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Item 1A. Risk Factors

2026-07-28 compared with 2026-04-28 · 47 added, 43 removed, 638 unchanged (12% of the section changed)

18 unchanged sentences

If we are not able to maintain revenues from JAKAFI in the United States, or our revenues from JAKAFI decrease, our business may be materially harmed and we may need to delay other drug discovery, development and commercialization initiatives or even significantly curtail operations, and our ability to license or acquire new products to diversify our revenue base could be limited.

In addition, revenues from our other products and our receipt of royalties under our collaboration agreements, including our agreements with Novartis Pharmaceutical International Ltd.

for sales of JAKAVI outside the United States and TABRECTA globally and with Eli Lilly and Company for worldwide sales of OLUMIANT, will depend on factors similar to those listed above, with similar regulatory, pricing and reimbursement issues driven by applicable regulatory authorities and governmental and third-party payors affecting jurisdictions outside the United States.

In addition, revenues from our other products and our receipt of royalties under our collaboration agreements, including our agreement with Novartis Pharmaceutical International Ltd.

for sales of JAKAVI outside the United States and TABRECTA globally and our agreement with Eli Lilly and Company for worldwide sales of OLUMIANT, will depend on factors similar to those listed above, with similar regulatory, pricing and reimbursement issues driven by applicable regulatory authorities and governmental and third-party payors affecting jurisdictions outside the United States.

If we are unable to obtain, or maintain at anticipated levels, coverage and reimbursement for our products from government health administration authorities, private health insurers and other organizations, our pricing may be affected and our product sales, results of operations and financial condition could be harmed.

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Third-party payors are increasingly challenging the prices charged for medical products and services, and payors and employers are adopting benefit plan changes that shift a greater portion of prescription drug costs to patients.

Third party pharmacy benefit managers (PBMs) , other similar organizations and payors can limit coverage to specific products on an approved list, or formulary, which might not include all of the approved products for a particular indication, and to exclude drugs from their formularies in favor of competitor drugs or alternative treatments, or place drugs on formulary tiers with higher patient co-pay obligations, and/or to mandate stricter utilization criteria.

Formulary exclusion effectively encourages patients and providers to seek alternative treatments, make a complex and time-intensive request for medical exemptions, or pay 100% of the cost of a drug.

Third party pharmacy benefit managers (PBMs) , other similar organizations and payors can limit coverage to specific products on an approved list, or formulary, which might not include all of the approved products for a particular indication, and they can exclude drugs from their formularies in favor of competitor drugs or alternative treatments, place drugs on formulary tiers with higher patient co-pay obligations, and mandate stricter utilization criteria.

Formulary exclusion effectively

encourages patients and providers to seek alternative treatments, make a complex and time-intensive request for medical exemptions, or pay 100% of the cost of a drug.

In addition, in many instances, certain PBMs, other similar organizations and third party payors may exert negotiating leverage by requiring incremental rebates, discounts or other concessions from manufacturers in order to maintain formulary positions, which could continue to result in higher gross to net deductions for affected products.

There has been significant consolidation in the health insurance industry, resulting in large insurers and PBMs exerting greater pressure and leverage in pricing and usage negotiations with drug manufacturers.

P ayors could

decide to exclude our products from formulary coverage lists, impose step edits that require patients to try alternative, including generic, treatments before authorizing payment for our products, limit the types of diagnoses for which coverage will be provided or impose a moratorium on coverage for products while the payor makes a coverage decision.

P ayors could decide to exclude our products from formulary coverage lists, impose step edits that require patients to try alternative, including generic, treatments before authorizing payment for our products, limit the types of diagnoses for which coverage will be provided or impose a moratorium on coverage for products while the payor makes a coverage decision.

An inability to maintain adequate formulary positions could increase patient cost-sharing for our products and cause some patients to determine not to use our products.

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patents on successful innovative pharmaceutical products.

We have received a notice letter from each of Apotex, Inc., Hikma Pharmaceuticals USA Inc., Sun Pharmaceutical Industries Inc., Granules India Ltd., Dr.

Reddy’s Laboratories, Inc., Eugia Pharma Specialties, Ltd., and Alkem Laboratories Ltd., which we refer to as the Generic JAKAFI Manufacturers, notifying us that each has filed an ANDA requesting approval to market a generic version of JAKAFI and that contains a paragraph IV certification purporting to challenge one or more patents covering ruxolitinib composition of matter and its use that expire (with pediatric extension) in June 2028 and patents covering ruxolitinib phosphate and its use that expire (with pediatric extension) in December 2028.

