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Item 1. Business

2021-02-09 compared with 2020-02-13 · 332 added, 361 removed, 472 unchanged (59% of the section changed)

This report contains forward-looking statements that involve risks and uncertainties.

These statements relate to future periods, future events or our future operating or financial plans or performance.

Often, these statements include the words “believe,” “expect,” “target,” “anticipate,” “intend,” “plan,” “seek,” “estimate,” “potential,” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” or “may,” or the negative of these terms, and other similar expressions.

These forward-looking statements include statements as to:

● the discovery, development, formulation, manufacturing and commercialization of our compounds, our drug candidates and JAKAFI ® /JAKAVI ® (ruxolitinib) and ICLUSIG ® (ponatinib);

● our plans to further develop our operations outside of the United States;

● conducting clinical trials internally, with collaborators, or with clinical research organizations;

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

● our licensing, investment and commercialization strategies, including our plans to commercialize JAKAFI and ICLUSIG;

● the regulatory approval process, including obtaining U.S.

Food and Drug Administration and other international health authorities approval for our products in the United States and abroad;

● the safety, effectiveness and potential benefits and indications of our drug candidates and other compounds under development;

● the timing and size of our clinical trials;

the compounds expected to enter clinical trials;

timing of clinical trial results;

● our ability to manage expansion of our drug discovery and development operations;

● future required expertise relating to clinical trials, manufacturing, sales and marketing;

● obtaining and terminating licenses to products, drug candidates or technology, or other intellectual property rights;

● the receipt from or payments pursuant to collaboration or license agreements resulting from milestones or royalties;

● plans to develop and commercialize products on our own;

● plans to use third-party manufacturers;

● plans for our manufacturing operations;

● expected expenses and expenditure levels;

expected uses of cash;

expected revenues and sources of revenues, including milestone payments;

expectations with respect to inventory;

● expectations with respect to reimbursement for our products;

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

● expected losses;

fluctuation of losses;

currency translation impact associated with collaboration royalties;

● our profitability;

the adequacy of our capital resources to continue operations;

● the need to raise additional capital;

● the costs associated with resolving matters in litigation;

● our expectations regarding competition;

● expectations relating to our new European headquarters, including construction activities, and the anticipated completion date for our large molecule production facility;

● our investments, including anticipated expenditures, losses and expenses;

● our patent prosecution and maintenance efforts.

These forward-looking statements reflect our current views with respect to future events, are based on assumptions and are subject to risks and uncertainties.

These risks and uncertainties could cause actual results to differ materially from those projected and include, but are not limited to:

● our ability to successfully commercialize JAKAFI and ICLUSIG;

● our ability to maintain at anticipated levels reimbursement for our products from government health administration authorities, private health insurers and other organizations;

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

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

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

● our ability to achieve a significant market share in order to achieve or maintain profitability;

● the risk of civil or criminal penalties if we market our products in a manner that violates health care fraud and abuse and other applicable laws, rules and regulations;

● our ability to discover, develop, formulate, manufacture and commercialize our drug candidates;

● the risk of unanticipated delays in, or discontinuations of, research and development efforts;

● the risk that previous preclinical testing or clinical trial results are not necessarily indicative of future clinical trial results;

● risks relating to the conduct of our clinical trials;

● changing regulatory requirements;

● the risk of adverse safety findings;

● the risk that results of our clinical trials do not support submission of a marketing approval application for our drug candidates;

● the risk of significant delays or costs in obtaining regulatory approvals;

● risks relating to our reliance on third-party manufacturers, collaborators, and clinical research organizations;

● risks relating to the development of new products and their use by us and our current and potential collaborators;

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

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

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

● our ability to maintain or obtain adequate product liability and other insurance coverage;

● the risk that our drug candidates may not obtain or maintain regulatory approval;

● the impact of technological advances and competition, including potential generic competition;

● our ability to compete against third parties with greater resources than ours;

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

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

● competition to develop and commercialize similar drug products;

● our ability to obtain and maintain patent protection and freedom to operate for our discoveries and to continue to be effective in expanding our patent coverage;

● the impact of changing laws on our patent portfolio;

● developments in and expenses relating to litigation;

● our ability to in-license drug candidates or other technology;

● unanticipated construction, other delays or changes in plans relating to our new European headquarters and large molecule production facility;

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

● our ability to obtain additional capital when needed;

● fluctuations in net cash provided and used by operating, financing and investing activities;

● our ability to analyze the effects of new accounting pronouncements and apply new accounting rules;

● our history of operating losses;

● the risks set forth under “Risk Factors.”

Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements.

Except as required by federal securities laws, we undertake no obligation to update any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

In this report all references to “Incyte,” “we,” “us,” “our” or the “Company” mean Incyte Corporation and our subsidiaries, except where it is made clear that the term means only the parent company.

Incyte and JAKAFI are our registered trademarks.

We also refer to trademarks of other corporations and organizations in this Annual Report on Form 10-K.

Incyte is a biopharmaceutical company focused on the discovery, development and commercialization of proprietary therapeutics.

Our global headquarters is located in Wilmington, Delaware.

We conduct our European clinical development and commercial operations from our offices in Geneva, Switzerland, and Lausanne, Switzerland;

and we conduct our Japanese operations from our office in Tokyo.

Marketed Indications - JAKAFI (ruxolitinib)

Our global headquarters is located in Wilmington, Delaware, where we conduct global commercial and clinical development operations.

We also conduct commercial and clinical development operations from our European headquarters in Morges, Switzerland and clinical development operations from our Japanese office in Tokyo.

As described in more detail below, our business is composed of three franchises that are defined by the indications of our approved medicines and the diseases for which our clinical candidates are being developed.

Hematology and Oncology

Our hematology and oncology franchise is comprised of four approved products, which are JAKAFI (ruxolitinib), MONJUVI (tafasitamab-cxix), PEMAZYRE (pemigatinib) and ICLUSIG (ponatinib), as well as numerous clinical development programs.

JAKAFI (ruxolitinib)

JAKAFI (ruxolitinib) is our first product to be approved for sale in the United States.

It was approved by the U.S.

Food and Drug Administration (FDA) in November 2011 for the treatment of adults with intermediate or high-risk myelofibrosis, in December 2014 for the treatment of adults with polycythemia vera who have had an inadequate response to or are intolerant of hydroxyurea and in May 2019 for the treatment of steroid-refractory acute graft-versus-host disease (GVHD) in adult and pediatric patients 12 years and older .

Food and Drug Administration (FDA) in November 2011 for the treatment of adults with intermediate or high-risk myelofibrosis (MF), in December 2014 for the treatment of adults with polycythemia vera (PV) who have had an inadequate response to or are intolerant of hydroxyurea and in May 2019 for the treatment of steroid-refractory acute graft-versus-host disease (GVHD) in adult and pediatric patients 12 years and older .

Myelofibrosis and polycythemia vera are both myeloproliferative neoplasms (MPNs), a type of rare blood cancer, and GVHD is an adverse immune response to an allogeneic hematopoietic stem cell transplant (HSCT).

Under our collaboration agreement with Novartis International Pharmaceutical Ltd., Novartis received exclusive development and commercialization rights to ruxolitinib outside of the United States for all hematologic and oncologic indications and sells ruxolitinib outside of the United States under the name JAKAVI.

Under our collaboration agreement with our collaboration partner Novartis Pharmaceutical International Ltd., Novartis received exclusive development and commercialization rights to ruxolitinib outside of the United States for all hematologic and oncologic indications and sells ruxolitinib outside of the United States under the name JAKAVI.

In 2003, we initiated a research and development program to explore the inhibition of enzymes called janus associated kinases (JAK).

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JAKAFI is distributed primarily through a network of specialty pharmacy providers and wholesalers that allow for efficient delivery of the medication by mail directly to patients or direct delivery to the patient’s pharmacy.

distribution process uses a model that is well-established and familiar to physicians who practice within the oncology field.

Our distribution process uses a model that is well-established and familiar to physicians who practice within the oncology field.

To further support appropriate use and future development of JAKAFI, our U.S.

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In December 2014, the FDA approved JAKAFI for the treatment of patients with PV who have had an inadequate response to or are intolerant of hydroxyurea.

The approval of JAKAFI for PV was based on data from the pivotal Phase III

RESPONSE trial.

The approval of JAKAFI for PV was based on data from the pivotal Phase III RESPONSE trial.

In this trial, patients treated with JAKAFI demonstrated superior hematocrit control and reductions in spleen volume compared to best available therapy.

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The most frequently reported adverse reactions among all study participants were infections (55%) and edema (51%), and the most common laboratory abnormalities were anemia (75%), thrombocytopenia (75%) and neutropenia (58%).

We have retained all development and commercialization rights to JAKAFI in the United States and are eligible to receive development and commercial milestones as well as royalties from product sales outside the United States.

We have retained all development and commercialization rights to JAKAFI in the United States and are eligible to receive development and sales milestones as well as royalties from product sales outside the United States.

We hold patents that cover the composition of matter and use of ruxolitinib, which patents, including applicable extensions, expire in late 2027.

Marketed Indications - ICLUSIG (ponatinib)

MONJUVI (tafasitamab-cxix)

In January 2020, we and MorphoSys AG entered into a collaboration and license agreement to further develop and commercialize MorphoSys' proprietary anti-CD19 antibody tafasitamab (MOR208) globally.

The agreement became effective March 2020.

Tafasitamab is an Fc-engineered antibody against CD19 currently in clinical development for the treatment of B cell malignancies.

We have rights to co-commercialize tafasitamab in the United States with MorphoSys, and we have exclusive development and commercialization rights outside of the United States.

In July 2020, we and MorphoSys announced that the FDA approved MONJUVI (tafasitamab-cxix), which is indicated in combination with lenalidomide for the treatment of adult patients with relapsed or refractory diffuse large B-cell lymphoma (DLBCL) not otherwise specified, including DLBCL arising from low grade lymphoma, and who are not

eligible for autologous stem cell transplant (ASCT).

MONJUVI was approved under accelerated approval based on overall response rate.

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

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

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

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

We estimate that there are ~10.000 patients diagnosed in the United States each year with relapsed or refractory diffuse large B-cell lymphoma (r/r DLBCL) who are not eligible for ASCT.

The approval of MONJUVI was based on data from the MorphoSys-sponsored Phase II L-MIND study, an open label, multicenter, single arm trial of MONJUVI in combination with lenalidomide as a treatment for adult patients with r/r DLBCL.

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

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

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

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

PEMAZYRE (pemigatinib)

In April 2020, we announced that the FDA approved PEMAZYRE (pemigatinib), a selective fibroblast growth factor receptor (FGFR) kinase inhibitor, for the treatment of adults with previously treated, unresectable locally advanced or metastatic cholangiocarcinoma with an FGFR2 fusion or other rearrangement as detected by an FDA-approved test.

PEMAZYRE is the first and only FDA-approved treatment for this indication, which was approved under accelerated approval based on overall response rate and duration of response (DOR).

Cholangiocarcinoma is a rare cancer that arises from the cells within the bile ducts.

It is often diagnosed late (stages III and IV) and the prognosis is poor.

The incidence of cholangiocarcinoma with FGFR2 fusions or rearrangements is increasing, and it is currently estimated that there are 2,000-3,000 patients in the United States, Europe and Japan.

The approval of PEMAZYRE was based on data from FIGHT-202, a multi-center, open-label, single-arm study evaluating PEMAZYRE as a treatment for adults with cholangiocarcinoma.

In FIGHT-202, and in patients harboring FGFR2 fusions or rearrangements (Cohort A), PEMAZYRE monotherapy resulted in an overall response rate of 36% (primary endpoint), and median DOR of 9.1 months (secondary endpoint).

FIGHT-302, a Phase III trial of pemigatinib for the first-line treatment of patients with cholangiocarcinoma and FGFR2 fusions or rearrangements, is ongoing.

We have retained all rights to PEMAZYRE globally, other than those granted to Innovent Biologics, Inc.

to develop and commercialize pemigatinib in hematology and oncology in mainland China, Hong Kong, Macau and Taiwan.

ICLUSIG (ponatinib)

In June 2016, we acquired the European operations of ARIAD Pharmaceuticals, Inc.

(ARIAD) and obtained an exclusive license to develop and commercialize ICLUSIG (ponatinib) in Europe and other select countries.

and obtained an exclusive license to develop and commercialize ICLUSIG (ponatinib) in Europe and other select countries.

ICLUSIG is a kinase inhibitor.

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or who have the T315I mutation.

Clinical Programs in Oncology

We believe that the future of cancer treatment lies in the use of targeted therapies, which aim to block the effects of cancer-causing mutations, and immune therapies, which seek to recruit the patient’s own immune system to tackle cancer.

Our most advanced programs are detailed below.

JAK Inhibition

As part of our ongoing LIMBER (Leadership in MPNs BEyond Ruxolitinib) clinical development initiative, which is designed to improve and expand therapeutic options for patients with myeloproliferative neoplasms, we are evaluating combinations of ruxolitinib with other therapeutic modalities, as well as developing a once-a-day formulation of ruxolitinib for potential use as monotherapy and combination therapy.

Based on positive Phase II data, we are preparing a pivotal trial program of ruxolitinib in combination with parsaclisib (PI3Kδ).

Additional Phase II trials combining ruxolitinib with investigational agents from our portfolio such as INCB53914 (PIM), INCB57643 (BET) and INCB00928 (ALK2) in patients with MF are either ongoing or in preparation.

Following positive proof-of-concept data, we initiated the pivotal RESET trial investigating ruxolitinib for the treatment of patients with essential thrombocythemia (ET).

In February 2020, it was decided to end recruitment into the RESET trial.

The REACH clinical program evaluates ruxolitinib in patients with steroid-refractory GVHD and includes REACH2, a Novartis-sponsored Phase III trial in steroid-refractory acute GVHD, and REACH3, a Phase III trial in steroid-refractory chronic GVHD that is co-sponsored by Incyte and Novartis.

Clinical Programs in Hematology and Oncology

Ruxolitinib and itacitinib

As part of our development efforts to evaluate JAK inhibition in GVHD, the REACH clinical program is evaluating ruxolitinib in patients with steroid-refractory GVHD and includes REACH2, a Novartis-sponsored Phase III trial in steroid-refractory acute GVHD, and REACH3, a Phase III trial in steroid-refractory chronic GVHD that is co-sponsored by Incyte and Novartis.

In October 2019, we and Novartis announced that REACH2 met its primary endpoint of superior ORR at Day 28 with ruxolitinib treatment compared to best available therapy.

No new safety signals were observed, and the ruxolitinib safety profile in REACH2 was consistent with that seen in previously reported studies in steroid-refractory acute GVHD.

The result of REACH3 is expected to be available in 2020.

In April 2020, we and Novartis announced that data from REACH2 were published in the New England Journal of Medicine.

In July 2020, we and Novartis announced that REACH3 met its primary endpoint of superior ORR at Month 6 with ruxolitinib treatment compared to best available therapy (BAT), as well as both key secondary endpoints, significantly improving patient-reported symptoms and failure-free survival.

No new safety signals were observed, and the ruxolitinib safety profile in REACH3 was consistent with that seen in previously reported studies in steroid-refractory chronic GVHD.

Additional data announced in December 2020 showed that best overall response (BOR) rate, defined as any response up to week 24, was achieved in a significantly higher percentage of patients with ruxolitinib therapy compared to BAT.

An sNDA seeking FDA approval of ruxolitinib in steroid-refractory chronic GVHD has been submitted.

A second JAK inhibitor in development is itacitinib, which is a selective JAK1 inhibitor.

In January 2020, we announced that in the pivotal Phase III GRAVITAS-301 trial in patients with steroid-naïve acute GVHD, itacitinib plus corticosteroids did not meet the primary endpoint of improving ORR at Day 28 compared to placebo plus corticosteroids.

Itacitinib is also being evaluated in GRAVITAS-309, a pivotal Phase III trial of itacitinib in patients with steroid-naïve chronic GVHD.

Itacitinib is being evaluated in GRAVITAS-309, a pivotal Phase III trial of itacitinib in patients with steroid-naïve chronic GVHD.

The FDA has granted itacitinib orphan drug status for GVHD.

FGFR1/2/3 Inhibition

As part of our ongoing LIMBER (Leadership In MPNs BEyond Ruxolitinib) clinical development initiative, which is designed to improve and expand therapeutic options for patients with myeloproliferative neoplasms, we are evaluating combinations of ruxolitinib with other therapeutic modalities, as well as developing a once-a-day formulation of ruxolitinib for potential use as monotherapy and combination therapy.

Based on positive Phase II data, we have opened two pivotal trials of ruxolitinib in combination with parsaclisib (PI3Kδ) in first-line MF (LIMBER-313) and in MF patients with a suboptimal response to ruxolitinib monotherapy (LIMBER-304), respectively.

Additional Phase II trials combining ruxolitinib with investigational agents from our portfolio such as INCB57643 (BET) and INCB00928 (ALK2) in patients with MF are in preparation, and additional discovery and development initiatives are also ongoing within the LIMBER program, which are evaluating both internally-discovered compounds, including itacitinib (JAK1), and candidates from collaboration partners.

Tafasitamab is an anti-CD19 antibody and is being investigated as a therapeutic option in B cell malignancies in a number of ongoing and planned combination trials.

An open-label Phase II combination trial (L-MIND) is investigating the safety and efficacy of tafasitamab in combination with lenalidomide in patients with relapsed or refractory diffuse large B-cell lymphoma (r/r DLBCL), and the ongoing Phase III B-MIND trial is assessing the combination of tafasitamab and bendamustine versus rituximab and bendamustine in r/r DLBCL.

firstMIND is a Phase Ib safety trial of tafasitamab as a first-line therapy for patients with DLBCL, and frontMIND, a placebo-controlled Phase III trial evaluating tafasitamab in combination with lenalidomide added to rituximab plus chemotherapy (R-CHOP) as a first-line therapy for patients with DLBCL, is planned to begin in 2021.

A placebo-controlled Phase III trial (inMIND) of tafasitamab added to lenalidomide plus rituximab (R 2 ) in patients with relapsed or refractory follicular or marginal zone lymphomas is now recruiting patients, and we are preparing to initiate both a proof-of-concept study of tafasitamab in combination with parsaclisib (PI3Kδ) in patients with relapsed or refractory B-cell malignancies and a proof-of-concept study of tafasitamab, lenalidomide and plamotamab in patients

with r/r DLBCL.

In May 2020, we announced the validation of the European Marketing Authorization Application (MAA) for tafasitamab seeking approval of tafasitamab in combination with lenalidomide, followed by tafasitamab monotherapy, for the treatment of adult patients with r/r DLBCL;

the validation of the MAA by the European Medicines Agency (EMA) confirms that the submission is ready to enter the formal review process.

In January 2021, we announced that Health Canada accepted the New Drug Submission (NDS) for tafasitamab in combination with lenalidomide, followed by tafasitamab monotherapy, as a treatment for adults with r/r DLBCL.

Pemigatinib is a potent and selective inhibitor of the fibroblast growth factor receptor (FGFR) isoforms 1, 2 and 3 with demonstrated activity in preclinical studies.

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The program initially included three Phase II trials – FIGHT-201 in patients with bladder cancer, FIGHT-202 in patients with cholangiocarcinoma, and FIGHT-203 in patients with 8p11 myeloproliferative syndrome (8p11 MPN).

Based on data generated from these ongoing trials, we have initiated additional trials, including FIGHT-205, which is evaluating pemigatinib plus pembrolizumab versus pemigatinib alone versus standard of care for metastatic or unresectable urothelial carcinoma in cisplatin-ineligible patients whose tumors express FGFR3 mutation or rearrangement, and FIGHT-207 which is a solid tumor-agnostic trial evaluating pemigatinib in patients with driver-alterations of FGF/FGFR.

In September 2019, we announced positive updated data from the FIGHT-202 trial evaluating pemigatinib in patients with advanced/metastatic or surgically unresectable cholangiocarcinoma who failed at least one previous treatment.

FIGHT-302, a Phase III trial of pemigatinib for the first-line treatment of patients with cholangiocarcinoma and FGFR2 fusions or rearrangements was initiated in June 2019.

In November 2019, we announced that the FDA had accepted for Priority Review our New Drug Application (NDA) for pemigatinib as a treatment for patients with previously treated, locally advanced or metastatic cholangiocarcinoma with FGFR2 fusions or rearrangements.

The Prescription Drug User Fee Act (PDUFA) target action date is May 30, 2020.

In January 2020, we announced that the Marketing Authorization Application (MAA) for pemigatinib as a treatment of adults with locally advanced or metastatic cholangiocarcinoma with an FGFR2 fusion or rearrangement that is relapsed or refractory after at least one line of systemic therapy had been validated by the European Medicines Agency (EMA).

Cholangiocarcinoma is a cancer that arises from the cells within the bile ducts.

It is often diagnosed late (stages III and IV) and the prognosis is poor.

The incidence of cholangiocarcinoma with FGFR2 fusions or rearrangements is increasing, and it is currently estimated that there are 2,000-3,000 patients in the U.S., Europe and Japan.

Pemigatinib has been granted Breakthrough Therapy designation by the FDA as a treatment for patients with previously treated, advanced/metastatic or unresectable FGFR2 translocated cholangiocarcinoma and as a treatment for patients with myeloid/lymphoid neoplasms with FGFR1 rearrangement (8p11 MPN) who have relapsed or are refractory to initial chemotherapy.

PD-1 Antagonism

Based on data generated from these ongoing trials, we have initiated additional trials, including FIGHT-207, which is a solid tumor-agnostic trial evaluating pemigatinib in patients with driver-alterations of FGF/FGFR.

In April 2020, we announced the FDA approval of pemigatinib as PEMAZYRE for the treatment of adults with previously treated, unresectable locally advanced or metastatic cholangiocarcinoma with an FGFR2 fusion or other rearrangement as detected by an FDA-approved test.

Pemigatinib was previously granted Breakthrough Therapy designation by the FDA as a treatment for patients with previously treated, advanced/metastatic or unresectable FGFR2 translocated cholangiocarcinoma and has Breakthrough Therapy designation as a treatment for patients with myeloid/lymphoid neoplasms with FGFR1 rearrangement (8p11 MPN) who have relapsed or are refractory to initial chemotherapy.

In January 2021, we announced that the EMA’s Committee for Medicinal Products for Human Use (CHMP) issued a positive opinion recommending the conditional marketing authorization of pemigatinib for the treatment of adults with unresectable locally advanced or metastatic cholangiocarcinoma with an FGFR2 fusion or rearrangement that is relapsed or refractory, after at least one line of systemic therapy.

In September 2020, we submitted a J-NDA seeking approval for pemigatinib as a treatment for CCA in Japan.

In October 2020, we announced that Health Canada accepted the New Drug Submission (NDS) for pemigatinib as a treatment for adults with previously treated, locally advanced or metastatic cholangiocarcinoma with FGFR2 fusion or other rearrangement.

The PI3Kδ pathway mediates oncogenic signaling in B cell malignancies.

Parsaclisib is a PI3Kδ inhibitor that has demonstrated potency and selectivity in preclinical studies and has potential therapeutic utility in the treatment of patients with lymphoma.

We initiated the CITADEL clinical program to evaluate parsaclisib in non-Hodgkin lymphomas, and we are currently running Phase II trials in follicular lymphoma, marginal zone lymphoma and mantle cell lymphoma.

The FDA has granted orphan drug designation and Fast Track designation to parsaclisib as a treatment for patients with follicular lymphoma, marginal zone lymphoma and mantle cell lymphoma.

In December 2020, we announced preliminary results from the ongoing CITADEL monotherapy development program, which was designed to enable registration of parsaclisib.

Results from four cohorts were presented at the American Society of Hematology (ASH), including in r/r follicular lymphoma (CITADEL-203), in BTK-naïve r/r marginal zone lymphoma (CITADEL-204) and in both BTK-naïve and BTK-experienced r/r mantle cell lymphoma (CITADEL-205).

In October 2017, we and MacroGenics, Inc.

announced an exclusive global collaboration and license agreement for MacroGenics’ INCMGA0012, an investigational monoclonal antibody that inhibits PD-1.

Under this collaboration, we obtained exclusive worldwide rights for the development and commercialization of INCMGA0012 in all indications.

announced an exclusive global collaboration and license agreement for MacroGenics’ retifanlimab (formerly INCMGA0012), an investigational monoclonal antibody that inhibits PD-1.

Under this collaboration, we obtained exclusive worldwide rights for the development and commercialization of retifanlimab in all indications.

The molecule is currently being evaluated both as monotherapy and in combination therapy across various tumor types.

Potentially registration-enabling trials in anal cancer, MSI-high endometrial cancer and Merkel cell carcinoma are ongoing, and a Phase III program evaluating INCMGA0012 in first-line non-small cell lung cancer (NSCLC) is in preparation.

PI3K-delta Inhibition

The PI3K-delta pathway mediates oncogenic signaling in B cell malignancies.

Parsaclisib is a PI3K-delta inhibitor that has demonstrated potency and selectivity in preclinical studies and has potential therapeutic utility in the treatment of patients with lymphoma.

Potentially registration-enabling trials in squamous cell carcinoma of the anal canal (SCAC), microsatellite instability-high (MSI-H) endometrial cancer and Merkel cell carcinoma are ongoing.

In January 2021, we announced that the FDA had accepted for Priority Review the Biologics License Application (BLA) for retifanlimab as a treatment for previously treated patients with advanced squamous cell carcinoma of the anal canal (SCAC) who have progressed following standard platinum-based chemotherapy.

The BLA submission was based on data from the Phase II POD1UM-202 trial of retifanlimab in patients with advanced SCAC who have progressed following standard platinum-based chemotherapy, preliminary results of which were presented at ESMO in September 2020.

The Phase III POD1UM-303 trial of retifanlimab in combination with platinum-based chemotherapy as a first-line treatment for patients with SCAC is underway.

The Phase III POD1UM-304 trial is evaluating retifanlimab in combination with platinum-based chemotherapy as a first-line treatment for patients with non-small cell lung cancer (NSCLC), and in October 2020, our collaboration partner Zai Lab announced dosing of the first patient in China.

Retifanlimab has been granted Fast Track designation for the treatment of certain patients with advanced or metastatic MSI-H or DNA mismatch repair (dMMR) endometrial cancer, for the treatment of certain patients with locally advanced or metastatic SCAC and for the treatment of Merkel cell carcinoma (MCC).

The FDA and EMA have granted orphan drug designation to retifanlimab as a treatment for patients with locally advanced or metastatic SCAC and the FDA has granted orphan drug designation to retifanlimab as a treatment for patients with MCC.

Indication and status

ruxolitinib (JAK1/JAK2)

Steroid-refractory chronic GVHD 1 :

Phase III (REACH3) 1

Refractory myelofibrosis:

Phase III with parsaclisib (PI3Kδ) in preparation;

Phase II with INCB53914 (PIM) ongoing, INCB57643 (BET) in preparation

Myelofibrosis:

Phase II with INCB00928 (ALK2) in preparation

Once-a-day ruxolitinib (JAK1/JAK2)

Myelofibrosis and polycythemia vera:

clinical pharmacology studies

sNDA submitted

itacitinib (JAK1)

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Phase III (GRAVITAS-309)

Cholangiocarcinoma:

Once-a-day ruxolitinib (JAK1/JAK2)

Myelofibrosis, polycythemia vera and GVHD:

clinical pharmacology studies

ruxolitinib + parsaclisib

(JAK1/JAK2 + PI3Kδ)

Myelofibrosis:

Phase III (first-line therapy)

Myelofibrosis:

Phase III (suboptimal responders to ruxolitinib)

ruxolitinib + INCB57643

(JAK1/JAK2 + BET)

Myelofibrosis:

Phase II in preparation

ruxolitinib + INCB00928

(JAK1/JAK2 + ALK2)

Myelofibrosis:

Phase II in preparation

itacitinib (JAK1)

Myelofibrosis:

Phase II (low platelets)

ruxolitinib + CK0804 2

(JAK1/JAK2 + CB-Tregs)

Myelofibrosis:

PoC in preparation

Phase II (L-MIND);

Phase III (B-MIND);

MAA and NDS under review

Phase Ib (firstMIND);

Phase III (frontMIND) in preparation

r/r follicular & marginal zone lymphomas:

Phase III (inMIND) in preparation

r/r B-cell malignancies:

PoC with parsaclisib (PI3Kδ) in preparation

r/r B-cell malignancies:

PoC with lenalidomide and plamotamab in preparation 4

Phase II (FIGHT-202), Phase III (FIGHT-302);

Bladder cancer:

Phase II (FIGHT-201, FIGHT-205)

NDS and J-NDA under review

Phase II (FIGHT-203)

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Phase II (FIGHT-207)

Parsaclisib (PI3Kδ)

Follicular lymphoma:

r/r follicular lymphoma:

Phase II (CITADEL-203)

Marginal zone lymphoma:

r/r marginal zone lymphoma:

Phase II (CITADEL-204)

Mantle cell lymphoma:

r/r mantle cell lymphoma:

Phase II (CITADEL-205)

INCMGA0012 (PD-1) 2

MSI-high endometrial cancer:

Phase II (POD1UM-101)

Phase II (POD1UM-101, POD1UM-204)

Merkel cell carcinoma:

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Phase II (POD1UM-202);

Phase III (PODIUM-301, PODIUM-304) in preparation

Phase III (PODIUM-303)

Phase III (POD1UM-304)

Clinical development of ruxolitinib in GVHD conducted in collaboration with Novartis.

INCMGA0012 licensed from MacroGenics.

Earlier-Stage Programs

We also have a number of other earlier-stage clinical programs, as detailed in the table below.

Development collaboration with Cellenkos, Inc.

tafasitamab development in collaboration with MorphoSys.

Clinical collaboration with MorphoSys and Xencor, Inc.

to investigate the combination of tafasitamab plus lenalidomide in combination with Xencor’s CD20xCD3 XmAb bispecific antibody, plamotamab.

retifanlimab licensed from MacroGenics.

Earlier-Stage Development Programs in Hematology and Oncology

We also have a number of other earlier-stage clinical programs in hematology and oncology, as detailed in the table below.

We intend to describe these programs more fully if we obtain clinical proof-of-concept and establish that a program warrants further development in a specific indication or group of indications.

Small molecules

INCB01158 (ARG) 1 , INCB81776 (AXL/MER), INCB62079 (FGFR4), epacadostat (IDO1), INCB59872 (LSD1), INCB86550 (PD-L1)

INCB01158 (ARG) 1 , INCB81776 (AXL/MER), epacadostat (IDO1),

INCB86550 (PD-L1), INCB106385 (A 2A /A 2B )

Monoclonal antibodies 2

INCAGN1876 (GITR), INCAGN2385 (LAG-3), INCAGN1949 (OX40),

INCAGN2390 (TIM-3)

INCAGN1876 (GITR), INCAGN2385 (LAG-3), INCAGN1949 (OX40), INCAGN2390 (TIM-3)

Bispecific antibodies

MCLA-145 (PD-L1xCD137) 3

INCB01158 development in collaboration with Calithera Biosciences, Inc.

INCB01158 licensed from Calithera Biosciences, Inc.

Discovery collaboration with Agenus Inc.

MCLA-145 development in collaboration with Merus N.V.

Clinical Programs outside Oncology

In June 2018, we announced that a Phase II trial of ruxolitinib cream for the topical treatment of atopic dermatitis showed a significant benefit over vehicle control and a global, pivotal Phase III program was initiated in December 2018.

In January 2020, we announced that TRuE-AD2, the first of two Phase III trials in the TRuE-AD development program of ruxolitinib cream in patients with mild-to-moderate atopic dermatitis, met its primary endpoint.

The overall efficacy and safety profile observed in TRuE-AD2 was consistent with previous data, and no new safety signals were observed.

Atopic dermatitis is a skin disorder that causes the skin to become red, scaly, and itchy.

Inflammation and AutoImmunity (IAI)

We do not yet have any approved products in IAI.

In anticipation of the potential FDA approval of our most advanced program, ruxolitinib cream for use in mild-to-moderate atopic dermatitis (AD), we recently established Incyte Dermatology as a new commercial franchise in the United States.

Clinical Programs in Dermatology

Ruxolitinib cream is a potent, selective inhibitor of JAK1 and JAK2 that provides the opportunity to directly target diverse pathogenic pathways that underlie certain dermatologic conditions, including atopic dermatitis and vitiligo.

In April 2020, safety and efficacy data from the two Phase III trials in the TRuE-AD program evaluating ruxolitinib cream in mild-to-moderate atopic dermatitis (AD) were presented at the Revolutionizing Atopic Dermatitis (RAD) virtual symposium;

both trials met their primary endpoints.

The 44-week long-term safety and efficacy portion of both the TRuE-AD1 and TRuE-AD2 trials have been completed.

In September 2020, we purchased a priority review voucher (PRV) from a third party, with the intent to use it in connection with our submission seeking FDA approval of ruxolitinib cream for the treatment of AD.

In December 2020, we submitted an NDA along with the PRV, seeking approval for ruxolitinib cream as a treatment for patients with AD.

AD is a skin disorder that causes long term inflammation of the skin resulting in itchy, red, swollen and cracked skin.

Onset can occur at any age, but is more common in infants and children.

In the United States, we estimate that there are approximately 10 million diagnosed and treated adolescent and adult patients with mild to moderate atopic dermatitis.

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

In June 2019, primary endpoint data after 6 months of therapy from the Phase II trial of ruxolitinib cream in patients with vitiligo showed a significant benefit over vehicle control, and a global, pivotal Phase III program was initiated in September 2019.

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There are no FDA approved treatments for repigmentation of vitiligo lesions.

A Phase II trial of INCB54707, a JAK1 selective inhibitor, is ongoing in patients with hidradenitis suppurativa, an inflammatory skin disease.

A Phase II trial of parsaclisib in patients with autoimmune hemolytic anemia, a rare red blood cell disorder, is also ongoing.

A Phase II trial of INCB00928 is in preparation for patients with fibrodysplasia ossificans progressiva, a disorder in which muscle tissue and connective tissue are gradually replaced by bone.

The Phase II trial of itacitinib in patients with ulcerative colitis has been discontinued and initial data from the Phase II trial of parsaclisib in patients with Sjögren's syndrome do not warrant continuation of the trial.

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

INCB54707 is undergoing evaluation in patients with hidradenitis suppurativa (HS), a chronic skin condition where lesions develop as a result of inflammation and infection of the sweat glands.

In October 2020, initial results from the clinical program were presented and a randomized Phase IIb trial of INCB54707 is underway in patients with HS.

Clinical Programs in Other IAI

A Phase II trial of parsaclisib in patients with autoimmune hemolytic anemia (AIHA), a rare red blood cell disorder, is also ongoing.

The FDA has granted orphan drug designation to parsaclisib as a treatment for patients with AIHA.

A Phase II trial of INCB00928 is in preparation for patients with fibrodysplasia ossificans progressiva (FOP), a disorder in which muscle tissue and connective tissue are gradually replaced by bone.

The FDA has granted Fast Track designation and orphan drug designation to INCB00928 as a treatment for patients with FOP.

Indication and status

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Atopic dermatitis:

Phase III (TRuE-AD1 ongoing, TRuE-AD2 primary endpoint met)

Phase III (TRuE-AD1, TRuE-AD2;

primary endpoint met);

NDA submitted

Phase III (TRuE-V1, TRuE-V2;

recruitment complete in both trials)

INCB54707 (JAK1)

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Novartis’ rights for ruxolitinib outside of the United States under our Collaboration and License Agreement with Novartis do not include topical administration.

Partnered Programs

We have a second JAK1 and JAK2 inhibitor, baricitinib, which is subject to our collaboration agreement with Eli Lilly and Company, in which Lilly received exclusive worldwide development and commercialization rights to the compound for inflammatory and autoimmune diseases.

The Phase III program of baricitinib in patients with rheumatoid arthritis incorporated all three rheumatoid arthritis populations (methotrexate naïve, biologic naïve, and tumor necrosis factor (TNF) inhibitor inadequate responders);

used event rates to fully power the baricitinib program for structural comparison and non-inferiority vs.

and evaluated patient-reported outcomes.

All four Phase III trials met their respective primary endpoints.

In January 2016, Lilly submitted an NDA to the FDA and an MAA to the EMA for baricitinib as treatment for rheumatoid arthritis.

In February 2017, we and Lilly announced that the European Commission approved baricitinib as OLUMIANT for the treatment of moderate-to-severe rheumatoid arthritis in adult patients who have responded inadequately to, or who are intolerant to, one or more disease-modifying antirheumatic drugs (DMARDs).

In July 2017, Japan's Ministry of Health, Labor and Welfare (MHLW) granted marketing approval for OLUMIANT for the treatment of rheumatoid arthritis (including the prevention of structural injury of joints) in patients with inadequate response to standard-of-care therapies.

In June 2018, the FDA approved the 2mg dose of OLUMIANT for the treatment of adults with moderately-to-severely active rheumatoid arthritis (RA) who have had an inadequate response to one or more tumor necrosis factor (TNF) inhibitor therapies.

Collaborative Partnered Programs

As described below under “—License Agreements and Business Relationships,” we are eligible for milestone payments and royalties on certain products that we licensed to third parties.

These include OLUMIANT (baricitinib), which is licensed to our collaborative partner Eli Lilly and Company, and JAKAVI (ruxolitinib) and TABRECTA (capmatinib), which are licensed to Novartis.

We have a second JAK1 and JAK2 inhibitor, baricitinib, which is subject to our collaboration agreement with Lilly, in which Lilly received exclusive worldwide development and commercialization rights to the compound for inflammatory and autoimmune diseases.

Rheumatoid Arthritis.

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Rheumatoid arthritis is estimated to affect about 1% of the world’s population.

used event rates to fully power the baricitinib program for structural comparison and non-inferiority vs.

and evaluated patient-reported outcomes.

All four Phase III trials met their respective primary endpoints.

In January 2016, Lilly submitted an NDA to the FDA and an MAA to the EMA for baricitinib as treatment for rheumatoid arthritis.

In July 2017, the Japanese Ministry of Health, Labour and Welfare (MHLW) granted marketing approval for OLUMIANT for the treatment of rheumatoid arthritis (including the prevention of structural injury of joints) in patients with inadequate response to standard-of-care therapies.

Atopic Dermatitis.

Atopic dermatitis (AtD) is a condition that makes the skin red and itchy and which is common in children but can occur at any age.

Atopic dermatitis is long lasting and tends to flare periodically and then subside.

Lilly has conducted a Phase IIa trial and a Phase III program to evaluate the safety and efficacy of baricitinib in patients with moderate-to-severe atopic dermatitis.

The JAK-STAT pathway has been shown to play an essential role in the dysregulation of immune responses in atopic dermatitis.

Therefore, we believe that inhibiting cytokine pathways dependent

on JAK1 and JAK2 may lead to positive clinical outcomes in atopic dermatitis.

In February 2019, we and Lilly announced that baricitinib met the primary endpoint in BREEZE-AD1 and BREEZE-AD2, two Phase III studies evaluating the efficacy and safety of baricitinib monotherapy for the treatment of adult patients with moderate to severe AtD and, in August 2019, we and Lilly announced that baricitinib met the primary endpoint in BREEZE-AD7, a Phase III study evaluating the efficacy and safety of baricitinib in combination with standard-of-care topical corticosteroids in patients with moderate to severe AtD.

In January 2020, we and Lilly announced that baricitinib met the primary endpoint in both BREEZE-AD4 and BREEZE-AD5, the results of which complete the placebo-controlled data program intended to support global registrations.

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

Therefore, we believe that inhibiting cytokine pathways dependent on JAK1 and JAK2 may lead to positive clinical outcomes in AD.

In February 2019, we and Lilly announced that baricitinib met the primary endpoint in BREEZE-AD1 and BREEZE-AD2, two Phase III studies evaluating the efficacy and safety of baricitinib monotherapy for the treatment of adult patients with moderate-to-severe AD and, in August 2019, we and Lilly announced that baricitinib met the primary endpoint in BREEZE-AD7, a Phase III study evaluating the efficacy and safety of baricitinib in combination with standard-of-care topical corticosteroids in patients with moderate-to-severe AD.

In January 2020, we and Lilly announced that baricitinib met the primary endpoint in both BREEZE-AD4 and BREEZE-AD5, the results of which completed the placebo-controlled data program intended to support global registrations.

An sNDA for baricitinib has been submitted by Lilly for the treatment of patients with AD.

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

In October 2020, Lilly announced that the European Commission approved baricitinib as OLUMIANT for the treatment of moderate-to-severe AD in adult patients who are candidates for systemic therapy.

In December 2020, baricitinib was approved by the MHLW for the treatment of patients with moderate-to-severe AD.

Systemic Lupus Erythematosus.

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In addition to affecting the skin and joints, it can affect other organs in the body such as the kidneys, the tissue lining the lungs and heart, and the brain.

Lilly has conducted a Phase II trial to evaluate the safety and efficacy of baricitinib in patients with SLE.

Lilly has conducted a Phase II trial to evaluate the safety and efficacy of

baricitinib in patients with SLE.

Baricitinib’s activity profile suggests that it inhibits cytokines implicated in SLE such as type I interferon (IFN), type II IFN-γ, IL-6, and IL-23 as well as other cytokines that may have a role in SLE, including granulocyte macrophage colony stimulating factor (GM-CSF) and IL-12.

The potential impact of baricitinib on the IFN pathway is highly relevant to SLE, as clinical and preclinical studies have established that this pathway is involved in the pathogenesis of SLE.

Lilly is currently running a Phase III trial of baricitinib in patients with SLE.

Lilly is currently running two Phase III trials of baricitinib in patients with SLE, BRAVE I and BRAVE II.

Alopecia Areata .

Alopecia areata is an autoimmune disorder in which the immune system attacks the hair follicles, causing hair loss in patches.

Lilly has initiated the Phase III portion of the ongoing Phase II/III trial designed to evaluate the safety and efficacy of baricitinib in patients with severe alopecia areata.

In March 2020, Lilly announced that baricitinib received Breakthrough Therapy designation for the treatment of alopecia areata, based on the positive Phase II results of Lilly’s adaptive Phase II/III study BRAVE-AA1.

The Phase III portion of BRAVE-AA1 is ongoing, as is a second Phase III study, BRAVE-AA2, in adults with severe or very severe alopecia areata.

Capmatinib is a potent and highly selective MET inhibitor.

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Dysregulation of the MET pathway is seen in many types of cancers, including lung, kidney, liver, stomach, breast and brain.

In June 2019, we and Novartis announced positive updated results from the GEOMETRY mono-1 Phase II clinical trial of capmatinib in patients with advanced NSCLC harboring MET exon 14 skipping mutations.

In December 2019, Novartis submitted the NDA seeking approval of capmatinib, and in February 2020 we and Novartis announced that the NDA had been accepted for Priority Review by the FDA.

Capmatinib has also been granted Breakthrough Therapy designation by the FDA as a treatment for patients with metastatic NSCLC harboring MET exon-14 skipping mutations, both for treatment-naive patients and for patients previously treated with platinum-based chemotherapy.

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

Approximately 3-4 percent of all patients with NSCLC have an identified MET mutation.

In May 2020, we and Novartis announced the FDA approval of capmatinib as TABRECTA for the treatment of adult patients with metastatic NSCLC whose tumors have a mutation that leads to MET exon 14 skipping (METex14) as detected by an FDA-approved test.

TABRECTA is the first and only treatment approved to specifically target NSCLC with this driver mutation and is approved for first-line and previously treated patients regardless of prior treatment type.

The FDA approval of TABRECTA was based on results from the pivotal GEOMETRY mono-1 study.

In the METex14 population (n=97), the confirmed overall response rate was 68% and 41% among treatment-naive (n=28) and previously treated patients (n=69), respectively, based on the Blinded Independent Review Committee (BIRC) assessment per RECIST v1.1.

In patients taking TABRECTA, the study also demonstrated a median duration of response of 12.6 months in treatment-naive patients (19 responders) and 9.7 months in previously treated patients (28 responders).

The most common treatment-related adverse events (AEs) (incidence ≥20%) are peripheral edema, nausea, fatigue, vomiting, dyspnea, and decreased appetite.

In September 2020, we and Novartis announced that GEOMETRY mono-1 results were published in The New England Journal of Medicine.

In June 2020, we and Novartis announced that the MHLW approved TABRECTA for METex14 mutation-positive advanced and/or recurrent unresectable NSCLC.

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

Approximately 3-4 percent of all patients with NSCLC have tumors with a mutation that leads to MET exon 14 skipping.

Though rare, this mutation is an indicator of especially poor prognosis and poor responses to standard therapies, including immunotherapy.

There is currently no approved therapy designed to selectively target this mutation.

Indication and status

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Phase III (BREEZE-AD);

approved in European Union and Japan;

sNDA submitted

Systemic lupus erythematosus:

Phase III (BRAVE I, BRAVE II)

Severe alopecia areata:

Phase III (BRAVE-AA1, BRAVE-AA2)

capmatinib (MET) 2

NSCLC (with MET exon 14 skipping mutations):

NDA submitted by Novartis in 2019

approved in United States and Japan

baricitinib licensed to Lilly.

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Below is a brief description of our significant business relationships and collaborations and related license agreements that expand our pipeline and provide us with certain rights to existing and potential new products and technologies.

Additional information regarding our collaboration agreements, including their financial and accounting impact on our business and results of operations, can be found in Note 6 of notes to our consolidated financial statements included in Item 8 of this report.

Out-License Agreements

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

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We retained options to co-develop and to co-promote capmatinib in the United States.

Under this agreement, we received an upfront payment and immediate milestone payment totaling $210.0 million and were initially eligible to receive additional payments of up to approximately $1.2 billion if defined development and commercialization milestones are achieved.

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

In addition, Novartis has received reimbursement and pricing approval for ruxolitinib in a specified number of countries, and we are now obligated to pay to Novartis tiered royalties in the low single-digits on future ruxolitinib net sales within the United States.

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.

In April 2016, we amended this agreement to provide that Novartis has exclusive research, development and commercialization rights outside of the United States to ruxolitinib (excluding topical formulations) in the GVHD field.

Under this amendment, we received a $5.0 million payment in exchange for the development and commercialization rights to ruxolitinib in GVHD outside of the United States and became eligible to receive up to $75.0 million of additional potential development and regulatory milestones relating to GVHD.

In March 2017, we recognized a $25.0 million milestone for the first patient first visit in a GVHD study and in December 2017, we recognized a $40.0 million milestone for Novartis achieving annual net sales of a JAK licensed product of $600.0 million.

In December 2018, we recognized a $60.0 million milestone for Novartis achieving annual net sales of a JAK licensed product of $900.0 million.

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.

Royalties are payable by Novartis on a product-by-product and country-by-country basis until the latest to occur of (i) the expiration of the last valid claim of the licensed patent rights covering the licensed product in the relevant country, (ii) the expiration of regulatory exclusivity for the licensed product in such country and (iii) a specified period from first commercial sale in such country of the licensed product by Novartis or its affiliates or sublicensees.

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

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

In December 2009, we entered into a License, Development and Commercialization Agreement with Lilly.

Under the terms of the agreement, Lilly received exclusive worldwide development and commercialization rights to baricitinib and certain back up compounds for inflammatory and autoimmune diseases.

We received an initial payment of $90.0 million, and were initially eligible to receive additional payments of up to $665.0 million based on the achievement of defined development, regulatory and commercialization milestones.

We retained options to co-develop our JAK1/JAK2 inhibitors with Lilly on a compound-by-compound and indication-by-indication basis.

Lilly is responsible for all costs relating to the development and commercialization of the compounds unless we elect to co-develop any compounds or indications.

If we elect to co-develop any compounds and/or indications, we would be responsible for funding 30% of the associated future global development costs from the initiation of a Phase IIb trial through regulatory approval, including post-launch studies required by a regulatory authority.

We would receive an incremental royalty rate increase across all tiers resulting in effective royalty rates ranging up to the high twenties on potential future global net sales for compounds and/or indications that we elect to co-develop.

For indications that we elect not to co-develop, we would receive tiered, double-digit royalty payments on future global net sales with rates ranging up to 20% if the product is successfully commercialized.

If we have started co-development funding for any indication, we can at any time opt out and stop future co-development cost sharing.

If we elect to do this, we would still be eligible for our base royalties plus an incremental pro-rated royalty commensurate with our contribution to the total co-development cost for those indications for which we co-funded.

We previously had retained an option to co-promote products in the United States but, in March 2016, we waived our co-promotion option as part of an amendment to the agreement.

In July 2010, we elected to co-develop baricitinib with Lilly in rheumatoid arthritis, and subsequently in several additional indications, and became responsible for funding 30% of the associated global development costs for such indications from the initiation of the Phase IIb trial through regulatory approval, including post-launch studies required by a regulatory authority.

In April 2019, we elected to end additional co-funding of the development of baricitinib in all indications, effective as of January 1, 2019.

Pursuant to the terms of the Lilly agreement, we will continue to receive base tiered royalties on global net sales of OLUMIANT in all indications, as well as pro-rated incremental royalties, as described above.

In March 2016, we entered into an amendment to the agreement with Lilly that allows us to engage in the development and commercialization of ruxolitinib in the GVHD field.

Upon execution of the amendment, we paid Lilly an upfront payment of $35.0 million and Lilly is eligible to receive up to $40.0 million in regulatory milestone payments relating to ruxolitinib in the GVHD field.

In May 2019, the approval of JAKAFI in steroid-refractory acute GVHD triggered a $20.0 million milestone payment to Lilly.

In February 2017, the European Commission announced the approval of baricitinib as OLUMIANT, triggering a $65.0 million milestone payment from Lilly.

In July 2017, Japan's MHLW granted marketing approval for OLUMIANT, triggering a $15.0 million milestone payment from Lilly.

In December 2017, we recognized a $30.0 million milestone payment for the first patient treated in the atopic dermatitis Phase III program for baricitinib.

In June 2018, the FDA approved the 2mg dose of OLUMIANT, triggering a $100.0 million milestone payment from Lilly.

In September 2018, we recognized a $20.0 million milestone payment for the first patient treated in the systemic lupus erythematosus Phase III program for baricitinib.

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.

Royalties are payable by Lilly on a product-by-product and country-by-country basis until the latest to occur of (i) the expiration of the last valid claim of the licensed patent rights covering the licensed product in the relevant country, (ii) the expiration of regulatory exclusivity for the licensed product in such country and (iii) a specified period from first commercial sale in such country of the licensed product by Lilly or its affiliates or sublicensees.

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

In May 2020, we amended our agreement with Lilly to enable Lilly to commercialize baricitinib for the treatment of COVID-19.

In December 2018, we entered into a research collaboration and licensing agreement with Innovent Biologics, Inc.

Under the terms of this agreement, Innovent received exclusive development and commercialization rights to pemigatinib and our clinical-stage product candidates itacitinib and parsaclisib in hematology and oncology indications in mainland China, Hong Kong, Macau and Taiwan.

In July 2019, we entered into a collaboration and license agreement with a subsidiary of Zai Lab Limited.

Under the terms of this agreement, Zai Lab received development and exclusive commercialization rights to INCMGA0012 in hematology and oncology in mainland China, Hong Kong, Macau and Taiwan.

We retained an option to assist in the promotion of INCMGA0012 in Zai Lab’s licensed territories.

In-License Agreements

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

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

In February 2017, we and Agenus amended this agreement.

Under the terms of this agreement, as amended, we received exclusive worldwide development and commercialization rights to four checkpoint modulators directed against GITR, OX40, LAG-3 and TIM-3.

In addition to the initial four program targets, we and Agenus have the option to jointly nominate and pursue additional targets within the framework of the collaboration, and in November 2015, three more targets were added.

Targets may be designated profit-share programs, where all costs and profits are shared equally by us and Agenus, or royalty-bearing programs, where we are responsible for all costs associated with discovery, preclinical, clinical development and commercialization activities.

The programs relating to GITR and OX40 and two of the undisclosed targets were profit-share programs until February 2017, while the other targets currently under collaboration are royalty-bearing programs.

The February 2017 amendment converted the programs relating to GITR and OX40 to royalty-bearing programs and removed from the collaboration the profit-share programs relating to the two undisclosed targets, with one reverting to us and one reverting to Agenus.

Should any of those removed programs be successfully developed by a party, the other party will be eligible to receive the same milestone payments as the royalty-bearing programs and royalties at a 15% rate on global net sales.

There are currently no profit-share programs.

For each royalty-bearing product other than GITR and OX40, Agenus will be eligible to receive tiered royalties on global net sales ranging from 6% to 12%.

For GITR and OX40, Agenus will be eligible to receive 15% royalties on global net sales.

Under the February 2017 amendment, we paid Agenus $20.0 million in accelerated milestones relating to the clinical development of the GITR and OX40 programs.

Agenus is eligible to receive up to an additional $510.0 million in future contingent development, regulatory and commercialization milestones across all programs in the collaboration.

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

Under the terms of this agreement, as amended in February 2017, we received exclusive worldwide development and commercialization rights to four checkpoint modulators directed against GITR, OX40, LAG-3 and TIM-3.

Takeda (ARIAD)

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ARIAD was subsequently acquired by Takeda Pharmaceutical Company Limited in 2017.

As such, Takeda will be eligible to receive from us tiered royalties on net sales of ICLUSIG in our territory and up to $135.0 million in potential future oncology development and regulatory approval milestone payments, together with additional milestone payments for non-oncology indications, if approved, in our territory.

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

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Merus retained exclusive development and commercialization rights in the United States to MCLA-145.

Each party will share equally the costs of mutually agreed global development activities for MCLA-145, and fund itself any independent development activities in its territory.

Merus will be responsible for commercializing MCLA-145 in the United States and we will be responsible for commercializing it outside of the United States.

In addition to receiving rights to MCLA-145 outside of the United States, we received worldwide exclusive development and commercialization rights to up to ten additional programs.

Of these ten additional programs, Merus retained the option, subject to certain conditions, to co-fund development of up to two such 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.

All costs related to the co-funded collaboration programs are subject to joint research and development plans and overseen by a joint development committee, but we will have final determination as to such plans in cases of dispute.

We will be responsible for all research, development and commercialization costs relating to all other programs.

In February 2017, we paid Merus an upfront non-refundable payment of $120.0 million.

For each program as to which Merus does not have commercialization or development co-funding rights, Merus will be 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 will be 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.

For MCLA-145, we and Merus will each be eligible to receive tiered royalties on net sales in the other party’s territory at rates ranging from 6% to 10%.

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.

In January 2017, we entered into a Collaboration and License Agreement with Calithera Biosciences, Inc.

Under this agreement, we received an exclusive, worldwide license to develop and commercialize small molecule arginase inhibitors, including INCB01158 (CB-1158), which is currently in Phase I clinical trials, for hematology and oncology indications.

We have agreed to co-fund 70% of the global development costs for the development of the licensed products for hematology and oncology indications.

Calithera will have the right to conduct certain clinical development under the collaboration, including combination studies of a licensed product with a proprietary compound of Calithera.

We will be entitled to 60% of the profits and losses from net sales of licensed product in the United States, and Calithera will have the right to co-detail licensed products in the United States, and we have agreed to pay Calithera tiered royalties ranging from the low to mid-double digits on net sales of licensed products outside the United States.

Calithera may opt out of its co-funding obligation, in which case the U.S.

profit sharing will no longer be in effect, and we have agreed to pay Calithera tiered royalties ranging from the low to mid-double digits on net sales of licensed products both in the United States and outside the United States, and additional royalties to reimburse Calithera for previously incurred development costs.

Calithera retains rights to certain arginase inhibitors that are not part of the collaboration for specific orphan indications outside of hematology and oncology, subject to our rights to negotiate a license for any such programs under specified circumstances if Calithera elects to out-license them.

In January 2017, we paid Calithera an upfront license fee of $45.0 million and have agreed to pay potential development, regulatory and sales milestone payments of over $430.0 million if the profit share is in effect, or $750.0 million if the profit share terminates.

The Calithera agreement will continue on a product-by-product and country-by-country basis for so long as we are developing or commercializing products in the United States (if the parties are sharing profits in the United States) and until we have no further royalty payment obligations, unless earlier terminated according to the terms of the agreement.

The agreement may be terminated in its entirety or on a product-by-product and/or a country-by-country basis by us for convenience.

The agreement may also be terminated by us for Calithera’s uncured material breach, by Calithera for our uncured material breach and by either party for bankruptcy or patent challenge.

If the agreement is terminated early with respect to one or more products or countries, all rights in the terminated products and countries revert to Calithera.

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

Under this agreement, we received exclusive development and commercialization rights worldwide to MacroGenics’ INCMGA0012, an investigational monoclonal antibody that inhibits PD-1.

Except as set forth in the succeeding sentence, we will have sole authority over and bear all costs and expenses in connection with the development and commercialization of INCMGA0012 in all indications, whether as a monotherapy or as part of a combination regimen.

Under this agreement, we received exclusive development and commercialization rights worldwide to MacroGenics’ INCMGA0012,

an investigational monoclonal antibody that inhibits PD-1.

MacroGenics has retained the right to develop and commercialize, at its cost and expense, its pipeline assets in combination with INCMGA0012.

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

In 2017, we paid MacroGenics an upfront payment of $150.0 million and in 2018, we paid MacroGenics milestones totaling $15.0 million.

MacroGenics will be eligible to receive up to an additional $405.0 million in future contingent development and regulatory milestones, and up to $330.0 million in commercial milestones as well as tiered royalties ranging from 15% to 24% of global net sales.

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 January 2018, we entered into a target discovery, research collaboration and option agreement with Syros Pharmaceuticals, Inc.

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We will have exclusive worldwide rights to develop and commercialize any therapies under the collaboration that modulate those validated targets.

We paid Syros $2.5 million in cash for access to proprietary technology and $7.5 million in cash for research and development services.

We have agreed to pay Syros up to $54.0 million in target selection and option exercise fees should we decide to exercise all of our options under the agreement.

For products resulting from the collaboration against each of the seven selected and validated targets, we have agreed to pay up to $50.0 million in potential development and regulatory milestones and up to $65.0 million in potential commercial milestones.

Syros is also eligible to receive low single-digit royalties on net sales of products resulting from the collaboration.

In December 2018, we entered into a research collaboration and licensing agreement with Innovent Biologics, Inc.

Under the terms of this agreement, Innovent received exclusive development and commercialization rights to our

clinical-stage product candidates pemigatinib, itacitinib and parsaclisib in hematology and oncology in mainland China, Hong Kong, Macau and Taiwan.

In January 2019, we recognized an upfront payment under this agreement of $40.0 million upon our transfer of the intellectual property related to the clinical-stage product candidates to Innovent.

In addition, we are eligible to receive $20.0 million in connection with the first related IND filing in China, up to $129.0 million in potential development and regulatory milestones, and up to $202.5 million in potential commercial milestones.

We are also eligible to receive tiered royalties from the high-teens to the low-twenties on future sales of products resulting from the collaboration.

We retain an option to assist in the promotion of the three product candidates in the Innovent territories.

In June 2019, we recognized the $20.0 million milestone for the first related IND filing in China.

In July 2019, we entered into a collaboration and license agreement with a subsidiary of Zai Lab Limited.

Under the terms of this agreement, Zai Lab received development and exclusive commercialization rights to INCMGA0012 in hematology and oncology in mainland China, Hong Kong, Macau and Taiwan.

We recognized an upfront payment under this agreement of $17.5 million in August 2019 upon our transfer of technology related to the licensed product candidate to Zai Lab, and are eligible to receive an additional $60.0 million in potential development, regulatory and commercial milestones, as well as tiered royalties from the low to mid-twenties.

We also retain an option to assist in the promotion of INCMGA0012 in Zai Lab’s licensed territories.

In January 2020, we entered into a Collaboration and License Agreement with MorphoSys AG and MorphoSys US Inc., a wholly-owned subsidiary of MorphoSys AG, covering the worldwide development and commercialization of MOR208 (tafasitamab), an investigational Fc engineered monoclonal antibody directed against the target molecule CD19 that is currently in clinical development by MorphoSys.

MorphoSys has exclusive worldwide development and commercialization rights to tafasitamab under a June 2010 collaboration and license agreement with Xencor, Inc.

In December 2019, MorphoSys submitted a Biologics License Application to the FDA for tafasitamab for the treatment of relapsed or refractory diffuse large B cell lymphoma.

Under the terms of the agreement, we will receive exclusive commercialization rights outside of the United States, and MorphoSys and we will have co-commercialization rights in the United States, with respect to tafasitamab.

MorphoSys will be responsible for leading the commercialization strategy and booking all revenue from sales of tafasitamab in the United States, and we and MorphoSys will both be responsible for commercialization efforts in the United States and will share equally the profits and losses from the co-commercialization efforts.

We will lead the commercialization strategy outside of the United States, and will be responsible for commercialization efforts and book all revenue from sales of tafasitamab outside of the United States, subject to our royalty payment obligations set forth below.

We and MorphoSys have agreed to co-develop tafasitamab and to share development costs associated with global and U.S.-specific clinical trials, with Incyte responsible for 55% of such costs and MorphoSys responsible for 45% of such costs.

Each company will be responsible for funding any independent development activities, and we will be responsible for funding development activities specific to our territory.

All development costs related to the collaboration will be subject to a joint development plan.

We have agreed to pay MorphoSys an upfront non-refundable payment of $750.0 million.

MorphoSys will be eligible to receive up to $740.0 million in future contingent development and regulatory milestones and up to $315.0 million in commercialization milestones as well as tiered royalties ranging from the mid-teens to mid-twenties of net sales outside of the United States.

MorphoSys’ 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 tafasitamab in that country, and (c) the expiration of any regulatory exclusivity for that licensed product in that country.

The effectiveness of the agreement is conditioned on the early termination or expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 as well as clearance by the German and Austrian antitrust authorities.

Under the terms of the agreement, we received exclusive commercialization rights outside of the United States, and MorphoSys and we have co-commercialization rights in the United States, with respect to tafasitamab.

In December 2019, coronavirus disease of 2019, or COVID-19, was first reported in Wuhan, China.

In March 2020, the World Health Organization declared COVID-19 a pandemic (“the COVID-19 Pandemic”).

We and our collaboration partners Lilly and Novartis initiated a number of clinical trials to address COVID-19.

In April 2020, we announced the initiation of a Phase III clinical trial (RUXCOVID) to evaluate the efficacy and safety of ruxolitinib plus standard-of-care (SoC), compared to SoC therapy alone, in patients not on mechanical ventilation and who have COVID-19 associated cytokine storm.

We sponsored this collaborative study in the United States and our collaboration partner Novartis International Pharmaceutical Ltd.

sponsored the study outside of the United States.

In December 2020, we announced initial results from RUXCOVID, where treatment with ruxolitinib plus SoC did not prevent complications compared to SoC treatment alone in patients with COVID-19 associated cytokine storm.

The RUXCOVID study has been completed and the data will be further analyzed to determine any potential impact on other studies of ruxolitinib in patients with COVID-19, including our Expanded Access Program in the United States, which allows eligible patients with severe COVID-19 associated cytokine storm to receive ruxolitinib.

A second Phase III clinical trial remains ongoing in multiple geographies, including the United States, to evaluate the efficacy and safety of ruxolitinib plus SoC, compared to SoC therapy alone, in COVID-19 patients on mechanical ventilation and who have acute respiratory distress syndrome (ARDS), a type of respiratory failure characterized by rapid onset of widespread inflammation in the lungs.

The SoC therapy is currently evolving and could be subject to change.

In April 2020, Lilly announced that it has entered into an agreement with the National Institute of Allergy and Infectious Diseases (NIAID), part of the National Institutes of Health, to study baricitinib as an arm in NIAID's Adaptive COVID-19 Treatment Trial (ACTT-2).

The study is investigating the efficacy and safety of baricitinib as a potential treatment for hospitalized patients diagnosed with COVID-19 in the United States, and Lilly is also planning an expansion to include Europe and Asia.

In September 2020, we and Lilly announced initial results from ACTT-2, where baricitinib in combination with remdesivir reduced the time to recovery in comparison with remdesivir alone.

Additional data announced in October 2020 showed that baricitinib plus remdesivir resulted in a numerical decrease in mortality through Day 29 compared to remdesivir alone, with a more pronounced reduction seen in more severely ill patients.

In November 2020, we and Lilly announced that the FDA issued an Emergency Use Authorization (EUA) for the

distribution and emergency use of baricitinib to be used in combination with remdesivir in hospitalized adult and pediatric patients two years of age or older with suspected or laboratory confirmed COVID-19 who require supplemental oxygen, invasive mechanical ventilation, or extracorporeal membrane oxygenation.

In December 2020, we and Lilly announced that data from ACTT-2 supportive of the EUA were published in the New England Journal of Medicine.

In addition, in June 2020, Lilly announced that the first patient had been enrolled in a Phase III randomized, double-blind, placebo–controlled study (COV-BARRIER) to evaluate the efficacy and safety of baricitinib in hospitalized adults not on mechanical ventilation and who have COVID-19.

Incyte’s Approach to Drug Discovery and Development

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Our drug development organization manages our clinical programs and utilizes clinical research organizations (CROs), expert scientific advisory boards, and leading consultants and suppliers as appropriate to ensure our clinical trials are conducted efficiently, effectively, and in accordance with regulatory and compliance guidelines.

To succeed in our objective to discover and advance novel therapeutics that address serious unmet medical needs, we have established a broad range of discovery capabilities in-house, including target validation, high-throughput screening, medicinal chemistry, computational chemistry, and pharmacological and ADME (absorption, distribution, metabolism and excretion) assessment.

To succeed in our objective to discover and advance novel therapeutics that address serious unmet medical needs, we have established a broad range of discovery capabilities in-house, including target validation, high-throughput screening, medicinal chemistry, computational chemistry, pharmacological and translational sciences and ADME (absorption, distribution, metabolism and excretion) assessment.

We augment these capabilities through collaborations with academic and contract laboratory resources with relevant expertise.

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The collaboration with Agenus has provided us with access to their antibody discovery platform and provided us with both clinical antibodies and pre-clinical candidates.

Recently, we have expanded our discovery reach to include bispecific antibodies through a collaboration with Merus.

We have expanded our discovery scope to include bispecific antibodies through a collaboration with Merus.

We are complementing these collaborations by building in-house antibody discovery, pharmacology, ADME and CMC capabilities and will partner these efforts with our small molecule portfolio.

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Incyte’s Commercial Strategy

Our strategy is to develop and commercialize our compounds on our own in selected markets where we believe a company of our size can successfully compete, such as in myelofibrosis, polycythemia vera, GVHD and other oncology indications.

Our strategy is to develop and commercialize compounds that we have internally discovered or have acquired rights to in the markets where we believe that a company of our size can successfully compete.

We currently commercialize three compounds in the United States and one in Europe.

In November 2011, we received regulatory approval of JAKAFI (ruxolitinib) in the United States for the treatment of intermediate or high-risk myelofibrosis.

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In May 2019, JAKAFI was approved for the treatment of steroid‐refractory acute GVHD in adult and pediatric patients 12 years and older.

We have expanded the marketing, medical, sales and operational infrastructure to support continued commercialization of JAKAFI in its three indications and to prepare for potential future indications of JAKAFI in the United States.

We are expanding marketing,

medical and operational infrastructure outside of the United States and within the United States to prepare for potential approval of other products.

For rights to ruxolitinib outside the United States as well as for pipeline compounds that are outside of our core expertise, would require expensive clinical studies, or could be used in combination with other compounds or biologics, we have established or may in the future establish collaborations or strategic relationships to support development and commercialization, such as our collaborations with Novartis and Lilly for our JAK inhibitors.

We believe the key benefits to entering into strategic relationships include the potential to receive upfront payments and future milestones and royalties in exchange for certain rights to our compounds, as well as the potential to expedite the development and commercialization of certain of our compounds.

In April 2020, we received regulatory approval of PEMAZYRE (pemigatinib) in the United States for the treatment of adults with previously treated, unresectable locally advanced or metastatic cholangiocarcinoma (CCA) with an FGFR2 fusion or other rearrangement.

We are focused on increasing the utilization of molecular profiling in CCA to support identification of appropriate patients for PEMAZYRE.

In January 2020, we and MorphoSys AG entered into a collaboration and license agreement to further develop and commercialize MorphoSys' proprietary anti-CD19 antibody tafasitamab globally.

In July of 2020, MONJUVI (tafasitamab-cxix), in combination with lenalidomide, was FDA approved for the treatment of adult patients with relapsed or refractory diffuse large B-cell lymphoma (DLBCL) not otherwise specified, including DLBCL arising from low grade lymphoma, and who are not eligible for autologous stem cell transplant.

MONJUVI is being co-commercialized by us and MorphoSys in the United States.

We have expanded the marketing, medical, sales and operational infrastructure to support the commercialization of JAKAFI, PEMAZYRE and MONJUVI in the United States.

ICLUSIG is approved in the European Union for the treatment of adult patients with CML who are resistant to dasatinib or nilotinib;

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We are focused on increasing the utilization of ICLUSIG in this patient population within our territory as appropriate.

We are continuing to expand our marketing, medical and operational infrastructure within the United States and outside of the United States to prepare for potential approval of other products.

For certain other compounds, including rights to ruxolitinib outside the United States and global rights to capmatinib, which have both been licensed to Novartis, and global rights to baricitinib, which have been licensed to Lilly, we have established and may in the future establish collaborations or strategic relationships to support development and commercialization in certain territories or therapeutic areas where we do not have or do not want to build expertise.

We believe the key benefits to entering into such strategic relationships include the potential to expedite the development and commercialization of certain of our compounds, as well as the opportunity to receive upfront payments and future milestones and royalties in exchange for certain rights to those compounds.

Patents and Other Intellectual Property

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The patents and patent applications relating to our drug products and drug candidates generally include claims directed to the compounds, methods of using the compounds, formulations of the compounds, pharmaceutical salt forms of the compounds, and methods of manufacturing the compounds.

Our policy is to pursue patent applications on inventions and discoveries that we believe are commercially important to the development and growth of our business.

The following table sets forth the status of the patents and patent applications in the United States, the European Union, and Japan, covering our drug products and drug candidates in key programs that show at least proof of concept in their respective clinical development programs:

Our policy is to pursue patent applications on

inventions and discoveries that we believe are commercially important to the development and growth of our business.

The following table sets forth the status of the patents and patent applications in the United States, the European Union, and Japan for our approved medicines and for those compounds in our portfolio that have been submitted to regulatory authorities seeking approval or are in registration-directed clinical trials:

Drug/Drug Candidate (Target)

Status of United States Patent Estate

(Earliest Anticipated Expirations,

Subject to Potential Extensions

and Payment of Maintenance Fees)

Status of European Union

and Japan Patent Estate

(Earliest Anticipated Expirations,

Subject to Potential Extensions

and Payment of Maintenance Fees)

Status of U.S.

Composition of Matter Patent Estate

(Earliest Anticipated Expiration

Including PTE Extensions where granted) 3

Status of EU Composition of Matter Patent Estate (Earliest Anticipated Expiration Including SPC Extensions where granted) 3

Status of Japan Composition of Matter Patent Estate (Earliest Anticipated Expiration Including SPC Extensions where granted) 3

ruxolitinib (JAK) 1,2

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Granted and pending (2027)

baricitinib (JAK)

Granted and pending (2028)

baricitinib (JAK)

Granted and pending (2030) 5

epacadostat (IDO1)

Granted and pending (2032)

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Granted and pending (2031) 4

capmatinib (MET)

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Granted and pending (2027) 4

parsaclisib (PI3Kδ)

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Granted and pending (2032) 4

pemigatinib (FGFR)

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Granted and pending (2033) 4

ponatinib (BCR ABL)

Granted and pending (2033) 4

INCMGA0012 (PD-1)

ponatinib (BCRABL)

Granted and pending (2026)

retifanlimab (PD-1) 6

Granted and pending (2036) 4

Pending (2036) 4

tafasitamab (CD19)

Granted and pending (2029) 5

Granted (2027) 4

Ruxolitinib cream formulation patents are issued in the United States, European Union and Japan with anticipated expiration dates of 2031 respectively, not including patent term extensions that will be sought upon regulatory approval.

Once-a-day (QD) ruxolitinib formulation patents are issued in the United States, but pending in the European Union and Japan with anticipated expiration dates of 2033 respectively, not including patent term extensions that will be sought upon regulatory approval.

Subject to the payment of maintenance fees.

Respective patent term extension/supplementary protection certificate (SPC) will be sought upon approval by the respective regulatory agency.

Patent term extension has been applied for and being sought.

Retifanlimab licensed from MacroGenics.

Patents extend for varying periods according to the date of patent filing or grant and the legal term of patents in the various countries where patent protection is obtained.

The actual protection afforded by a patent, which can vary from country to country, depends on the type of patent, the scope of its coverage and the availability of legal remedies in the country.

For example, our U.S.

patent covering the composition of matter of ruxolitinib has been extended to 2027.

We may seek to license rights relating to technologies, drug candidates or drug products in connection with our drug discovery and development programs and commercialization activities.

Under these licenses, such as our licenses

from Agenus, ARIAD/Takeda, Calithera, MacroGenics, MorphoSys, and Merus we may be required to pay up-front fees, license fees, milestone payments and royalties on sales of future products.

Under these licenses, such as our licenses from Agenus, ARIAD/Takeda, Calithera, MacroGenics, MorphoSys, and Merus, we may be required to pay up-front fees, license fees, milestone payments and royalties on sales of future products.

Although we believe our rights under patents and patent applications provide a competitive advantage, the patent positions of pharmaceutical and biotechnology companies are highly uncertain and involve complex legal and factual questions.

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Our drug discovery, development and commercialization activities face, and will continue to face, intense competition from organizations such as pharmaceutical and biotechnology companies, as well as academic and research institutions and government agencies.

We face significant competition from organizations, particularly fully integrated pharmaceutical companies, that are pursuing pharmaceuticals that are competitive with JAKAFI, ICLUSIG and our drug candidates.

Many companies and institutions, either alone or together with their collaborative partners, have substantially greater financial resources, larger drug discovery, development and commercial staffs and significantly greater experience than we do in:

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● manufacturing, marketing, distributing and selling products.

Accordingly, our competitors may succeed in obtaining patent protection, receiving FDA and other regulatory approval or commercializing products that compete with JAKAFI, ICLUSIG or our drug candidates.

In addition, any drug candidate that we successfully develop may compete with existing therapies that have long histories of safe and effective use.

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Under the SPA procedure, a sponsor may seek the FDA’s agreement on the design and size of a clinical trial intended to form the primary basis of an effectiveness claim.

If the FDA agrees in writing, its agreement may not be changed after the trial begins, except when agreed by FDA or in limited circumstances, such as when a substantial scientific issue essential to determining the safety and effectiveness of a drug candidate is identified after a

Phase III clinical trial is commenced and agreement is obtained with the FDA.

If the outcome of the trial is successful, the sponsor will ordinarily be able to rely on it as the primary basis for approval with respect to effectiveness.

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The length of time and related costs necessary to complete clinical trials varies significantly and may be difficult to predict.

Clinical results are frequently susceptible to varying interpretations that may delay, limit or prevent regulatory approvals.

Clinical results are frequently susceptible to varying interpretations that may delay, limit or prevent regulatory

Additional factors that can cause delay or termination of our clinical trials, or cause the costs of these clinical trials to increase, include:

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We cannot guarantee that the FDA will grant any of our requests for any of these expedited program designations, that any such designations would affect the time of review or that the FDA will approve the NDA or BLA submitted for any of our drug candidates, whether or not these designations are granted.

Additionally, FDA approval of a product can

include restrictions on the product’s use or distribution (such as permitting use only for specified medical conditions or limiting distribution to physicians or facilities with special training or experience).

Additionally, FDA approval of a product can include restrictions on the product’s use or distribution (such as permitting use only for specified medical conditions or limiting distribution to physicians or facilities with special training or experience).

Approval of such designated products can be conditioned on additional clinical trials after approval.

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The FDA’s stated policy is to act on 90% of priority NDAs and BLAs within eight months of receipt (or six months after filing, which occurs within 60 days after NDA or BLA submission).

Although the FDA historically has not met these goals, the agency has made significant improvements in the timeliness of the review process.

Although the FDA

historically has not met these goals, the agency has made significant improvements in the timeliness of the review process.

NDA and BLA review often extends beyond anticipated completion dates due to FDA requests for additional data or clarification, the FDA’s decision to have an advisory committee review, and difficulties in scheduling an advisory committee meeting.

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We or our contract manufacturers may not be able to comply with applicable Good Manufacturing Practices and FDA or other regulatory requirements.

If we or our contract

manufacturers fail to comply, we or our contract manufacturers may be subject to legal or regulatory action, such as suspension of manufacturing license, seizure of product, or voluntary recall of product.

If we or our contract manufacturers fail to comply, we or our contract manufacturers may be subject to legal or regulatory action, such as suspension of manufacturing license, seizure of product, or voluntary recall of product.

Furthermore, continued compliance with applicable Good Manufacturing Practices will require continual expenditure of time, money and effort on the part of us or our contract manufacturers in the areas of production and quality control and record keeping and reporting, in order to ensure full compliance.

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On its own initiative, the FDA may require changes to the labeling of an approved drug if it becomes aware of new safety information that the agency believes should be included in the approved drug’s labeling.

The FDA also enforces the requirements of the Prescription Drug Marketing Act, or PDMA, which, among other things, imposes various requirements in connection with the distribution of product samples to physicians.

The FDA also enforces the requirements of the

Prescription Drug Marketing Act, or PDMA, which, among other things, imposes various requirements in connection with the distribution of product samples to physicians.

In addition to inspections related to manufacturing, we are subject to periodic unannounced inspections by the FDA and other regulatory bodies related to the other regulatory requirements that apply to marketed drugs manufactured or distributed by us.

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The six month pediatric exclusivity is added to any existing patent or non-patent exclusivity period for which the drug is eligible.

Orphan drug products are also eligible for

pediatric exclusivity if the FDA requests and the company completes pediatric clinical trials.

Orphan drug products are also eligible for pediatric exclusivity if the FDA requests and the company completes pediatric clinical trials.

Under the Biologics Price Competition and Innovation Act, the FDA may grant 12 years of data exclusivity for innovative biological products.

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Whether or not we obtain FDA approval for a product, we must obtain the requisite approvals from regulatory authorities in non-US countries prior to the commencement of clinical trials or marketing of the product in those countries.

Certain countries outside of the United States have a process that requires the submission of a clinical trial application, or CTA, much like an IND prior to the commencement of human clinical trials.

Certain countries outside of the United States have a process that requires the submission of a clinical trial application, or

CTA, much like an IND prior to the commencement of human clinical trials.

In Europe, a CTA must be submitted to the competent national health authority and to independent ethics committees in each country in which a company plans to conduct clinical trials.

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Drugs can be authorized in the EU by using (i) the centralized authorization procedure, (ii) the mutual recognition procedure, (iii) the decentralized procedure or (iv) national authorization procedures.

The European Medicines Agency (EMA) implemented the centralized procedure for the approval of human drugs to facilitate marketing authorizations that are valid throughout the EU.

The European Medicines Agency implemented the centralized procedure for the approval of human drugs to facilitate marketing authorizations that are valid throughout the EU.

This procedure results in a single marketing authorization granted by the European Commission that is valid across the EU.

Under the centralized procedure, the maximum timeframe for the evaluation of a marketing authorization application by the EMA is 210 days (excluding clock stops, when additional written or oral information is to be provided by the applicant in response to questions asked by the Committee for Medicinal Products for Human Use (CHMP)).

A positive opinion on the MAA by the CHMP then needs to be endorsed by the European Commission.

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The opinion of this EMA Committee is then forwarded to the Commission, for the start of the decision making process.

As in the centralized procedure, this process entails consulting various European Commission

Directorates General and the Standing Committee on Human Medicinal Products or Veterinary Medicinal Products, as appropriate.

As in the centralized procedure, this process entails consulting various European Commission Directorates General and the Standing Committee on Human Medicinal Products or Veterinary Medicinal Products, as appropriate.

Legislation similar to the Orphan Drug Act has been enacted in other countries outside of the United States, including the EU.

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Our manufacturing strategy is to contract with third parties to manufacture the raw materials, our active pharmaceutical ingredients, or API, and finished dosage form for clinical and commercial uses.

We currently do not operate manufacturing facilities for clinical or commercial production of JAKAFI, ICLUSIG, or our drug candidates.

We currently do not operate manufacturing facilities for clinical or commercial production of JAKAFI, ICLUSIG, PEMAZYRE or our drug candidates.

In addition, we expect for the foreseeable future to continue to rely on third parties for the manufacture of commercial supplies of the raw materials, API and finished drug product for any drugs that we successfully develop and are approved for commercial sale.

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Establishing and managing the supply chain requires a significant financial commitment and the creation and maintenance of numerous third-party contractual relationships.

We contract with third parties to manufacture JAKAFI, ICLUSIG, and our drug candidates for clinical and commercial purposes.

We contract with third parties to manufacture JAKAFI, ICLUSIG, PEMAZYRE and our drug candidates for clinical and commercial purposes.

Our collaborator MorphoSys is currently responsible for sourcing manufacturing of MONJUVI.

Third-party manufacturers supply raw materials, and other third-party manufacturers convert these raw materials into API or convert the API into final dosage form.

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We procure API from Takeda, which outsources the API manufacturing to a third party.

For pemigatinib, the API for PEMAZYRE, we have one qualified third-party contract manufacturer from which we can source drug substance.

We also rely on third-party contract manufacturers to tablet or capsulate all of our active pharmaceutical ingredients for clinical and commercial uses.

For JAKAFI, we have two qualified third-party manufacturers from which we can source commercial drug product.

For ICLUSIG we have two qualified third-party manufacturers from which we can source commercial drug product.

For JAKAFI and ICLUSIG, we have two qualified third-party manufacturers from which we can source commercial drug product.

Secondary packaging of ICLUSIG is performed by a qualified third-party manufacturer.

Primary packaged product for ICLUSIG can be used for clinical and commercial purposes.

For PEMAZYRE, we have one qualified third-party manufacturer from which we can source commercial drug product.

We may not be able to obtain sufficient quantities of any of our raw materials, drug candidates, API, or finished goods if our designated manufacturers do not have the capacity or capability to manufacture our products according to our schedule and specifications.

If any of these single source suppliers were to become unable or unwilling to supply us with API or finished product that complies with applicable regulatory requirements, we could incur significant delays in our clinical trials or interruption of commercial supply which could have a material adverse effect on our business.

Similar risks apply to our supply of MONJUVI under our collaboration with MorphoSys.

We have established a quality assurance program intended to ensure that our third-party manufacturers and service providers produce materials and provide services, as applicable, in accordance with the FDA and EMA’s current Good Manufacturing Practices and other applicable regulations.

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In July 2018, we purchased land located in Yverdon, Switzerland for construction of a large molecule production facility to manufacture biologic drug substances for our drug candidates.

Construction activity commenced in July 2018 and is expected to be completed in the second half of 2020.

Construction activity commenced in July 2018 and we currently expect the facility will be operational in the second half of 2021.

Third-party Manufacturers

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Access to Supplies and Materials

Our third-party manufacturers need access to certain supplies and products to manufacture JAKAFI, ICLUSIG, and our drug candidates.

If delivery of material from their suppliers were interrupted for any reason or if they are unable to purchase sufficient quantities of raw materials used to manufacture JAKAFI, ICLUSIG, and our drug candidates, they may be unable to ship JAKAFI and ICLUSIG for commercial supply or to supply our drug candidates in development for clinical trials.

Our third-party manufacturers need access to certain supplies and products to manufacture JAKAFI, ICLUSIG, PEMAZYRE and our drug candidates.

If delivery of material from their suppliers were interrupted for any reason or if they are unable to purchase sufficient quantities of raw materials used to manufacture JAKAFI, ICLUSIG, PEMAZYRE and our drug candidates, they may be unable to ship JAKAFI, ICLUSIG and PEMAZYRE for commercial supply or to supply our drug candidates in development for clinical trials.

For example, currently raw materials used to manufacture ruxolitinib phosphate, the API in JAKAFI, are supplied by Chinese-based companies.

As a result, an international trade dispute between China and the United States or any other actions by the Chinese government that would limit or prevent Chinese companies from supplying these materials would adversely affect our ability to manufacture and supply our products to meet market needs and have a material and adverse effect on our operating results.

Human Resources

Human Capital

Our human capital management philosophy is committed to promoting an environment where our colleagues are fulfilled and valued.

We promote a company culture based on scientific excellence as we seek to create new treatments;

we are creative in our development strategies;

and we seek positive collaboration with each other.

Working collaboratively is of the utmost importance as we aim to change the treatment landscape for patients with cancer and inflammatory and autoimmune diseases.

It is our goal to conduct business in a manner that does not compromise the health of people nor the state of the environment.

It is our policy to comply with all applicable environmental health and safety (EHS) regulatory requirements and seek to continually improve our EHS management systems.

A strong safety culture is a fundamental part of how we work, and our philosophy is that everyone at Incyte has a responsibility to create and maintain a safe and healthy workplace with a goal to reduce risk and prevent injuries.

We appreciate one another’s differences and strengths and are proud to be an Equal Opportunity Employer.

We value diversity of backgrounds and perspectives and our policy is that we do not discriminate based on race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, military and veteran status, sexual orientation or any other protected characteristic as established by federal, state or local laws.

Further, we have policies in place that prohibit harassment of all kinds.

At Incyte, we prohibit retaliation in all forms and are committed to encouraging a culture where employees can freely ask questions and raise concerns.

Our management team makes themselves available to all employees and quarterly global Town Hall events allow for open question and answer dialogue.

We believe that creative solutions are best achieved by diverse teams working together, and inclusion is therefore essential to Incyte.

Diversity of thoughts, backgrounds, perceptions and ideas help us create the medical solutions that patients require, and represent the lifeblood of organizations such as ours.

We have recently formed an Inclusion Committee, which is co-chaired by our Chief Executive Officer and our Head of Human Resources, to bring forth actionable plans across multiple focus areas.

We have expanded our recruitment searches to include organizations and websites dedicated to Black candidates.

We have also partnered with Jopwell, to aid connections with Black and other underrepresented candidates for non-science jobs and we are participating in the reputable Scientific Mentoring & Diversity Program (SMDP) mentoring program that pairs primarily Black and Brown students, who are post baccalaureate and graduate students with mentors who work at biopharmaceutical companies.

We additionally post all of our open positions on the Historically Black Colleges and Universities career pages.

We offer what we believe is a competitive compensation package, which allows 100% of global Incyte employees to participate in our annual incentive compensation plan as well as annual equity-based grants.

We seek to ensure our compensation package remains competitive by benchmarking against our peers several times annually as well as conducting twice per year compensation reviews to confirm that our employees are being compensated fairly, equitably and in accordance with our pay structures and job levels.

In addition, we offer what we believe is a competitive benefits package, which includes an option to participate in our Employee Stock Purchase Plan for both full-time and part-time employees working at least 20 hours per week.

We believe that our health insurance coverage is industry-leading, as it provides 100% coverage for full-time employees and is 95% subsidized for part-time employees working at least 20 hours per week in the United States.

Beyond compensation and benefits, we are committed to supporting our colleagues in their professional development.

Opportunities for growth are provided through challenging job assignments, performance management and training opportunities.

Globally, all full-time employees are eligible for tuition reimbursement.

We believe these professional opportunities enhance our colleagues’ skills, career aspirations and job satisfaction as well as provide personal enrichment.

As of December 31, 2020, we had 1,773 employees, including 930 in research and development, 161 in medical affairs, 438 in sales and marketing and 244 in operations support, finance and administrative positions.

Geographically, 1,156 employees were based in the United States and 300 employees were based in Europe and Japan.

employees are covered by collective bargaining agreements, and management considers relations with our employees to be good.

Geographically, 1,381 employees were based in the United States and Canada, 356 employees were based in Europe and 36 employees were based in Asia.

None of our employees are covered by collective bargaining agreements, and management considers relations with our employees to be good.

Available Information

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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-K

Item 1. Business