What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-08-02 compared with 2022-05-03 · 146 added, 129 removed, 655 unchanged (30% of the section changed)

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

The following discussion of our financial condition and results of operations as of and for the three months ended March 31, 2022 should be read in conjunction with the unaudited condensed consolidated financial statements and notes to those statements included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements as of and for the year ended December 31, 2021 included in our Annual Report on Form 10-K for the year ended December 31, 2021 previously filed with the SEC.

The following discussion of our financial condition and results of operations as of and for the three and six months ended June 30, 2022 should be read in conjunction with the unaudited condensed consolidated financial statements and notes to those statements included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements as of and for the year ended December 31, 2021 included in our Annual Report on Form 10-K for the year ended December 31, 2021 previously filed with the SEC.

Forward-Looking Statements

35 unchanged sentences

● our expectations regarding competition;

● expectations relating to the anticipated completion and GMP approval dates for our large molecule production facility;

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

34 unchanged sentences

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

● unanticipated construction, other delays or changes in plans or regulatory agency interactions relating to our large molecule production facility;

● unanticipated delays or changes in plans or regulatory agency interactions or other issues relating to our large molecule production facility;

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

12 unchanged sentences

Our business is subject to numerous risks and uncertainties that could affect our ability to successfully implement our business strategy and affect our financial results.

You should carefully consider all of the information in this report

and, in particular, the following principal risks and all of the other specific factors described in Item 1A.

You should carefully consider all of the information in this report and, in particular, the following principal risks and all of the other specific factors described in Item 1A.

of this report, “Risk Factors,” before deciding whether to invest in our company.

40 unchanged sentences

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

We also conduct clinical development and commercial operations from our

country offices across Europe, including our European headquarters in Morges, Switzerland, our Japanese office in Tokyo and our Canadian headquarters in Montreal.

We also conduct clinical development and commercial operations from our country offices across Europe, including our European headquarters in Morges, Switzerland, our Japanese office in Tokyo and our Canadian headquarters in Montreal.

As described in more detail below, we operate in two therapeutic areas that are defined by the indications of our approved medicines and the diseases for which our clinical candidates are being developed.

53 unchanged sentences

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

In addition, a greater proportion of patients treated with JAKAFI achieved complete hematologic remission—which was defined as achieving hematocrit control, and lowering platelet and white blood cell counts.

In addition, a greater proportion of patients treated with JAKAFI

achieved complete hematologic remission—which was defined as achieving hematocrit control, and lowering platelet and white blood cell counts.

In the RESPONSE trial, the most common hematologic adverse reactions (incidence > 20%) were thrombocytopenia and anemia.

20 unchanged sentences

The most common hematologic adverse reactions (incidence > 35%) were anemia and thrombocytopenia.

The most common nonhematologic adverse reactions (incidence ≥ 20%) were infections (pathogen not specified) and viral infection.

The most common non-hematologic adverse reactions (incidence ≥ 20%) were infections (pathogen not specified) and viral infection.

In addition, the FDA updated labeling for JAKAFI to include warnings of increased risk of major adverse cardiovascular events, thrombosis, and secondary malignancies related to another JAK-inhibitor treating rheumatoid arthritis, a condition for which JAKAFI is not indicated.

1 unchanged sentence

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 mid-2028.

We hold patents that cover the composition of matter and use of ruxolitinib.

These patents, including applicable extensions, currently expire in mid-2028.

A determination of pediatric exclusivity would add six months to the expiration.

MONJUVI (tafasitamab-cxix) / MINJUVI (tafasitamab)

11 unchanged sentences

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.

In August 2021, we and MorphoSys announced that the European Commission (EC) granted conditional marketing authorization for MINJUVI (tafasitamab) in combination with lenalidomide, followed by MINJUVI monotherapy, for the treatment of adult patients with relapsed or refractory DLBCL who are not eligible for autologous stem cell transplant (ASCT).

In August 2021, we and MorphoSys announced that the European Commission granted conditional marketing authorization for MINJUVI (tafasitamab) in combination with lenalidomide, followed by MINJUVI monotherapy, for the treatment of adult patients with relapsed or refractory DLBCL who are not eligible for autologous stem cell transplant (ASCT).

The conditional approval was based on the three-year results from the L-MIND study evaluating the safety and efficacy of MINJUVI in combination with lenalidomide as a treatment for patients with r/r DLBCL who are not eligible for ASCT.

12 unchanged sentences

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

In March 2021, PEMAZYRE was approved by the Japanese Ministry of Health, Labour and Welfare (MHLW) for the treatment of patients with unresectable biliary tract cancer (BTC) with an FGFR2 fusion gene, worsening after cancer chemotherapy.

cancer chemotherapy.

Also in March 2021, PEMAZYRE was approved by the European Commission (EC) for the treatment of adults with locally advanced or metastatic cholangiocarcinoma with an FGFR2 fusion or rearrangement that have progressed after at least one prior line of systemic therapy.

19 unchanged sentences

Clinical Programs in Hematology and Oncology

Ruxolitinib and itacitinib

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.