We have received notice letters from Apotex, Inc., Hikma Pharmaceuticals USA Inc., Sun Pharmaceutical Industries Inc., Granules India Ltd., Dr.

Reddy’s Laboratories, Inc., Eugia Pharma Specialties, Ltd., Alkem Laboratories Ltd., Alembic Pharmaceuticals Ltd., and MSN Pharmaceuticals Inc.

and MSN Laboratories Pvt.

(together “MSN”), which we refer to as the Generic JAKAFI Manufacturers, notifying us that each has filed an ANDA requesting approval to market a generic version of JAKAFI and that contain a paragraph IV certification purporting to challenge one or more patents covering ruxolitinib composition of matter and its use that expire (with pediatric extension) in June 2028 and patents covering ruxolitinib phosphate and its use that expire (with pediatric extension) in December 2028.

We have also received a separate notice letter from Apotex, Inc.

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District Court for the District of New Jersey asserting certain FDA Orange-Book-listed patents for JAKAFI.

In October 2025 and February 2026, we entered into a confidential settlement agreement with Hikma Pharmaceuticals USA Inc.

and Granules India Ltd., respectively, settling all outstanding claims in the Hikma and Granules litigations.

We subsequently entered into confidential settlement agreements with Hikma Pharmaceuticals USA Inc., Granules India Ltd., Dr.

Reddy’s Laboratories, Inc., Eugia Pharma Specialties, Ltd., and Alkem Laboratories Ltd., respectively, settling all outstanding claims in the litigations against those Generic JAKAFI Manufacturers.

The actions against the other Generic JAKAFI Manufacturers remain pending.

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Competitors for OPZELURA include existing over-the-counter topical treatments and prescription topical treatments, as well as oral and injectable therapies, from major pharmaceutical and biotechnology companies, and companies that produce generic versions of prescription treatments.

We have received a notice letter from each of Padagis Israel Pharmaceuticals Ltd., Taro Pharmaceuticals Inc., Zydus Lifesciences Limited and Encube Ethicals Private Limited, which we refer to as the Generic OPZELURA Manufacturers, notifying us that each has filed an ANDA requesting approval to market a generic version of OPZELURA and that contains a paragraph IV certification purporting to challenge one or more patents covering ruxolitinib phosphate cream and its uses that expire in 2031 and 2040.

None of the notice letters challenge the ruxolitinib or ruxolitinib phosphate composition of matter patents, providing patent coverage (with pediatric extension) until December 2028, and the notice letter from Zydus Lifesciences Limited also does not challenge certain patents covering ruxolitinib phosphate cream and its uses, providing patent coverage (with pediatric extension) until November 2031.

We have received notice letters from Padagis Israel Pharmaceuticals Ltd., Taro Pharmaceuticals Inc., Zydus Lifesciences Limited and Encube Ethicals Private Limited, which we refer to as the Generic OPZELURA Manufacturers, notifying us that each has filed an ANDA requesting approval to market a generic version of OPZELURA and that contain a paragraph IV certification purporting to challenge one or more patents covering ruxolitinib phosphate cream and its uses that expire in 2031 and 2040.

None of the notice letters challenge the ruxolitinib or ruxolitinib phosphate composition of matter patents, providing patent coverage (with pediatric extension) until December 2028.

In response to the notice letters, we filed patent infringement actions against each of the Generic OPZELURA Manufacturers in the U.S.

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Each of these actions remains pending.

There can be no assurance that our patents will be upheld or that any litigation in which we might engage with any generic manufacturer will be successful in protecting exclusivity of our products.

There can be no assurance that our patents will be upheld or that any litigation in which we might engage with any generic manufacturer will be successful in protecting the exclusivity of our products.

The entry of a competitive drug product from another company or a generic version of one of our products could result in a decrease in sales of our products and materially harm our business, operating results and financial condition.

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• enter into arrangements with third parties to provide services or to manufacture our products on our behalf;

• prepare and execute our commercial product launch strategies;

• deploy sales, marketing, distribution and manufacturing resources effectively or enter into arrangements with third parties to provide these functions in compliance with all applicable laws;

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Discovery and development of drug candidates are expensive, uncertain and time-consuming, and we do not know if our efforts will lead to discovery of any drug candidates that can be successfully developed and marketed.

We, or our collaborators or licensees, may decide to discontinue development of any or all of our drug candidates at any time for commercial, scientific or other reasons.

We, and our collaborators and licensees, must continuously decide whether to discontinue development of any or all of our drug candidates at any time for commercial, scientific or other reasons.

Even if a drug candidate receives marketing approval, it may not be able to achieve market acceptance or compete successfully with our competitors’ products and we may never realize a return on the significant amount of time and money invested in the drug candidate, which could adversely affect our operating results and financial condition as well as our business plans.

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To obtain regulatory approval, we or our collaborators, as the case may be, must first show that our or our collaborators’ drug candidates are safe and effective for target indications through preclinical testing (animal testing) and clinical trials (human testing).

Preclinical testing and clinical development are long, expensive and uncertain processes, and we do not know whether the FDA will allow us or our collaborators to undertake clinical trials of any drug candidates in addition to our or our collaborators’ compounds currently in clinical trials.

Preclinical and clinical development are long, expensive and uncertain processes, and we do not know whether the FDA will allow us or our collaborators to undertake clinical trials of any drug candidates in addition to our or our collaborators’ compounds currently in clinical trials.

If regulatory approval of a product is granted, this approval will be limited to those disease states and conditions for which the product is demonstrated through clinical trials to be safe and effective.

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Approval by the FDA does not ensure approval by regulatory authorities in other countries, and approval by one foreign regulatory authority does not ensure approval by regulatory authorities in other countries or by the FDA.

Healthcare reform measures could impact the pricing and profitability of pharmaceuticals, and adversely affect the commercial viability of our or our collaborators’ products and drug candidates.

If recent proposals for changes to Medicare and Medicaid reimbursement of drug prices are adopted into law, our results of operations and financial condition could be harmed.

In recent years, through legislative and regulatory actions and executive orders, the U.S.

federal government has made substantial changes to various payment systems under the Medicare and other federal healthcare programs.

Comprehensive reforms to the U.S.

healthcare system were enacted, including changes to the methods for, and amounts of, Medicare reimbursement.

For example, the American Rescue Plan Act of 2021 includes a provision that became effective in January 2024 that eliminated the statutory cap on rebates that drug manufacturers pay to Medicaid.

Healthcare reform measures, including federal and state drug pricing reforms, could impact the pricing and profitability of pharmaceuticals and adversely affect the commercial viability of our or our collaborators’ products and drug candidates.

In recent years, the U.S.

federal government has enacted significant healthcare and drug pricing reforms through legislation and regulation.

These reforms include modifications to Medicare reimbursement, increased manufacturer rebate obligations under certain government healthcare programs and the establishment of new mechanisms intended to reduce prescription drug spending.

For example, the American Rescue Plan Act of 2021 included a provision that became effective in January 2024 that eliminated the statutory cap on rebates that drug manufacturers pay to Medicaid.

It is expected that this provision, as implemented by the Centers for Medicare and Medicaid Services (“CMS”), will have the effect of increasing Medicaid rebate liability, particularly in the case of medicines that have experienced price increases at a rate in excess of inflation.

Further, in August 2022, the Inflation Reduction Act of 2022 was enacted, which includes provisions allowing the federal government to negotiate prices for certain high-expenditure single source Medicare drugs, to impose penalties and to implement a potential excise tax for manufacturers that fail to comply with the negotiation by offering a price that is not equal to or less than the negotiated “maximum fair price” under the law, and to impose rebate liability on manufacturers that take price increases that exceed inflation.

The new law also reduced the out-of-pocket prescription drug costs for Medicare Part D beneficiaries, and to help pay for this change in benefit design, the law imposes a new discount program which started in 2025 in which manufacturers pay specified discounts on Medicare Part D utilization of their drugs as a condition of selling such drugs in the Medicare Part D program.

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.

While there is currently significant uncertainty regarding the implementation of some of these reforms or the scope of amended or additional reforms, the implementation of reforms could significantly reduce net sales resulting from the Medicare programs and limit our ability to increase the prices that we charge for our drugs.

Reforms or other changes to these payment systems may change the availability, methods and rates of reimbursements from Medicare, private insurers and other third-party payors for our current and any future approved products.

These reforms may affect future investments in our drug development, should the reforms affect our risk-benefit analysis of investing in a drug candidate.

Some of these changes and proposed changes could result in reduced reimbursement rates or the elimination of dual sources of payment, which could reduce the price that we or any of our collaborators or licensees receive for any products in the future, and which would adversely affect our business strategy, operations and financial results.

In addition, there has been an increasing legislative and enforcement interest in the United States with respect to drug pricing practices.

In addition, the Inflation Reduction Act of 2022 (the “IRA”) introduced several significant changes to Medicare, including:

requiring CMS to negotiate prices for certain high-expenditure, single source Medicare drugs;

imposing inflation-based rebates on manufacturers whose prices increase faster than inflation;

redesigning the Medicare Part D benefit to cap beneficiary out-of-pocket costs while requiring manufacturers to provide mandatory discounts under the Medicare Part D Manufacturer Discount Program beginning in 2025;

and establishing penalties for manufacturers that fail to comply with applicable Medicare Drug Price Negotiation Program requirements.

The IRA provides phased implementation of the Medicare Part D Manufacturer Discount Program for certain qualifying products.

Certain Incyte products currently qualify for this phase-in, although our manufacturer discount obligations will increase over time as those provisions phase out.

In 2025, Congress enacted the ORPHAN Cures Act, which amended certain provisions of the Medicare Drug Price Negotiation Program established under the IRA.

As a result, the timeline under which the ruxolitinib phosphate active moiety could become eligible for Medicare drug price negotiation has been extended.

While the ORPHAN Cures Act delayed the timing of potential Medicare drug price negotiation applicable to ruxolitinib phosphate, future policy actions could modify, repeal or further amend these provisions, or otherwise expand government authority over pharmaceutical pricing.

More broadly, reforms or other changes to Medicare, Medicaid or other government healthcare programs, as well as changes in reimbursement policies adopted by private insurers and other third-party payors, may alter reimbursement methodologies, reduce reimbursement rates or product pricing or increase manufacturer liabilities.

Changes to Medicare Part B reimbursement methodologies, payment rates or site-of-care payment policies applicable to physician-administered drugs could adversely affect provider purchasing decisions, product utilization, reimbursement and revenues.

These reforms may affect future investments in our drug development should they affect our risk-benefit analysis of investing in drug candidates, reduce the price that we or any of our collaborators or licensees receive for our products and adversely affect our business strategy, operations and financial results.

In addition, legislative and enforcement interest in the United States with respect to drug pricing practices has increased.

This has resulted in significant legislative activity and proposals from the prior and current administrations relating to prescription drug prices and reimbursement, any of which, if enacted, could impose downward pressure on the prices that we can charge for our products and may further limit the commercial viability of our products and drug candidates.

Specifically, there have been ongoing federal congressional inquiries and proposed and enacted federal and state legislation, executive orders and administrative agency rules designed to, among other things, bring more transparency to drug pricing, reduce drug prices, reform government program reimbursement methodologies for prescription drugs, expand access to government-mandated discounted pricing (known as 340B pricing) through broader contract pharmacy arrangements, allow importation of drugs into the United States from other countries and limit allowable prices for drugs through reference to an average price from foreign markets that may be substantially lower than what we currently or would otherwise charge.

In certain foreign markets, pricing or profitability of prescription pharmaceuticals is subject to government control.

In certain foreign markets, pricing or profitability of prescription pharmaceuticals is

subject to government control.

We expect that the healthcare reform measures that have been adopted in the United States and in foreign markets, and further reforms that may be adopted in the future, could result in more rigorous coverage criteria and additional downward pressure on the prices that we may receive for our approved products.

2 unchanged sentences

Further, if we become the subject of any governmental or other regulatory hearing or investigation with respect to the pricing of our products or other business practices, we could incur significant expenses and could be distracted from the operation of our business and execution of our business strategy.

Any such hearing or investigation could also result in significant negative publicity and harm to our reputation, reduced market acceptance and demand, which could adversely affect our financial results and growth prospects.

In addition, the trend toward managed healthcare in the United States as well as legislative and regulatory proposals to reform healthcare or address the cost of government insurance programs may all result in lower prices for, or rejection of, our products.

Any such hearing or investigation could also result in significant negative publicity and harm to our reputation and reduced market acceptance and demand, which could adversely affect our financial results and growth prospects.

Additionally, the trend toward managed healthcare in the United States, as well as legislative and regulatory proposals to reform healthcare or address the cost of government insurance programs, may result in lower prices for, or rejection of, our products.

Managed healthcare organizations could control or significantly influence the purchase of healthcare services and products.

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The same risks apply to our compounds developed and marketed by our collaborators, and our future potential milestone and royalty revenues could be affected in a similar manner.

Changes in government pricing policies, including the enactment of “most favored nation” pricing legislation, could adversely affect our business.

Changes in government pricing policies, including the enactment of “most favored nation” legislation and actions, could adversely affect our business.

Our revenue, results of operations and cash flows could be materially and adversely affected by changes in government pricing policies, including recently proposed or enacted “most favored nation” (MFN) pricing legislation or executive actions.

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(“Merus”) and Syndax Pharmaceuticals Inc., or explore additional opportunities to further develop and commercialize existing drug candidates in specific jurisdictions, such as our June 2016 acquisition of the development and commercialization rights to ICLUSIG in certain countries.

We may be unable to enter into any additional

in-licensing agreements because suitable drug candidates that are within our expertise may not be available to us on terms that are acceptable to us or because competitors with greater resources seek to in-license the same drug candidates.

We may be unable to enter into any additional in-licensing agreements because suitable drug candidates that are within our expertise may not be available to us on terms that are acceptable to us or because competitors with greater resources seek to in-license the same drug candidates.

Drug candidates that we would like to develop or commercialize may not be available to us because they are controlled by competitors who are unwilling to license the rights to the drug candidate to us.

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These problems include difficulties with production costs and yields, quality control and assurance and shortages of qualified personnel.

To the extent problems such as these

are experienced, we could encounter difficulties in supplying sufficient product to meet demand or incur additional costs to remedy the problems or to recall defective products.

To the extent problems such as these are experienced, we could encounter difficulties in supplying sufficient product to meet demand or incur additional costs to remedy the problems or to recall defective products.

Any such recall could also harm our sales efforts and our reputation.

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The FDA and comparable agencies in other jurisdictions directly regulate many of our most critical business activities, including the conduct of preclinical and clinical studies, product manufacturing, advertising and promotion, product distribution, adverse event reporting and product risk management.

States increasingly have been placing greater restrictions on the marketing practices of healthcare companies and have instituted pricing disclosure and other requirements for companies selling

pharmaceuticals.

States increasingly have been placing greater restrictions on the marketing practices of healthcare companies and have instituted pricing disclosure and other requirements for companies selling pharmaceuticals.

In addition, pharmaceutical and biotechnology companies have been the target of lawsuits and investigations alleging violations of government regulations, including claims asserting submission of incorrect pricing information, improper promotion of pharmaceutical products, payments intended to influence the referral of federal or state healthcare business, submission of false claims for government reimbursement, antitrust violations, violations of the U.S.

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For example, in February 2024 we entered into a purchase agreement with MorphoSys AG and MorphoSys US Inc.

under which we acquired rights to tafasitamab (MONJUVI/MINJUVI) that resulted in our holding exclusive global development and commercialization rights to tafasitamab.

under which we acquired rights to tafasitamab (MONJUVI/MINJUVI) that resulted in our holding exclusive global development and commercialization rights to tafasitamab, and in June 2026 we entered into an agreement to acquire Vega Therapeutics and its novel antibody therapies for rare blood disorders.

The success of our acquisitions, joint ventures, strategic alliances and investments will depend on our ability to identify, negotiate, complete and, in the case of acquisitions, integrate those transactions and, if necessary, obtain satisfactory debt or equity financing to fund those transactions.

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• uncertainties in our ability to maintain the key business relationships of any business we acquire;

• exposure to unknown or contingent liabilities or the incurrence of unanticipated expenses, including those with respect to intellectual property, pre-clinical or clinical data, safety, compliance or internal controls, and including as a result of the failure of the due diligence processes to identify significant problems, liabilities or challenges of an acquired company or asset;

• exposure to unknown or contingent liabilities or the incurrence of unanticipated expenses, including those with respect to intellectual property, preclinical or clinical data, safety, compliance or internal controls, and including as a result of the failure of the due diligence processes to identify significant problems, liabilities or challenges of an acquired company or asset;

• the risk that acquired businesses may have differing or inadequate cybersecurity and data protection controls;

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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 1A. Risk Factors