UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number:
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(State or other jurisdiction of | (IRS Employer | |
(Address of principal executive offices) | (Zip Code) |
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) | Name of exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒
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Accelerated filer ☐ | ||
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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The number of outstanding shares of the registrant’s Common Stock, $.001 par value, was
INCYTE CORPORATION
INDEX
| 3 | ||
3 | |||
3 | |||
4 | |||
Condensed Consolidated Statements of Comprehensive Income (Loss) | 5 | ||
6 | |||
7 | |||
8 | |||
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 26 | ||
26 | |||
28 | |||
52 | |||
53 | |||
53 | |||
53 | |||
82 | |||
83 | |||
2
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
INCYTE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except number of shares and par value)
March 31, | December 31, | ||||||
| 2022 |
| 2021* | ||||
(unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | | $ | | |||
Marketable securities—available-for-sale (amortized cost $ |
| |
| | |||
Accounts receivable |
| |
| | |||
Inventory |
| |
| | |||
Prepaid expenses and other current assets | |
| | ||||
Total current assets |
| |
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Restricted cash and investments |
| | | ||||
Long term investments |
| | | ||||
Inventory |
| | | ||||
Property and equipment, net |
| | | ||||
Finance lease right-of-use assets, net | | | |||||
Other intangible assets, net | | | |||||
Goodwill | | | |||||
Deferred income tax asset | | | |||||
Other assets, net |
| | | ||||
Total assets | $ | | $ | | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | | $ | | |||
Accrued compensation |
| |
| | |||
Accrued and other current liabilities |
| |
| | |||
Finance lease liabilities | | | |||||
Acquisition-related contingent consideration | | | |||||
Total current liabilities |
| |
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Acquisition-related contingent consideration | | | |||||
Finance lease liabilities | | | |||||
Other liabilities |
| | | ||||
Total liabilities |
| |
| | |||
Commitments and contingencies (Note 14) | |||||||
Stockholders’ equity: | |||||||
Preferred stock, $ |
|
| |||||
Common stock, $ |
| | | ||||
Additional paid-in capital |
| | | ||||
Accumulated other comprehensive loss |
| ( | ( | ||||
Accumulated deficit |
| ( | ( | ||||
Total stockholders’ equity |
| |
| | |||
Total liabilities and stockholders’ equity | $ | | $ | |
*
See accompanying notes.
3
INCYTE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share amounts)
Three Months Ended | |||||||
March 31, | |||||||
| 2022 |
| 2021 |
| |||
Revenues: | |||||||
Product revenues, net | $ | | $ | | |||
Product royalty revenues |
| |
| | |||
Milestone and contract revenues |
| |
| — | |||
Total revenues |
| |
| | |||
Costs and expenses: | |||||||
Cost of product revenues (including definite-lived intangible amortization) |
| | | ||||
Research and development |
| | | ||||
Selling, general and administrative |
| | | ||||
Change in fair value of acquisition-related contingent consideration | | | |||||
Collaboration loss sharing | | | |||||
Total costs and expenses |
| |
| | |||
Income from operations |
| |
| | |||
Other income (expense), net |
| | ( | ||||
Interest expense |
| ( | ( | ||||
Unrealized loss on long term investments |
| ( | ( | ||||
Income before provision for income taxes |
| |
| | |||
Provision for income taxes |
| | | ||||
Net income | $ | | $ | | |||
Net income per share: | |||||||
Basic | $ | $ | |||||
Diluted | $ | $ | |||||
Shares used in computing net income per share: | |||||||
Basic | |||||||
Diluted | |
See accompanying notes.
4
INCYTE CORPORATION
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited, in thousands)
Three Months Ended | |||||||
March 31, | |||||||
| 2022 |
| 2021 |
| |||
Net income | $ | | $ | | |||
Other comprehensive loss: | |||||||
Foreign currency translation loss | ( | ( | |||||
Unrealized loss on marketable securities, net of tax |
| ( | ( | ||||
Defined benefit pension gain, net of tax | | | |||||
Other comprehensive loss |
| ( |
| ( | |||
Comprehensive income | $ | | $ | |
See accompanying notes.
5
INCYTE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(unaudited, in thousands, except number of shares)
For the Three Months Ended March 31, 2021 | ||||||||||||||
Total | ||||||||||||||
Common | Additional | Accumulated Other | Accumulated | Stockholders’ | ||||||||||
Stock | Paid-in Capital | Comprehensive Loss | Deficit | Equity | ||||||||||
Balances at January 1, 2021 | $ | | $ | | $ | ( | $ | ( | $ | | ||||
Issuance of |
| |
| |
| — |
| — |
| | ||||
Issuance of | — | | — | — | | |||||||||
Stock compensation |
| — | | — | — |
| | |||||||
Other comprehensive loss | — |
| — |
| ( |
| — | ( | ||||||
Net income | — |
| — |
| — |
| | | ||||||
Balances at March 31, 2021 | $ | | $ | | $ | ( | $ | ( | $ | |
For the Three Months Ended March 31, 2022 | ||||||||||||||
Total | ||||||||||||||
Common | Additional | Accumulated Other | Accumulated | Stockholders’ | ||||||||||
Stock | Paid-in Capital | Comprehensive Loss | Deficit | Equity | ||||||||||
Balances at January 1, 2022 | $ | | $ | | $ | ( | $ | ( | $ | | ||||
Issuance of |
| — |
| |
| — |
| — |
| | ||||
Issuance of | — | | — | — | | |||||||||
Stock compensation |
| — | | — | — |
| | |||||||
Other comprehensive loss | — |
| — |
| ( |
| — | ( | ||||||
Net income | — |
| — |
| — |
| | | ||||||
Balances at March 31, 2022 | $ | | $ | | $ | ( | $ | ( | $ | |
See accompanying notes.
6
INCYTE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
Three Months Ended | |||||||
March 31, | |||||||
| 2022 |
| 2021 |
| |||
Cash flows from operating activities: | |||||||
Net income | $ | | $ | | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization |
| | | ||||
Stock-based compensation |
| | | ||||
Deferred income taxes | | | |||||
Other, net | | | |||||
Unrealized loss on long term investments |
| | | ||||
Change in fair value of acquisition-related contingent consideration | | | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable |
| | | ||||
Prepaid expenses and other assets |
| ( | ( | ||||
Inventory |
| ( | ( | ||||
Accounts payable |
| ( | ( | ||||
Accrued and other liabilities |
| | ( | ||||
Net cash provided by operating activities |
| |
| | |||
Cash flows from investing activities: | |||||||
Purchase of long term investments |
| — |
| ( | |||
Sale of long term investments | — | | |||||
Capital expenditures |
| ( |
| ( | |||
Purchases of marketable securities |
| — |
| ( | |||
Sale and maturities of marketable securities |
| |
| | |||
Net cash used in investing activities |
| ( |
| ( | |||
Cash flows from financing activities: | |||||||
Proceeds from issuance of common stock under stock plans |
| | | ||||
Tax withholdings related to restricted and performance share vesting | ( | ( | |||||
Payment of finance lease liabilities |
| ( | ( | ||||
Payment of contingent consideration | ( | ( | |||||
Net cash provided by financing activities |
| |
| | |||
Effect of exchange rates on cash, cash equivalents, restricted cash and investments | | ( | |||||
Net increase in cash, cash equivalents, restricted cash and investments |
| |
| | |||
Cash, cash equivalents, restricted cash and investments at beginning of period | | | |||||
Cash, cash equivalents, restricted cash and investments at end of period | $ | | $ | | |||
Supplemental Schedule of Cash Flow Information | |||||||
Income taxes paid | $ | | $ | | |||
Unpaid purchases of property and equipment | $ | | $ | | |||
Leased assets obtained in exchange for new operating lease liabilities | $ | | $ | | |||
Leased assets obtained in exchange for new finance lease liabilities | $ | | $ | |
See accompanying notes.
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INCYTE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2022
(Unaudited)
Note 1. Organization and business
Incyte Corporation (including its subsidiaries, “Incyte,” “we,” “us,” or “our”) is a biopharmaceutical company focused on developing and commercializing proprietary therapeutics. Our portfolio includes compounds in various stages, ranging from preclinical to late stage development, and commercialized products JAKAFI® (ruxolitinib), ICLUSIG® (ponatinib), PEMAZYRE® (pemigatinib), OPZELURA™ (ruxolitinib cream), MINJUVI® (tafasitamab) and MONJUVI® (tafasitamab-cxix), which is co-commercialized. Our operations are treated as
Note 2. Summary of significant accounting policies
Basis of presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The condensed consolidated balance sheet as of March 31, 2022, the condensed consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for the three months ended March 31, 2022 and 2021, are unaudited, but include all adjustments, consisting only of normal recurring adjustments, which we consider necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. The condensed consolidated balance sheet at December 31, 2021 has been derived from our audited consolidated financial statements.
Although we believe that the disclosures in these financial statements are adequate to make the information presented not misleading, certain information and footnote information normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission.
Results for any interim period are not necessarily indicative of results for any future interim period or for the entire year. The accompanying financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021.
Principles of Consolidation. The condensed consolidated financial statements include the accounts of Incyte Corporation and our wholly owned subsidiaries. All inter-company accounts, transactions, and profits have been eliminated in consolidation.
Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Recent Accounting Pronouncements
There were no new accounting pronouncements issued nor adopted since our filing of the Annual Report on Form 10-K for the year ended December 31, 2021, which could have a significant effect on our condensed consolidated financial statements.
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Note 3. Revenues
Revenues are recognized under guidance within ASC 606, Revenue from Contracts with Customers. The following table presents our disaggregated revenue for the periods presented (in thousands):
Three Months Ended | |||||||
| March 31, |
| |||||
2022 | 2021 | ||||||
JAKAFI revenues, net | $ | | $ | | |||
ICLUSIG revenues, net | | | |||||
PEMAZYRE revenues, net | | | |||||
MINJUVI revenues, net | | — | |||||
OPZELURA revenues, net | | — | |||||
Total product revenues, net | | | |||||
JAKAVI product royalty revenues | | | |||||
OLUMIANT product royalty revenues | | | |||||
TABRECTA product royalty revenues | | | |||||
Total product royalty revenues | | | |||||
Milestone and contract revenues | | — | |||||
Total revenues | $ | | $ | |
For further information on our revenue-generating contracts, refer to Note 7.
Note 4. Fair value of financial instruments
The following is a summary of our marketable security portfolio for the periods presented (in thousands):
Net | ||||||||||
Amortized | Unrealized | Estimated | ||||||||
| Cost |
| Losses |
| Fair Value |
| ||||
March 31, 2022 |
|
|
| |||||||
Debt securities (government) | $ | | $ | ( | $ | | ||||
December 31, 2021 | ||||||||||
Debt securities (government) | $ | | $ | ( | $ | |
Our available-for-sale debt securities generally have contractual maturity dates of between
Fair Value Measurements
FASB accounting guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability (“the exit price”) in an orderly transaction between market participants at the measurement date. The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. In determining fair value we use quoted prices and observable inputs. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of us. The fair value hierarchy is broken down into three levels based on the source of inputs as follows:
Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities.
9
Level 2—Valuations based on observable inputs and quoted prices in active markets for similar assets and liabilities.
Level 3—Valuations based on inputs that are unobservable and models that are significant to the overall fair value measurement.
Recurring Fair Value Measurements
Our marketable securities consist of investments in U.S. government debt securities that are classified as available-for-sale.
At March 31, 2022 and December 31, 2021, our Level 2 U.S. government debt securities were valued using readily available pricing sources which utilize market observable inputs, including the current interest rate and other characteristics for similar types of investments. Our long term investments classified as Level 1 were valued using their respective closing stock prices on The Nasdaq Stock Market. We did not experience any transfers of financial instruments between the fair value hierarchy levels during the three months ended March 31, 2022.
The following fair value hierarchy table presents information about each major category of our financial assets measured at fair value on a recurring basis (in thousands):
Fair Value Measurement at Reporting Date Using: | |||||||||||||
Quoted Prices in | Significant Other | Significant | |||||||||||
Active Markets for | Observable | Unobservable | |||||||||||
Identical Assets | Inputs | Inputs | Balance as of | ||||||||||
| (Level 1) |
| (Level 2) |
| (Level 3) |
| March 31, 2022 |
| |||||
Cash and cash equivalents | $ | | $ | — | $ | — | $ | | |||||
Debt securities (government) |
| — |
| |
| — |
| | |||||
Long term investments (Note 7) |
| |
| — |
| — |
| | |||||
Total assets | $ | | $ | | $ | — | $ | |
Fair Value Measurement at Reporting Date Using: | |||||||||||||
Quoted Prices in | Significant Other | Significant | |||||||||||
Active Markets for | Observable | Unobservable | |||||||||||
Identical Assets | Inputs | Inputs | Balance as of | ||||||||||
| (Level 1) |
| (Level 2) |
| (Level 3) |
| December 31, 2021 |
| |||||
Cash and cash equivalents | $ | | $ | — | $ | — | $ | | |||||
Debt securities (government) | — |
| |
| — | | |||||||
Long term investments (Note 7) |
| |
| — |
| — |
| | |||||
Total assets | $ | | $ | | $ | — | $ | |
10
The following fair value hierarchy table presents information about each major category of our financial liabilities measured at fair value on a recurring basis as (in thousands):
Fair Value Measurement at Reporting Date Using: | ||||||||||||
Quoted Prices in | Significant Other | Significant | ||||||||||
Active Markets for | Observable | Unobservable | ||||||||||
Identical Liabilities | Inputs | Inputs | Balance as of | |||||||||
| (Level 1) |
| (Level 2) |
| (Level 3) |
| March 31, 2022 | |||||
Acquisition-related contingent consideration | $ | — | $ | — | $ | | $ | | ||||
Total liabilities | $ | — | $ | — | $ | | $ | |
Fair Value Measurement at Reporting Date Using: | |||||||||||||
Quoted Prices in | Significant Other | Significant | |||||||||||
Active Markets for | Observable | Unobservable | |||||||||||
Identical Liabilities | Inputs | Inputs | Balance as of | ||||||||||
(Level 1) | (Level 2) | (Level 3) | December 31, 2021 | ||||||||||
Acquisition-related contingent consideration | $ | — | $ | — | $ | | $ | | |||||
Total liabilities | $ | — | $ | — | $ | | $ | |
The following is a roll forward of our Level 3 liabilities (in thousands):
2022 | |||
Balance at January 1, | $ | | |
Contingent consideration earned during the period but not yet paid | ( | ||
Change in fair value of contingent consideration | | ||
Balance at March 31, | $ | |
The fair value of the contingent consideration was determined on the date of acquisition, June 1, 2016, using an income approach based on projected future net revenues of ICLUSIG in the European Union and other countries for the approved third line treatment over
We make payments to Takeda Pharmaceutical Company Limited quarterly based on the royalties or any additional milestone payments earned in the previous quarter. At March 31, 2022 and December 31, 2021, contingent consideration earned but not yet paid was $
Note 5. Concentration of credit risk and current expected credit losses
In November 2009, we entered into a collaboration and license agreement with Novartis Pharmaceutical International Ltd. (“Novartis”). In December 2009, we entered into a license, development and commercialization agreement with Eli Lilly and Company (“Lilly”). In December 2018, we entered into a research collaboration and licensing agreement with Innovent Biologics, Inc. (“Innovent”). In July 2019, we entered into a collaboration and license agreement with Zai Lab (Shanghai) Co., Ltd., a subsidiary of Zai Lab Limited (collectively, “Zai Lab”). The above collaboration partners comprised, in aggregate,
11
In November 2011, we began commercialization and distribution of JAKAFI, in April 2020, we began commercialization and distribution of PEMAZYRE, and in October 2021, we began commercialization and distribution of OPZELURA to a number of customers. Our product revenues are concentrated in a number of these customers. The concentration of credit risk related to our JAKAFI, PEMAZYRE and OPZELURA product revenues is as follows:
Percentage of Total Net | ||||||
Product Revenues for the | ||||||
Three Months Ended | ||||||
March 31, | ||||||
| 2022 |
| 2021 |
|
| |
Customer A |
| | % | | % | |
Customer B |
| | % | | % | |
Customer C |
| | % | | % | |
Customer D |
| | % | | % | |
Customer E |
| | % | — | % |
We are exposed to risks associated with extending credit to customers related to the sale of products. Customers A, B, C, D and E comprised, in aggregate,
We assessed our collaborative and customer receivable assets as of March 31, 2022 according to our accounting policy for applying reserves for expected credit losses, noting minimal history of uncollectible receivables and the continued perceived creditworthiness of our third party sales relationships, upon which the expected credit losses were considered de minimis. As of March 31, 2022 and December 31, 2021, we had
Note 6. Inventory
Our inventory balance consists of the following (in thousands):
March 31, | December 31, | ||||||
| 2022 |
| 2021 |
| |||
Raw materials | $ | | $ | | |||
Work-in-process | | | |||||
Finished goods |
| |
| | |||
Total inventory | $ | | $ | |
Inventories, stated at the lower of cost and net realizable value, consist of raw materials, work in process and finished goods. At March 31, 2022, $
We capitalize inventory after FDA approval as the related costs are expected to be recoverable through the commercialization of the product. Costs incurred prior to FDA approval are recorded as research and development expense in our statements of operations. At March 31, 2022, inventory with approximately $
12
Note 7. License agreements
Novartis
In November 2009, we entered into a Collaboration and License Agreement with Novartis. Under the terms of the agreement, Novartis received exclusive development and commercialization rights outside of the United States to our JAK inhibitor 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. Novartis also received worldwide exclusive development and commercialization rights to our MET inhibitor compound capmatinib and certain back-up compounds in all indications.
Under this agreement, we were initially eligible to receive up to $
We also are eligible to receive tiered, double-digit royalties ranging from the upper-teens to the mid-twenties on future JAKAVI net sales outside of the United States, and tiered, worldwide royalties on TABRECTA net sales that range from
For the three months ended March 31, 2022 and 2021, we recorded $
Lilly - Baricitinib
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 our JAK inhibitor baricitinib, and certain back-up compounds for inflammatory and autoimmune diseases.
Under this agreement, we were initially eligible to receive up to $
In May 2020, we amended our agreement with Lilly to enable Lilly to develop and commercialize baricitinib for the treatment of COVID-19. As part of the amended agreement, in addition to the royalties described above, we will be entitled to receive additional royalty payments with rates in the low teens on global net sales of baricitinib for the treatment of COVID-19 that exceed a specified aggregate global net sales threshold.
Product royalty revenue related to Lilly net sales of OLUMIANT outside of the United States for the three months ended March 31, 2022 and 2021 was $
13
Lilly - Ruxolitinib
In March 2016, we entered into an amendment to the agreement with Lilly that amended the non-compete provision of the agreement to allow us to engage in the development and commercialization of ruxolitinib in the GVHD field. Lilly is eligible to receive up to $
Agenus
In January 2015, we entered into a License, Development and Commercialization Agreement with Agenus Inc. and its wholly-owned subsidiary, 4-Antibody AG (now known as Agenus Switzerland Inc.), which we collectively refer to as Agenus. Under this agreement, which was amended in February 2017, the parties have agreed to collaborate on the discovery of novel immuno-therapeutics using Agenus’ antibody discovery platforms. Under the terms of the amended agreement, we received exclusive worldwide development and commercialization rights to
As of March 31, 2022, we have paid Agenus milestones totaling $
In addition, in 2017 we also agreed to purchase
We intend to hold the investment in Agenus for the foreseeable future and therefore, are accounting for our shares held in Agenus at fair value whereby the investment is marked to market through earnings in each reporting period. Given our intent to hold the investment for the foreseeable future, we have classified the investment within long term investments on the accompanying condensed consolidated balance sheets. For the three months ended March 31, 2022 and 2021, we recorded an unrealized loss of $
Merus
In December 2016, we entered into a Collaboration and License Agreement with Merus N.V. (“Merus”). Under this agreement, the parties have agreed to collaborate with respect to the research, discovery and development of bispecific antibodies utilizing Merus’ technology platform. The collaboration encompasses up to
14
In January 2022, we decided to opt-out of the continued development of MCLA-145, a bispecific antibody targeting PD-L1 and CD137. We continue to collaborate with Merus and leverage the Merus platform to develop a pipeline of novel agents, as we continue to hold worldwide exclusive development and commercialization rights to up to ten additional programs. Of these
For each program as to which Merus does not have commercialization or development co-funding rights, Merus is eligible to receive up to $
In addition, in 2016 we entered into a Share Subscription Agreement with Merus, pursuant to which we agreed to purchase
We have concluded that we have the ability to exercise significant influence, but not control, over Merus based primarily on our ownership interest, the level of intra-entity transactions between us and Merus related to development expenses, as well as other qualitative factors. We have elected the fair value option to account for our long term investment in Merus whereby the investment is marked to market through earnings in each reporting period. We believe the fair value option to be the most appropriate accounting method to account for securities in publicly held collaborators for which we have significant influence. For the three months ended March 31, 2022 and 2021 we recorded an unrealized loss of $
Calithera
In January 2017, we entered into a Collaboration and License Agreement with Calithera Biosciences, Inc. (“Calithera”). Under this agreement, we received an exclusive, worldwide license to develop and commercialize small molecule arginase inhibitors, including INCB01158. We have agreed to co-fund
15
As of March 31, 2022, we have paid Calithera milestones totaling $
In addition, in 2017, we entered into a Stock Purchase Agreement with Calithera for the purchase of
We intend to hold the investment in Calithera for the foreseeable future and therefore, are accounting for our shares held in Calithera at fair value whereby the investment is marked to market through earnings in each reporting period. Given our intent to hold the investment for the foreseeable future, we have classified the investment within long term investments on the accompanying condensed consolidated balance sheets. For the three months ended March 31, 2022 and 2021 we recorded an unrealized loss of $
MacroGenics
In October 2017, we entered into a Global Collaboration and License Agreement with MacroGenics, Inc. (“MacroGenics”). Under this agreement, we received exclusive development and commercialization rights worldwide to MacroGenics’ INCMGA0012 (formerly MGA012), an investigational monoclonal antibody that inhibits PD-1. Except as set forth in the succeeding sentence, we 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. 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.
As of March 31, 2022, we have paid MacroGenics developmental milestones totaling $
Research and development expenses for the three months ended March 31, 2022 and 2021 also included $
Syros
In January 2018, we entered into a Target Discovery, Research Collaboration and Option Agreement with Syros Pharmaceuticals, Inc. (“Syros”). Under this agreement, Syros will use its proprietary gene control platform to identify novel therapeutic targets with a focus in myeloproliferative neoplasms and we have received options to obtain exclusive worldwide rights to intellectual property resulting from the collaboration for up to
16
milestones and up to $
In addition, in 2018, we entered into a Stock Purchase Agreement with Syros for the purchase of