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

The FDA accepted the NDA for QD ruxolitinib with a Prescription Drug User Fee Act (PDUFA) target action date of March 23, 2023.

Based on positive Phase II data, we 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), and both trials are ongoing.

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.

Itacitinib is a selective JAK1 inhibitor being evaluated in GRAVITAS-309, a Phase II/III trial of itacitinib in patients with steroid-naïve chronic GVHD.

The FDA has granted itacitinib orphan drug status for GVHD.

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 internally-discovered compounds and candidates from collaboration partners.

We no longer intend to develop itacitinib, a selective JAK1 inhibitor, in treatment-naïve chronic GVHD (cGVHD).

Based on efficacy data from Part I of the Phase II/II GRAVTIAS-309 trial, we determined that a pivotal trial was unlikely to be successful.

In September 2021, we and Syndax Pharmaceuticals, Inc.

1 unchanged sentence

Together, we plan to develop axatilimab as a therapy for patients with chronic GVHD as well as in additional immune-mediated diseases where CSF-1R-dependent monocytes and macrophages are believed to contribute to organ fibrosis.

In December, updated positive data were presented at ASH from the Phase I/II trial evaluating axatilimab as a monotherapy in patients with

recurrent or refractory chronic GVHD after two or more prior lines of therapy.

In December, updated positive data were presented at ASH from the Phase I/II trial evaluating axatilimab as a monotherapy in patients with recurrent or refractory chronic GVHD after two or more prior lines of therapy.

A 68% overall response rate and broad clinical benefit across multiple organs were observed at doses being assessed in AGAVE-201, a global pivotal trial evaluating axatilimab monotherapy in patients with chronic GVHD in the third line setting.

Additional trials of axatilimab are planned in patients with chronic GVHD, including a Phase II trial in combination with a JAK inhibitor in patients with steroid-refractory cGVHD.

In May 2022, Syndax announced that axatilimab was granted fast-track designation by the FDA for the treatment of patients with chronic GVHD after failure of two or more lines of systemic therapy.

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.

2 unchanged sentences

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 ongoing, as is a proof-of-concept study (topMIND) evaluating tafasitamab in combination with parsaclisib (PI3Kδ) in patients with relapsed or refractory B-cell malignancies.

We are also preparing to initiate a proof-of-concept study of tafasitamab, lenalidomide and plamotamab in patients with r/r DLBCL.

A proof-of-concept study of tafasitamab, lenalidomide and plamotamab in patients with r/r DLBCL is also ongoing.

In January 2021, the FDA granted orphan drug designation to tafasitamab as a treatment for patients with follicular lymphoma.

3 unchanged sentences

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 myeloid/lymphoid neoplasms with FGFR1 rearrangement.

Based on data generated from these ongoing trials, we have initiated additional trials.

FIGHT-207, a solid tumor-agnostic trial evaluating pemigatinib in patients with driver-alterations of FGF/FGFR, is now closed to recruitment.

Based on findings from this study, we have identified populations that may potentially benefit from treatment with pemigatinib and are initiating two Phase II trials – FIGHT-209 in patients with glioblastoma and FIGHT-210 in patients with non-small cell lung cancer.

Based on data generated from these trials, we have initiated additional trials including FIGHT-302, a Phase III study in first-line cholangiocarcinoma.

FIGHT-207, a solid tumor-agnostic trial evaluating pemigatinib in

patients with driver-alterations of FGF/FGFR, is now closed to recruitment.

Based on findings from this study, we have identified populations that may potentially benefit from treatment with pemigatinib and have initiated two Phase II trials – FIGHT-209 in patients with glioblastoma and FIGHT-210 in patients with non-small cell lung cancer.

Pemigatinib has Breakthrough Therapy designation as a treatment for patients with myeloid/lymphoid neoplasms (MLN) with FGFR1 rearrangement who have relapsed or are refractory to initial chemotherapy.

5 unchanged sentences

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 2021, we announced the FDA acceptance of a NDA seeking approval of parsaclisib for the treatment of patients with relapsed or refractory follicular lymphoma, marginal zone lymphoma and mantle cell lymphoma.

The submission was based on data from several Phase II studies (CITADEL-203, -204 and -205) evaluating parsaclisib as a treatment for relapsed or refractory NHLs (follicular, marginal zone and mantle cell).

In January 2022, we announced that we withdrew the NDA seeking approval of parsaclisib for the three indications in NHL.

In October 2021, we announced the FDA acceptance of an NDA seeking approval of parsaclisib for the treatment of patients with relapsed or refractory follicular lymphoma, marginal zone lymphoma and mantle cell lymphoma.

The submission was based on data from several Phase II studies (CITADEL-203, -204 and -205) evaluating parsaclisib as a treatment for relapsed or refractory non-Hodgkin lymphomas (follicular, marginal zone and mantle cell).

In January 2022, we announced that we withdrew the NDA seeking approval of parsaclisib for the three indications in non-Hodgkin lymphoma.

The decision to withdraw the NDA followed discussions with FDA regarding confirmatory studies that we determined cannot be completed within a reasonable time period to support an accelerated approval.

We have an ongoing EMA submission under review for MZL.

In July 2022, we withdrew the Marketing Authorization Application (MAA) seeking approval of parsaclisib in marginal zone lymphoma following discussions with the European Medicines Agency regarding the confirmatory study needed to support the approval which we determined were not feasible.

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

10 unchanged sentences

In July 2021, we announced that the FDA issued a complete response letter (CRL) for the BLA of retifanlimab for the treatment of squamous cell carcinoma of the anal canal (SCAC).

In October 2021, we announced that we withdrew the Marketing Authorization Application (MAA) seeking approval of retifanlimab in SCAC.

In October 2021, we announced that we withdrew the MAA seeking approval of retifanlimab in SCAC.

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.

5 unchanged sentences

clinical pharmacology studies;

NDA under review

ruxolitinib + parsaclisib

13 unchanged sentences

Myelofibrosis:

PoC in preparation

itacitinib (JAK1)

Treatment-naïve chronic GVHD:

Phase II/III (GRAVITAS-309)

PoC (LIMBER-TREG108)

axatilimab (anti-CSF-1R) 2

10 unchanged sentences

r/r B-cell malignancies:

PoC with lenalidomide and plamotamab being initiated 4

PoC with lenalidomide and plamotamab 4

pemigatinib (FGFR1/2/3)

3 unchanged sentences

Glioblastoma:

Phase II (FIGHT-209) being initiated

Phase II (FIGHT-210) being initiated

Phase II (FIGHT-209)

Phase II (FIGHT-210)

parsaclisib (PI3Kδ)

Autoimmune hemolytic anemia:

Warm autoimmune hemolytic anemia:

Phase III (PATHWAY)

15 unchanged sentences

Tumor shrinkage was observed for all three oral PD-L1 inhibitors.

With regards to safety, both INCB99280 and INCB99318 did not show peripheral neuropathy seen with INCB86550.

With regard to safety, both INCB99280 and INCB99318 did not show peripheral neuropathy seen with INCB86550.

In May 2022, the decision was made to prioritize the development of INCB99280 and INCB99318 based on positive therapeutic ratios.

2 unchanged sentences

INCB123667 is a novel, potent and selective oral small molecule inhibitor of CDK2 which has been shown to suppress tumor growth as monotherapy and in combination with standard of care, in Cyclin E amplified tumor models, in vivo.

A Phase I dose-escalation and dose-expansion study of INCB123667 in adults with selected advanced or metastatic solid tumors is being initiated.

In July 2022, we initiated a Phase I dose-escalation and dose-expansion study evaluating INCB123667 in adults with selected advanced or metastatic solid tumors.

INCA32459 (LAG-3xPD-1)

In collaboration with Merus we have developed INCA32459, a novel LAG3xPD-1 bispecific antibody that is planned to enter clinical studies later this year.

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

1 unchanged sentence

Small molecules

INCB81776 (AXL/MER), epacadostat (IDO1), INCB99280 (PD-L1), INCB99318 (PD-L1), INCB106385 (A2A/A 2B ), INCB123667 (CDK2)

INCB81776 (AXL/MER), INCB99280 (PD-L1), INCB99318 (PD-L1), INCB106385 (A2A/A 2B ), INCB123667 (CDK2)

Monoclonal antibodies 1

INCAGN1876 (GITR), INCAGN2385 (LAG-3), INCAGN1949 (OX40), INCAGN2390 (TIM-3), INCA00186 (CD73)

Bispecific antibodies

INCA32459 (LAG-3xPD-1) 2

Discovery collaboration with Agenus Inc.

Development collaboration with Merus

Inflammation and AutoImmunity (IAI)

2 unchanged sentences

OPZELURA (ruxolitinib) cream

In September 2021, we announced that the FDA approved OPZELURA (ruxolitinib) cream, a novel cream formulation of Incyte’s selective JAK1/JAK2 inhibitor ruxolitinib, for the topical short-term and non-continuous chronic treatment of mild to moderate atopic dermatitis (AD) in non-immunocompromised patients 12 years of age and older whose disease is not adequately controlled with topical prescription therapies, or when those therapies are not advisable.

Atopic Dermatitis.

of age and older whose disease is not adequately controlled with topical prescription therapies, or when those therapies are not advisable.

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

2 unchanged sentences

The approval of OPZELURA was based on data from two randomized, double-blind, vehicle-controlled Phase III studies (TRuE-AD1 and TRuE-AD 2) evaluating the safety and efficacy of OPZELURA in adolescents and adults with mild to moderate AD.

Significantly more patients treated with OPZELURA achieved Investigator’s Global Assessment (IGA) Treatment Success at Week 8 (defined as an IGA score of 0 or 1 with at least a 2-point improvement from baseline,

the primary endpoint:

53.8% in TRuE-AD1 and 51.3% in TRuE-AD2, compared to vehicle (15.1% in TRuE-AD1, 7.6% in TRuE-AD2;

3 unchanged sentences

The most common (≥1%) treatment-emergent adverse reactions in patients treated with OPZELURA were nasopharyngitis, diarrhea, bronchitis, ear infection, eosinophil count increased, urticaria, folliculitis, tonsillitis and rhinorrhea.

In July 2022, we announced that the FDA approved OPZELURA for the topical treatment of nonsegmental vitiligo in adult and pediatric patients 12 years of age and older.

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

Vitiligo is a chronic autoimmune depigmenting skin disease characterized by patches of the skin losing their pigment.

It is estimated that there are at least 1.5 million patients diagnosed with vitiligo in the United States, with the majority of patients (approximately 85%) suffering from nonsegmental vitiligo.

OPZELURA is the first and only FDA approved treatment for repigmentation of vitiligo lesions.

The approval of OPZELURA in vitiligo was based on two randomized, double-blind, vehicle-controlled Phase III studies (TRuE-V1 and TRuE-V2) evaluating the safety and efficacy of OPZELURA in adolescents and adults with nonsegmental vitiligo.

Treatment with 1.5% ruxolitinib cream twice daily (BID) resulted in greater improvement versus vehicle for the primary and all key secondary endpoints in both the TRuE-V1 and TRuE-V2 studies.

Results, which were consistent across both studies, showed that 29.9% of patients applying ruxolitinib cream achieved > 75% improvement from baseline in the facial Vitiligo Area Scoring Index (F-VASI75) at Week 24, the primary endpoint.

At Week 52, approximately 50% of patients achieved F-VASI75.

The most common ( > 1%) treatment-emergent adverse reactions in patients treated with OPZELURA were application site acne, application site pruritus, nasopharyngitis, headache, urinary tract infection, application site erythema and pyrexia.

Clinical Programs in Dermatology

2 unchanged sentences

Two Phase III trials (TRuE-CHE1 and TRuE-CHE2) evaluating ruxolitinib cream in chronic hand eczema are in preparation.

In addition, we are evaluating ruxolitinib cream in vitiligo, and in May 2021, we announced positive topline results from the Phase III TRuE-V program evaluating ruxolitinib cream as a treatment for adolescent and adult patients with vitiligo.

Both TRuE-V1 and TRuE-V2 studies met the primary and key secondary endpoints, including patient reported outcomes.

The overall efficacy and safety profile of ruxolitinib cream was consistent with previously reported Phase II data, and no new safety signals were observed.

In October 2021, data from the Week 24 analysis of the Phase III TRuE-V program were presented at the European Academy of Dermatology and Venereology Congress (EADV).

Treatment with 1.5% ruxolitinib cream twice daily (BID) resulted in greater improvement versus vehicle for the primary and all key secondary endpoints in both the TRuE-V1 and TRuE-V2 studies.

Results, which were consistent across both studies, showed that 29.9% of patients applying ruxolitinib cream achieved ≥75% improvement from baseline in the facial Vitiligo Area Scoring Index (F-VASI75), the primary endpoint.

The overall safety profile of ruxolitinib cream in vitiligo was consistent with previous study data.

In the TRuE-V studies, patients using ruxolitinib cream did not report clinically significant application site reactions.

Treatment-emergent adverse events were consistent with previous studies, with no serious treatment-related adverse events reported.

In October 2021, we announced the validation of the European Marketing Authorization Application (MAA) for ruxolitinib cream as a potential treatment for adolescents and adults (age ≥12 years) with non-segmental vitiligo with facial involvement.

In December 2021, we announced that the U.S.

FDA accepted for Priority Review the sNDA for ruxolitinib cream as a potential treatment for adolescents and adults (age ≥ 12 years) with vitiligo.

In March 2022, we announced the FDA extended the review period for the sNDA by an additional three months to allow time to review additional data from the ongoing Phase III studies submitted by Incyte in response to the FDA’s information request.

The Prescription Drug User Fee Act (PDUFA) target action date is July 18, 2022.

In March 2022, data from the Week 52 analysis of the Phase III TRuE-V program were presented at the American Academy of Dermatology (AAD) annual meeting.

Treatment with 1.5% ruxolitinib cream twice daily (BID) resulted in further improvement in facial and total body repigmentation at Week 52.

Results showed that at Week 52, approximately 50% of patients achieved > 75% improvement from baseline in the Facial Vitiligo Area Scoring Index (F-VASI75).

The overall safety profile of ruxolitinib cream in vitiligo was consistent with previous study data and there were no clinically significant application site reactions or serious treatment-related adverse events related to ruxolitinib cream.

Vitiligo is a long-term skin condition characterized by patches of the skin losing their pigment.

It is estimated that vitiligo affects 0.5-2% of the US population and, therefore, there are at least 1.5 million patients in the United States with this disorder.

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

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.

In March 2021, we initiated a Phase II trial evaluating INCB54707 in patients with vitiligo.

A Phase II trial evaluating INCB54707 in patients with prurigo nodularis is ongoing.

In October 2021, we announced the validation of the MAA for ruxolitinib cream as a potential treatment for adolescents and adults (age ≥12 years) with nonsegmental vitiligo with facial involvement.

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

Povorcitinib 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 povorcitinib is underway in patients with HS.

In March 2021, we initiated a Phase II trial evaluating povorcitinib in patients with vitiligo.

A Phase II trial evaluating povorcitinib in patients with prurigo nodularis is ongoing.

Indication and status

2 unchanged sentences

Phase III pediatric study (TRuE-AD3)

Chronic hand eczema:

Phase III (TRuE-CHE1 and TRuE-CHE2) being initiated

Phase III (TRuE-V1, TRuE-V2);

primary endpoint met in both studies);

sNDA and MAA under review

approved by FDA;

MAA under review

Chronic hand eczema:

Phase III (TRuE-CHE1 and TRuE-CHE2) in preparation

ruxolitinib cream + NB-UVB (JAK1/JAK2 + phototherapy)

Phase II being initiated

INCB54707 (JAK1)

povorcitinib (JAK1)

Hidradenitis suppurativa:

Phase III in preparation

Prurigo nodularis:

1 unchanged sentence

Clinical Programs in Other IAI

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.

In May 2022, we initiated a Phase II trial evaluating INCB00928 in 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.

2 unchanged sentences

Fibrodysplasia ossificans progressiva:

Phase II in preparation

Collaborative Partnered Programs

6 unchanged sentences

Current rheumatoid arthritis treatments include the use of non-steroidal anti-inflammatory drugs, disease-modifying anti-rheumatic drugs, such as methotrexate, and the newer biological response modifiers that target pro-inflammatory cytokines, such as tumor necrosis factor, implicated in the pathogenesis of rheumatoid arthritis.

these approaches to treatment is curative;

None of these approaches to treatment is curative;

therefore, there remains an unmet need for new safe and effective treatment options for these patients.

22 unchanged sentences

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

Systemic Lupus Erythematosus.

Systemic lupus erythematosus (SLE) is a chronic disease that causes inflammation.

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.

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.

In January 2022, Lilly announced the discontinuation of the Phase III development program for baricitinib in SLE based on top-line efficacy results from two pivotal Phase III trials (SLE-BRAVE-I and –II).

The primary endpoint of SRI-

4 response was reached in SLE-BRAVE-I but was not reached in SLE-BRAVE-II and key secondary endpoints were not met in either study.

Alopecia Areata .

6 unchanged sentences

In March 2022, we and Lilly announced positive 52 week results from BRAVE-AA1 and BRAVE-AA2 at the American Academy of Dermatology (AAD) annual meeting showing 40% of adults saw at least 80% scalp coverage.

Regulatory applications for baricitinib as a treatment for alopecia areata have been submitted in the U.S., Europe and Japan.

In June 2022, the FDA approved 2mg, and 4mg doses of OLUMIANT for the treatment of adults with severe alopecia areata, becoming the first and only systemic treatment in the indication.

In June 2022, OLUMIANT was approved as a treatment for alopecia areata in Europe and Japan.

Systemic Lupus Erythematosus.

Systemic lupus erythematosus (SLE) is a chronic disease that causes inflammation.

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.

The primary endpoint of SRI-4 response was reached in SLE-BRAVE-I but was not reached in SLE-BRAVE-II and key secondary endpoints were not met in either study.

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

3 unchanged sentences

The EUA now provides for the use of baricitinib for treatment of COVID-19 in hospitalized adults and pediatric patients two years of age or older requiring supplemental oxygen, non-invasive or invasive mechanical ventilation or extracorporeal membrane oxygenation (ECMO).

In June 2022, we and Lilly announced the FDA approved baricitinib as OLUMIANT for the treatment of COVID-19 in hospitalized adults requiring supplemental oxygen, non-invasive or invasive mechanical ventilation, or extracorporeal membrane oxygenation (ECMO).

Capmatinib is a potent and highly selective MET inhibitor.

15 unchanged sentences

In April 2022, we and Novartis announced a positive opinion from the CHMP based on data from the Phase II GEOMETRY mono-1 study showing an overall response rate (ORR) of 51.6% in a cohort evaluating second-line patients only and 44% in all previously-treated patients with advanced non-small cell lung cancer (NSCLC) harboring alterations leading to MET exon 14 skipping.

In June 2022, we and Novartis announced the European Commission approval of capmatinib as TABRECTA as monotherapy treatment of adults with advanced non-small cell lung cancer (NSCLC) harboring alterations leading to mesenchymal-epithelial-transition factor gene (MET) exon 14 (METex14) skipping who require systemic therapy following prior treatment with immunotherapy and/or platinum-based chemotherapy.

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

4 unchanged sentences

GVHD is a life-threatening complication of stem cell transplants, with no established standard of care in Europe for patients who do not adequately respond to first-line steroid treatment.

In May 2022, we and Novartis announced the EC approval of ruxolitinib as JAKAVI for the treatment of acute or chronic GVHD in patients aged 12 years and older who have inadequate response to corticosteroids or other systemic therapies.

Indication and status

2 unchanged sentences

Phase III (BREEZE-AD);

approved in European Union and Japan

approved in Europe and Japan

Severe alopecia areata:

Phase III (BRAVE-AA1, BRAVE-AA2);

submissions in U.S., EU, and Japan

approved in the United States, Europe and Japan

capmatinib (MET) 2

NSCLC (with MET exon 14 skipping mutations):

approved in United States and Japan;

MAA under review;

positive CHMP opinion received

approved in the United States, Europe and Japan

ruxolitinib (JAK1/JAK2) 3

Acute and chronic GVHD:

MAA and J-NDA under review;

positive CHMP opinion received

approved in Europe;

J-NDA under review

baricitinib licensed to Lilly.

9 unchanged sentences

Under the terms of the agreement, Novartis received exclusive development and commercialization rights outside of the United States to ruxolitinib and certain back up compounds for hematologic and oncology indications, including all hematological malignancies, solid tumors and myeloproliferative diseases.

We retained exclusive development and commercialization

rights to JAKAFI (ruxolitinib) in the United States and in certain other indications.

We retained exclusive development and commercialization rights to JAKAFI (ruxolitinib) in the United States and in certain other indications.

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

12 unchanged sentences

Under the terms of this agreement, InnoCare’s subsidiary received development and exclusive commercialization rights to tafasitamab in hematology and oncology in mainland China, Hong Kong, Macau and Taiwan.

In April 2022, we entered into a Strategic Alliance Agreement with Maruho Co., Ltd.

Under the terms of this agreement, Maruho received development, manufacturing and exclusive commercialization rights to ruxolitinib cream, and other potential future topical formulations of ruxolitinib, in autoimmune and inflammatory dermatologic diseases in Japan.

In-License Agreements

7 unchanged sentences

all of the outstanding shares of ARIAD Pharmaceuticals (Luxembourg) S.à.r.l., the parent company of ARIAD’s European subsidiaries responsible for the development and commercialization of ICLUSIG in the European Union and other countries.

We obtained an exclusive

license to develop and commercialize ICLUSIG in Europe and other select countries.

We obtained an exclusive license to develop and commercialize ICLUSIG in Europe and other select countries.

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

16 unchanged sentences

In March 2021, axatilimab was granted Orphan Drug Designation by the FDA for the treatment of chronic GVHD and a second designation in April 2021 for treatment of idiopathic pulmonary fibrosis.

The Agreement became effective in December 2021.

Under the terms of this agreement, we received exclusive commercialization rights outside of the United States, and Syndax has co-commercialization rights in the United States with respect to axatilimab.

14 unchanged sentences

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 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 July 2021, we and Lilly announced that the FDA broadened the EUA for baricitinib to allow for treatment with or without remdesivir.

11 unchanged sentences

Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2021 Form 10-K.

There have been no significant changes to our critical accounting policies during the three months ended March 31, 2022.

There have been no significant changes to our critical accounting policies or estimates during the six months ended June 30, 2022.

Recent Accounting Pronouncements

1 unchanged sentence

Results of Operations

We recorded net income of $38.0 million and basic and diluted net income per share of $0.17 for the three months ended March 31, 2022, as compared to net income of $53.5 million and basic and diluted net income per share of $0.24 in the corresponding period in 2021.

We recorded net income of $161.4 million and basic net income per share of $0.73 and diluted net income per share of $0.72 for the three months ended June 30, 2022, as compared to net income of $149.5 million and basic net income per share of $0.68 and diluted net income per share of $0.67 in the corresponding period in 2021.

We recorded net income of $199.4 million and basic net income per share of $0.90 and diluted net income per share of $0.89 for the six months ended June 30, 2022, as compared to net income of $203.0 million and basic net income per share of $0.92 and diluted net income per share of $0.91 in the corresponding period in 2021.

For the Three Months Ended,

For the Six Months Ended,

(in millions)

JAKAFI revenues, net

10 unchanged sentences

Total revenues

The increase in JAKAFI product revenues for the three months ended March 31, 2022 as compared to the corresponding period in 2021 was comprised of a volume increase of $43.3 million and a price increase of $35.5 million.

The increase in JAKAFI product revenues for the three months ended June 30, 2022 as compared to the corresponding period in 2021 was comprised of a volume increase of $51.2 million and a price increase of $17.4 million.

The increase in JAKAFI product revenues for the six months ended June 30, 2022 as compared to the corresponding period in 2021 was comprised of a volume increase of $94.3 million and a price increase of $53.0 million.

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

3 unchanged sentences

Discounts and

Three Months Ended March 31, 2022

Six Months Ended June 30, 2022

Balance at January 1, 2022

3 unchanged sentences

Credits/payments for prior period sales

Balance at March 31, 2022

Balance at June 30, 2022

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

7 unchanged sentences

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

The increase in OLUMIANT product royalty revenues for the three months ended March 31, 2022 as compared to the corresponding period in 2021 reflects an increase in net product sales as a result of the use of OLUMIANT for the treatment of COVID-19.

The increase in OLUMIANT product royalty revenues for the six months ended June 30, 2022 as compared to the corresponding period in 2021 reflects an increase in net product sales as a result of the use of OLUMIANT for the treatment of COVID-19.

Our milestone and contract revenues for the six months ended June 30, 2022, were derived from total regulatory milestones of $60.0 million under the Novartis collaboration and license agreement, regulatory milestones of $70.0 million under the license, development and commercialization agreement with Lilly, and a $ 5.0 million regulatory milestone under the Innovent research collaboration and licensing agreement.

Our milestone and contract revenues for the six months ended June 30, 2021, were derived from a $10.0 million milestone under the Innovent research collaboration and licensing agreement.

Cost of Product Revenues

For the Three Months Ended,

For the Six Months Ended,

(in millions)

Product costs

5 unchanged sentences

Cost of product revenues includes all product related costs, employee personnel costs, including stock compensation, for those employees dedicated to the production of our commercial products, royalties under our collaborative agreements and amortization of our licensed intellectual property rights for ICLUSIG.

The increase in cost of product revenues for the three months ended March 31, 2022 as compared to the same period in 2021 was primarily due to product related costs for our commercial products including OPZELURA.

The increase in cost of product revenues for the three and six months ended June 30, 2022 as compared to the same periods in 2021 was primarily due to product related costs for our commercial products including OPZELURA.

Operating Expenses

1 unchanged sentence

For the Three Months Ended,

For the Six Months Ended,

(in millions)

Salary and benefits related

4 unchanged sentences

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

The increase in salary and benefits related expense for the three months ended March 31, 2022 as compared to the corresponding period in 2021 was due primarily to increased development headcount to sustain our development pipeline.

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

The increase in clinical research and outside services expense for the three months ended March 31, 2022 as compared to the corresponding period in 2021 was primarily due continued investment in our late stage development assets.

Research and development expenses include upfront and milestone expenses related to our collaborative agreements of $20.0 million and $11.5 million, respectively, for the three months ended March 31, 2022 and 2021.

Research and development expenses for the three months ended March 31, 2022 and 2021 were net of $10.3 million and $3.6 million, respectively, of costs reimbursed by our collaborative partners.

The increase in salary and benefits related expense for the three and six months ended June 30, 2022 as compared to the corresponding periods in 2021 was due primarily to increased development headcount to sustain our development pipeline.

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

The decrease in clinical research and outside services expense for the three months ended June 30, 2022 as compared to the corresponding period in 2021 was primarily due to the timing of studies, and the increase in such expense for the six months ended June 30, 2022 as compared to the corresponding period in 2021 was due to continued investment in our late stage development assets.

Research and development expenses include upfront and milestone expenses related to our collaborative agreements of $2.5 million and $22.5 million, respectively, for the three and six months ended June 30, 2022.

Research and development expenses include upfront and milestone expenses related to our collaborative agreements of $5.0 million and $16.5 million, respectively, for the three and six months ended June 30, 2021.

Research and development expenses for the three and six months ended June 30, 2022 and 2021 were net of $24.3 million, $34.6 million, $8.9 million and $12.5 million, respectively, of costs reimbursed by our collaborative partners.

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

4 unchanged sentences

For the Three Months Ended,

For the Six Months Ended,

(in millions)

Salary and benefits related

2 unchanged sentences

Total selling, general and administrative expenses

The increase in salary and benefits related expense for the three months ended March 31, 2022 as compared to the corresponding period in 2021 was due primarily to increased headcount.

The increase in salary and benefits related expense for the three and six months ended June 30, 2022 as compared to the corresponding period in 2021 was due primarily to increased headcount.

This increased headcount was due primarily to the establishment of our dermatology commercial organization and activities to support the launch of OPZELURA for the treatment of atopic dermatitis.

The increase in other contract services and outside costs was primarily due to

expenses related to our dermatology commercial organization and activities to support the launch of OPZELURA for the treatment of atopic dermatitis.

The increase in other contract services and outside costs for the three and six months ended June 30, 2022, as compared to the corresponding periods in 2021, was due primarily to expenses related to our dermatology commercial organization and activities to support the launch of OPZELURA for the treatments of atopic dermatitis and pre-launch activities for vitiligo.

Change in fair value of acquisition-related contingent consideration

1 unchanged sentence

The fair value of the acquisition-related contingent consideration is remeasured quarterly.

The change in fair value of the acquisition-related contingent consideration for the three months ended March 31, 2022 and 2021 was $6.4 million and $5.5 million, respectively, which is recorded in change in fair value of acquisition-related contingent consideration on the condensed consolidated statements of operations.

The change in fair value for the three months ended March 31, 2022 and 2021 was due primarily to the passage of time as there were no other significant changes in the key assumptions during the periods.

The change in fair value of the acquisition-related contingent consideration for the three and six months ended June 30, 2022 was $3.3 million and $9.7 million, respectively, which is recorded in change in fair value of acquisition-related contingent consideration on the condensed consolidated statements of operations.

The change in fair value of the acquisition-related contingent consideration for the three and six months ended June 30, 2021 was $4.6 million and $10.2 million, respectively, which is recorded in change in fair value of acquisition-related contingent consideration on the

condensed consolidated statements of operations.

The change in fair value for the three and six months ended June 30, 2022 and 2021 was due primarily to the passage of time and updated projections of future net revenues of ICLUSIG.

Collaboration loss sharing

Under the collaboration and license agreement with MorphoSys, which was executed in March 2020, we and MorphoSys are both responsible for the commercialization efforts of tafasitamab in the United States and share equally the profits and losses from the co-commercialization efforts.

For the three months ended March 31, 2022 and 2021, our 50% share of the costs for tafasitamab was $4.7 million and $10.5 million, respectively, as recorded in collaboration loss sharing on the condensed consolidated statement of operations.

Under the collaboration and license agreement with MorphoSys, which was executed in March 2020, we and MorphoSys are both responsible for the commercialization efforts of tafasitamab in the United States and will share equally the profits and losses from the co-commercialization efforts.

For the three and six months ended June 30, 2022, our 50% share of the losses for tafasitamab was $2.5 million and $7.3 million, respectively, as recorded in collaboration loss sharing on the condensed consolidated statement of operations.

For the three and six months ended June 30, 2021, our 50% share of the losses for tafasitamab was $9.8 million and $20.3 million, respectively, as recorded in collaboration loss sharing on the condensed consolidated statement of operations.

Other income (expense)

Unrealized gain (loss) on long term investments.

Unrealized (loss) gain on long term investments.

Unrealized gains and losses on long term investments will fluctuate from period to period, based on the change in fair value of the securities we hold in our publicly held collaboration partners.

1 unchanged sentence

For the Three Months Ended,

For the Six Months Ended,

(in millions)

Total unrealized loss on long term investments

(in millions)

Total unrealized (loss) gain on long term investments

Provision for income taxes.

The provision for income taxes for the three months ended March 31, 2022 and 2021 was $32.5 million and $15.8 million, respectively.

The provision for income taxes increased as compared to that for the prior year period due to the release of our valuation allowance against a majority of our U.S.

The provision for income taxes for the three and six months ended June 30, 2022 was $67.9 million and $100.5 million, respectively.

The provision for income taxes for the three and six months ended June 30, 2021 and was $22.2 million and $38.0 million, respectively.

The provision for income taxes increased in 2022 as compared to that for the prior year period due to the release of our valuation allowance against a majority of our U.S.

research and development tax credit carryforwards and other deferred tax assets at December 31, 2021.

Liquidity and Capital Resources

Due to historical net losses, we had an accumulated deficit of $0.7 billion as of March 31, 2022.

Due to historical net losses, we had an accumulated deficit of $0.6 billion as of June 30, 2022.

We have funded our research and development operations through cash received from customers, sales of equity securities, the issuance of convertible notes, and collaborative arrangements.

At March 31, 2022, we had available cash, cash equivalents and marketable securities of $2.5 billion.

At June 30, 2022, we had available cash, cash equivalents and marketable securities of $2.7 billion.

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

1 unchanged sentence

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

Net cash provided by operating activities for the three months ended March 31, 2022 and 2021 was $215.7 million and $206.1 million, respectively.

Net cash provided by operating activities for the six months ended June 30, 2022 and 2021 was $389.9 million and $379.0 million, respectively.

The increase in cash provided by operating activities was due primarily to changes in working capital.

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

Net cash used in investing activities was $16.7 million for the three months ended March 31, 2022, which represented capital expenditures of $17.0 million, offset by the sale and maturity of marketable securities of $0.3 million.

Net cash used in investing activities was $59.8 million for the three months ended March 31, 2021, which represented purchases of marketable securities of $39.3 million, capital expenditures of $48.1 million, and purchase of long term equity investment of $8.7 million, offset in part by the sale and maturity of marketable securities of $35.2 million and the sale of long term investment of $1.1 million.

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

Net cash provided by financing activities was $0.1 million and $12.8 million, respectively, for the three months ended March 31, 2022 and 2021, primarily representing proceeds from the issuance of common stock under our stock plans, offset in part by cash paid to ARIAD/Takeda for contingent consideration.

Net cash used in investing activities was $29.2 million for the six months ended June 30, 2022, which represented purchases of marketable securities of $44.0 million and capital expenditures of $28.7 million, offset in part by the sale and maturities of marketable securities of $43.5

Net cash used in investing activities was $108.9 million for the six months ended June 30, 2021, which represented purchases of marketable securities of $102.3 million, capital expenditures of $114.4 million, and purchases of long term equity investments of $8.7 million, offset in part by the sale of long term investment of $9.3 million and the sales and maturities of marketable securities of $107.1 million.

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

Net cash provided by financing activities was $16.0 million for the six months ended June 30, 2022 and net cash provided by financing activities was $16.5 million for the six months ended June 30, 2021, primarily representing proceeds from the issuance of common stock under our stock plans, offset in part by cash paid to ARIAD/Takeda for contingent consideration.

Our capital expenditures for construction activities are discussed in Note 8 of notes to our condensed consolidated financial statements.

3 unchanged sentences

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

As of March 31, 2022, we had no outstanding borrowings and were in compliance with all covenants under this facility.

As of June 30, 2022, we had no outstanding borrowings and were in compliance with all covenants under this facility.

income tax payments will increase significantly due to the mandatory capitalization and amortization of research and development expenses for tax years beginning after December 31, 2021, as required under the Tax Cuts and Jobs Act of 2017, which eliminated the immediate expensing of such expenses.

We believe that our cash flow from operations, together with our cash, cash equivalents and marketable securities and funds available under our revolving credit facility, will be adequate to satisfy our capital needs for the foreseeable future.

10 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis