 31, 2026 is lower than the U.S.

statutory rate primarily due to favorable changes in unrecognized tax benefits, tax benefits associated with the generation of tax credits and favorable foreign tax effects.

This is partially offset by a net increase in valuation allowances against certain U.S.

The provision for income taxes for the three and six months ended June 30, 2026 was $165.9 million and $206.2 million, respectively.

The provision for income taxes for the three and six months ended June 30, 2025 was $153.0 million and $229.0 million, respectively.

Our effective tax rates for the three and six months ended June 30, 2026 were favorably impacted by tax benefits associated with the generation of tax credits and foreign tax effects.

This was mostly offset by a net increase in valuation allowances against certain U.S.

federal and state deferred tax assets.

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

statutory rate primarily due to an unfavorable change in our valuation allowances against certain U.S.

federal and state deferred tax assets and unfavorable foreign tax effects.

This was partially offset by tax benefits associated with the generation of tax credits and favorable effects of cross-border tax laws.

In addition, our effective tax rate for the six months ended June 30, 2026 was favorably impacted by changes in unrecognized tax benefits.

Our effective tax rates for the three and six months ended June 30, 2025 were unfavorably impacted by an increase in valuation allowances against certain U.S.

federal and state deferred tax assets.

This was partially offset by tax rate benefits associated with the generation of tax credits and the effects of cross-border tax laws.

Liquidity and Capital Resources

At March 31, 2026, we had available cash, cash equivalents and marketable securities of $4.0 billion.

At June 30, 2026, we had available cash, cash equivalents and marketable securities of $4.5 billion.

Subsequently, in July 2026, we paid cash consideration of $1.25 billion to acquire Vega Therapeutics, Inc.

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

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

Net cash provided by operating activities for the three months ended March 31, 2026 and 2025 was $369.4 million and $266.1 million, respectively.

Net cash provided by operating activities for the six months ended June 30, 2026 and 2025 was $877.0 million and $310.8 million, respectively.

The increase in cash provided by operating activities was due primarily to the increased net income for the 2026 period.

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

Net cash used in investing activities was $88.2 million for the three months ended March 31, 2026, which primarily represented purchases of marketable securities of $142.7 million, offset in part by maturities of marketable securities of $69.7 million.

Net cash provided by investing activities was $1.1 million for the three months ended March 31, 2025, which primarily represented by maturities of marketable securities of $45.5 million, offset in part by purchases of marketable securities of $41.2 million.

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

Net cash used in investing activities was $140.0 million for the six months ended June 30, 2026, which primarily represented purchases of marketable securities of $174.1 million, purchases of long term investments of $40.0 million and capital expenditures of $22.6 million, offset in part by maturities of marketable securities of $101.7 million.

Net cash used in investing activities was $17.8 million for the six months ended June 30, 2025, which primarily represented by purchases of marketable securities of $97.3 million and capital expenditures of $22.2 million, offset in part by maturities of marketable securities of $101.8 million.

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

Net cash provided by financing activities was $84.8 million for the three months ended March 31, 2026, primarily representing proceeds from issuance of common stock under our stock plans.

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

Net cash provided by financing activities was $150.3 million for the six months ended June 30, 2026, primarily representing proceeds from issuance of common stock under our stock plans.

Net cash used in financing activities was $23.9 million for the six months ended June 30, 2025, primarily representing the $19.1 million paid for excise taxes relating to the June 2024 share repurchase, cash paid for tax withholdings related to restricted and performance share vesting and cash paid to ARIAD/Takeda for contingent consideration, partially offset by proceeds from issuance of common stock under our stock plans.

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

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

As of March 31, 2026, we had no outstanding borrowings and were in compliance with all covenants under this facility.

As of June 30, 2026, we had no outstanding borrowings and were in compliance with all covenants under this facility.

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

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis