10-Q 1 incy-20220331x10q.htm 10-Q
221409550P12M00P10YP36Mhttp://fasb.org/us-gaap/2021-01-31#OtherNonoperatingIncomeExpensehttp://fasb.org/us-gaap/2021-01-31#OtherNonoperatingIncomeExpense0000879169--12-312022Q1false221084433P3Y0000879169us-gaap:CommonStockMember2021-01-012021-03-310000879169us-gaap:RetainedEarningsMember2022-03-310000879169us-gaap:CommonStockMember2022-03-310000879169us-gaap:AdditionalPaidInCapitalMember2022-03-310000879169us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-310000879169us-gaap:RetainedEarningsMember2021-12-310000879169us-gaap:CommonStockMember2021-12-310000879169us-gaap:AdditionalPaidInCapitalMember2021-12-310000879169us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310000879169us-gaap:RetainedEarningsMember2021-03-310000879169us-gaap:CommonStockMember2021-03-310000879169us-gaap:AdditionalPaidInCapitalMember2021-03-310000879169us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310000879169us-gaap:RetainedEarningsMember2020-12-310000879169us-gaap:CommonStockMember2020-12-310000879169us-gaap:AdditionalPaidInCapitalMember2020-12-310000879169us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310000879169us-gaap:EmployeeStockOptionMember2021-12-310000879169us-gaap:EmployeeStockMember2022-01-012022-03-310000879169us-gaap:EmployeeStockOptionMember2021-01-012021-03-310000879169us-gaap:EmployeeStockMember2021-01-012021-03-310000879169us-gaap:EmployeeStockOptionMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMember2022-01-012022-03-310000879169us-gaap:EmployeeStockOptionMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2022-01-012022-03-310000879169srt:MinimumMemberus-gaap:PerformanceSharesMember2022-01-012022-03-310000879169srt:MaximumMemberus-gaap:PerformanceSharesMember2022-01-012022-03-310000879169incy:AgenusMember2021-01-012021-12-310000879169incy:AgenusMember2020-01-012020-12-310000879169incy:OlumiantRoyaltyMemberus-gaap:NonUsMemberincy:EliLillyMember2022-01-012022-03-310000879169incy:JakaviMemberus-gaap:NonUsMemberincy:NovartisMember2022-01-012022-03-310000879169incy:TabrectaMemberincy:NovartisMember2022-01-012022-03-310000879169us-gaap:RoyaltyMember2022-01-012022-03-310000879169us-gaap:ProductMember2022-01-012022-03-310000879169incy:TabrectaRoyaltyRevenuesMember2022-01-012022-03-310000879169incy:PemazyreMember2022-01-012022-03-310000879169incy:OpzeluraMember2022-01-012022-03-310000879169incy:OlumiantRoyaltyMember2022-01-012022-03-310000879169incy:MINJUVIMember2022-01-012022-03-310000879169incy:MilestoneAndContractRevenueMember2022-01-012022-03-310000879169incy:JakaviRoyaltyRevenuesMember2022-01-012022-03-310000879169incy:JAKAFIMember2022-01-012022-03-310000879169incy:ICLUSIGMember2022-01-012022-03-310000879169incy:OlumiantRoyaltyMemberus-gaap:NonUsMemberincy:EliLillyMember2021-01-012021-03-310000879169incy:JakaviMemberus-gaap:NonUsMemberincy:NovartisMember2021-01-012021-03-310000879169incy:TabrectaMemberincy:NovartisMember2021-01-012021-03-310000879169us-gaap:RoyaltyMember2021-01-012021-03-310000879169us-gaap:ProductMember2021-01-012021-03-310000879169incy:TabrectaRoyaltyRevenuesMember2021-01-012021-03-310000879169incy:PemazyreMember2021-01-012021-03-310000879169incy:OlumiantRoyaltyMember2021-01-012021-03-310000879169incy:JakaviRoyaltyRevenuesMember2021-01-012021-03-310000879169incy:JAKAFIMember2021-01-012021-03-310000879169incy:ICLUSIGMember2021-01-012021-03-310000879169incy:MorphosysAgMember2022-01-012022-03-310000879169incy:MacrogenicsMember2022-01-012022-03-310000879169incy:InvestmentInSyndaxPharmaceuticalsIncMemberincy:StockPurchaseAgreementMember2021-12-092021-12-090000879169incy:MorphosysAgMember2021-01-012021-03-310000879169incy:MacrogenicsMember2021-01-012021-03-310000879169us-gaap:ConstructionInProgressMemberincy:LandLocatedWithinYParcSwitzerlandsLargestTechnologyParkInYverdonMember2022-03-310000879169incy:BuildingAndLeaseholdImprovementsMemberincy:OfficeBuildingMorgesSwitzerlandMember2022-03-310000879169us-gaap:OfficeEquipmentMember2022-03-310000879169us-gaap:LandMember2022-03-310000879169us-gaap:EquipmentMember2022-03-310000879169us-gaap:ConstructionInProgressMember2022-03-310000879169us-gaap:ComputerEquipmentMember2022-03-310000879169incy:OperatingLeaseRightOfUseAssetsMember2022-03-310000879169incy:BuildingAndLeaseholdImprovementsMember2022-03-310000879169incy:BuildingAndOfficeEquipmentMemberincy:OfficeBuildingWilmingtonDelawareMember2021-12-310000879169us-gaap:OfficeEquipmentMember2021-12-310000879169us-gaap:LandMember2021-12-310000879169us-gaap:EquipmentMember2021-12-310000879169us-gaap:ConstructionInProgressMember2021-12-310000879169us-gaap:ComputerEquipmentMember2021-12-310000879169incy:OperatingLeaseRightOfUseAssetsMember2021-12-310000879169incy:BuildingAndLeaseholdImprovementsMember2021-12-310000879169incy:LandLocatedWithinYParcSwitzerlandsLargestTechnologyParkInYverdonMember2018-07-012018-07-310000879169us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-03-310000879169us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310000879169us-gaap:RetainedEarningsMember2022-01-012022-03-310000879169us-gaap:RetainedEarningsMember2021-01-012021-03-310000879169incy:InvestmentInSyndaxPharmaceuticalsIncMember2021-12-310000879169incy:AgenusMember2021-12-310000879169incy:OfficeBuildingMorgesSwitzerlandMember2018-02-280000879169incy:OfficeBuildingMorgesSwitzerlandMember2022-01-012022-03-310000879169incy:SyrosPharmaceuticalsIncMember2021-12-310000879169incy:MorphosysAgMember2021-12-310000879169incy:MerusNVMember2021-12-310000879169incy:CalitheraBiosciencesIncMember2021-12-310000879169incy:JAKAFIMembercountry:USincy:NovartisMember2022-01-012022-03-310000879169incy:JAKAFIMembercountry:USincy:NovartisMember2021-01-012021-03-3100008791692021-01-012021-12-310000879169us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-03-310000879169us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-12-310000879169incy:SyrosPharmaceuticalsIncMember2022-01-012022-03-310000879169incy:MorphosysAgMember2022-01-012022-03-310000879169incy:MerusNVMember2022-01-012022-03-310000879169incy:InvestmentInSyndaxPharmaceuticalsIncMember2022-01-012022-03-310000879169incy:CalitheraBiosciencesIncMember2022-01-012022-03-310000879169incy:AgenusMember2022-01-012022-03-310000879169incy:SyrosPharmaceuticalsIncMember2021-01-012021-03-310000879169incy:MorphosysAgMember2021-01-012021-03-310000879169incy:MerusNVMember2021-01-012021-03-310000879169incy:CalitheraBiosciencesIncMember2021-01-012021-03-310000879169incy:AgenusMember2021-01-012021-03-310000879169incy:MerusNVMemberus-gaap:IPOMember2021-01-310000879169incy:SyrosPharmaceuticalsIncMember2022-03-310000879169incy:MorphosysAgMember2022-03-310000879169incy:MerusNVMember2022-03-310000879169incy:InvestmentInSyndaxPharmaceuticalsIncMember2022-03-310000879169incy:CalitheraBiosciencesIncMember2022-03-310000879169incy:AgenusMember2022-03-310000879169incy:InvestmentInSyndaxPharmaceuticalsIncMemberincy:StockPurchaseAgreementMember2021-12-090000879169incy:InvestmentInSyndaxPharmaceuticalsIncMemberincy:StockPurchaseAgreementMember2021-09-300000879169incy:SyrosPharmaceuticalsIncMemberincy:StockPurchaseAgreementMember2018-12-310000879169incy:SyrosPharmaceuticalsIncMemberincy:AmendedStockPurchaseAgreementMember2018-12-310000879169incy:CalitheraBiosciencesIncMemberincy:StockPurchaseAgreementMember2017-12-310000879169incy:AgenusMemberincy:StockPurchaseAgreementMember2017-12-310000879169incy:MerusNVMemberincy:StockPurchaseAgreementMember2016-12-310000879169us-gaap:EmployeeStockOptionMember2022-01-012022-03-310000879169us-gaap:RestrictedStockUnitsRSUMember2022-03-310000879169us-gaap:PerformanceSharesMember2022-03-310000879169us-gaap:EmployeeStockOptionMember2022-03-310000879169srt:MinimumMember2022-01-012022-03-310000879169srt:MaximumMember2022-01-012022-03-310000879169incy:CustomerEMemberincy:SalesRevenueGoodsServicesNetMemberus-gaap:CustomerConcentrationRiskMember2022-01-012022-03-310000879169incy:CustomerDMemberincy:SalesRevenueGoodsServicesNetMemberus-gaap:CustomerConcentrationRiskMember2022-01-012022-03-310000879169incy:CustomerCMemberincy:SalesRevenueGoodsServicesNetMemberus-gaap:CustomerConcentrationRiskMember2022-01-012022-03-310000879169incy:CustomerBMemberincy:SalesRevenueGoodsServicesNetMemberus-gaap:CustomerConcentrationRiskMember2022-01-012022-03-310000879169incy:CustomerAMemberincy:SalesRevenueGoodsServicesNetMemberus-gaap:CustomerConcentrationRiskMember2022-01-012022-03-310000879169incy:CollaborationPartnersaBCAndDMemberus-gaap:AccountsReceivableMemberus-gaap:CreditConcentrationRiskMember2022-01-012022-03-310000879169incy:AggregateConcentrationCustomersMemberus-gaap:AccountsReceivableMemberus-gaap:CreditConcentrationRiskMember2022-01-012022-03-310000879169incy:CollaborationPartnersaBCAndDMemberus-gaap:AccountsReceivableMemberus-gaap:CreditConcentrationRiskMember2021-01-012021-12-310000879169incy:AggregateConcentrationCustomersMemberus-gaap:AccountsReceivableMemberus-gaap:CreditConcentrationRiskMember2021-01-012021-12-310000879169incy:CustomerDMemberincy:SalesRevenueGoodsServicesNetMemberus-gaap:CustomerConcentrationRiskMember2021-01-012021-03-310000879169incy:CustomerCMemberincy:SalesRevenueGoodsServicesNetMemberus-gaap:CustomerConcentrationRiskMember2021-01-012021-03-310000879169incy:CustomerBMemberincy:SalesRevenueGoodsServicesNetMemberus-gaap:CustomerConcentrationRiskMember2021-01-012021-03-310000879169incy:CustomerAMemberincy:SalesRevenueGoodsServicesNetMemberus-gaap:CustomerConcentrationRiskMember2021-01-012021-03-3100008791692021-03-3100008791692020-12-310000879169incy:AriadPharmaceuticalsMemberus-gaap:LiabilityMemberus-gaap:MeasurementInputDiscountRateMember2016-06-010000879169us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2022-03-310000879169us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-310000879169incy:CorporateAndGovernmentDebtSecuritiesMember2022-03-310000879169incy:CorporateAndGovernmentDebtSecuritiesMember2021-12-310000879169us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2022-03-310000879169us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2022-03-310000879169us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2022-03-310000879169us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-310000879169us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-310000879169us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310000879169incy:OfficeBuildingWilmingtonDelawareMember2022-03-310000879169incy:OfficeBuildingMorgesSwitzerlandMember2022-03-310000879169us-gaap:EmployeeStockOptionMember2022-01-012022-03-310000879169us-gaap:EmployeeStockOptionMember2021-01-012021-03-310000879169us-gaap:SellingGeneralAndAdministrativeExpensesMember2022-01-012022-03-310000879169us-gaap:ResearchAndDevelopmentExpenseMember2022-01-012022-03-310000879169us-gaap:PerformanceSharesMember2022-01-012022-03-310000879169us-gaap:CostOfSalesMember2022-01-012022-03-310000879169us-gaap:SellingGeneralAndAdministrativeExpensesMember2021-01-012021-03-310000879169us-gaap:ResearchAndDevelopmentExpenseMember2021-01-012021-03-310000879169us-gaap:PerformanceSharesMember2021-01-012021-03-310000879169us-gaap:CostOfSalesMember2021-01-012021-03-310000879169us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310000879169us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310000879169us-gaap:AccruedLiabilitiesMemberincy:MorphosysAgMember2022-03-310000879169us-gaap:AccruedLiabilitiesMemberincy:MacrogenicsMember2022-03-310000879169us-gaap:AccruedLiabilitiesMemberincy:MorphosysAgMember2021-12-310000879169us-gaap:AccruedLiabilitiesMemberincy:MacrogenicsMember2021-12-310000879169incy:AmericanDepositarySharesMember2020-01-310000879169us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-03-310000879169incy:NovartisMember2022-03-310000879169incy:NovartisMember2021-12-310000879169incy:InvestmentInSyndaxPharmaceuticalsIncMemberincy:StockPurchaseAgreementMember2021-09-012021-09-300000879169incy:SyrosPharmaceuticalsIncMemberincy:StockPurchaseAgreementMember2018-01-012018-12-310000879169incy:SyrosPharmaceuticalsIncMemberincy:AmendedStockPurchaseAgreementMember2018-01-012018-12-310000879169incy:CalitheraBiosciencesIncMemberincy:StockPurchaseAgreementMember2017-01-012017-12-310000879169incy:AgenusMemberincy:StockPurchaseAgreementMember2017-01-012017-12-310000879169incy:MerusNVMemberincy:StockPurchaseAgreementMember2016-01-012016-12-310000879169incy:JakaviMembersrt:MinimumMemberincy:NovartisMember2022-01-012022-03-310000879169incy:JakaviMembersrt:MaximumMemberincy:NovartisMember2022-01-012022-03-310000879169incy:DevelopmentRegulatoryAndCommercializationMilestonesMembersrt:MinimumMemberincy:AgenusMember2022-01-012022-03-310000879169incy:DevelopmentRegulatoryAndCommercializationMilestonesMembersrt:MaximumMemberincy:AgenusMember2022-01-012022-03-310000879169incy:AgenusMember2022-01-012022-03-310000879169srt:MinimumMemberincy:MacrogenicsMember2017-10-012017-10-310000879169srt:MaximumMemberincy:MacrogenicsMember2017-10-012017-10-310000879169srt:MinimumMemberus-gaap:NonUsMemberincy:MerusNVMember2016-12-012016-12-310000879169srt:MaximumMemberus-gaap:NonUsMemberincy:MerusNVMember2016-12-012016-12-310000879169srt:MaximumMembercountry:USincy:MerusNVMember2016-12-012016-12-310000879169srt:MinimumMemberincy:MerusNVMember2016-12-012016-12-310000879169srt:MaximumMemberincy:MerusNVMember2016-12-012016-12-310000879169country:USincy:CalitheraBiosciencesIncMember2017-01-012017-01-310000879169incy:SyrosPharmaceuticalsIncMember2018-01-012018-01-310000879169incy:AgenusMember2015-01-012015-01-310000879169incy:InnoventBiologicsIncMember2022-01-012022-03-310000879169incy:TafasitamabMemberincy:InnocarePharmaLimitedMember2021-09-012021-09-300000879169incy:DevelopmentAndRegulatoryMilestonesMemberincy:TafasitamabMemberincy:InnocarePharmaLimitedMember2021-08-012021-08-310000879169incy:CommercializationMilestonesMemberincy:TafasitamabMemberincy:InnocarePharmaLimitedMember2021-08-012021-08-310000879169incy:DevelopmentAndRegulatoryMilestonesMembersrt:MaximumMemberincy:CollaborationAndLicenseAgreementWithZaiLabLtdMember2019-07-012019-07-310000879169incy:CommercializationMilestonesMembersrt:MaximumMemberincy:CollaborationAndLicenseAgreementWithZaiLabLtdMember2019-07-012019-07-310000879169incy:DevelopmentAndRegulatoryMilestonesMembersrt:MaximumMemberincy:InnoventBiologicsIncMember2018-12-012018-12-310000879169incy:CommercializationMilestonesMembersrt:MaximumMemberincy:InnoventBiologicsIncMember2018-12-012018-12-310000879169incy:RegulatoryMilestonesMembersrt:MaximumMemberincy:EliLillyMember2009-12-012009-12-310000879169incy:DevelopmentMilestonesMembersrt:MaximumMemberincy:EliLillyMember2009-12-012009-12-310000879169incy:CommercializationMilestonesMembersrt:MaximumMemberincy:EliLillyMember2009-12-012009-12-310000879169incy:DevelopmentAndRegulatoryMilestonesMemberincy:GvhdMembersrt:MaximumMemberincy:NovartisMember2009-11-012009-11-300000879169incy:RegulatoryMilestonesMembersrt:MaximumMemberincy:NovartisMember2009-11-012009-11-300000879169incy:DevelopmentMilestonesMembersrt:MaximumMemberincy:NovartisMember2009-11-012009-11-300000879169incy:CommercializationMilestonesMembersrt:MaximumMemberincy:NovartisMember2009-11-012009-11-300000879169incy:SyndaxPharmaceuticalsIncMember2021-12-012021-12-310000879169srt:MaximumMemberincy:SyrosPharmaceuticalsIncMember2018-01-310000879169incy:DevelopmentRegulatoryAndCommercializationMilestonesMembersrt:MaximumMemberincy:CalitheraBiosciencesIncMember2017-01-310000879169incy:MorphosysAgMemberincy:MorphosysAgMember2022-01-012022-03-310000879169incy:IncyteMemberincy:MorphosysAgMember2022-01-012022-03-310000879169incy:SyndaxPharmaceuticalsIncMembercountry:USincy:SyndaxPharmaceuticalsIncMember2021-09-012021-09-300000879169incy:IncyteMembercountry:USincy:SyndaxPharmaceuticalsIncMember2021-09-012021-09-300000879169incy:CalitheraBiosciencesIncMember2017-01-012017-01-310000879169incy:MerusNVMember2022-01-012022-01-310000879169incy:RegulatoryMilestonesMemberincy:GvhdMembersrt:EuropeMemberincy:EliLillyMember2022-03-012022-03-310000879169incy:RegulatoryMilestonesMemberincy:GvhdMemberincy:EliLillyMember2019-05-012019-05-310000879169incy:DevelopmentMilestonesMemberincy:MacrogenicsMember2017-10-012022-03-310000879169incy:CalitheraBiosciencesIncMember2017-01-012022-03-310000879169incy:MerusNVMember2016-12-012022-03-310000879169incy:DevelopmentRegulatoryAndCommercializationMilestonesMemberincy:AgenusMember2015-01-012022-03-310000879169incy:MerusNVMember2016-12-012016-12-310000879169incy:RegulatoryMilestonesMemberincy:PemazyreMemberincy:InnoventBiologicsIncMember2022-03-012022-03-310000879169incy:RegulatoryMilestonesMemberincy:EliLillyMember2009-12-012022-03-310000879169incy:DevelopmentMilestonesMemberincy:EliLillyMember2009-12-012022-03-310000879169incy:CommercializationMilestonesMemberincy:EliLillyMember2009-12-012022-03-310000879169incy:RegulatoryMilestonesMemberincy:NovartisMember2009-11-012022-03-310000879169incy:DevelopmentMilestonesMemberincy:NovartisMember2009-11-012022-03-310000879169incy:CommercializationMilestonesMemberincy:NovartisMember2009-11-012022-03-310000879169incy:DevelopmentRegulatoryAndCommercializationMilestonesMemberincy:AgenusMember2022-03-310000879169incy:DevelopmentAndRegulatoryMilestonesMemberincy:SyndaxPharmaceuticalsIncMembersrt:MaximumMember2021-09-300000879169incy:CommercializationMilestonesMemberincy:SyndaxPharmaceuticalsIncMembersrt:MaximumMember2021-09-300000879169incy:FutureContingentDiscoveryMilestoneMembersrt:MaximumMemberincy:NimbleMember2020-09-300000879169incy:DevelopmentAndRegulatoryMilestonesMembersrt:MaximumMemberincy:NimbleMember2020-09-300000879169incy:CommercializationMilestonesMembersrt:MaximumMemberincy:NimbleMember2020-09-300000879169incy:DevelopmentAndRegulatoryMilestonesMembersrt:MaximumMemberincy:MorphosysAgMember2020-01-310000879169incy:CommercializationMilestonesMembersrt:MaximumMemberincy:MorphosysAgMember2020-01-310000879169incy:DevelopmentAndRegulatoryMilestonesMembersrt:MaximumMemberincy:SyrosPharmaceuticalsIncMember2018-01-310000879169incy:CommercializationMilestonesMembersrt:MaximumMemberincy:SyrosPharmaceuticalsIncMember2018-01-310000879169incy:DevelopmentAndRegulatoryMilestonesMembersrt:MaximumMemberincy:MacrogenicsMember2017-10-310000879169incy:CommercializationMilestonesMembersrt:MaximumMemberincy:MacrogenicsMember2017-10-310000879169incy:DevelopmentAndRegulatoryMilestonesMembersrt:MaximumMemberincy:MerusNVMember2016-12-310000879169incy:CommercializationMilestonesMembersrt:MaximumMemberincy:MerusNVMember2016-12-310000879169incy:GvhdMemberincy:EliLillyMember2016-03-310000879169incy:OfficeBuildingMorgesSwitzerlandMember2019-06-300000879169incy:AriadPharmaceuticalsMemberus-gaap:LiabilityMember2016-06-012016-06-010000879169incy:MerusNVMemberus-gaap:IPOMember2021-01-012021-01-310000879169country:USincy:MorphosysAgMember2021-01-012021-03-3100008791692021-01-012021-03-310000879169country:USincy:MerusNVMember2016-12-012016-12-310000879169country:USincy:MorphosysAgMember2022-01-012022-03-310000879169us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-01-012022-03-310000879169incy:AccruedAndOtherCurrentLiabilityMemberincy:AriadPharmaceuticalsMember2022-01-012022-03-310000879169incy:AccruedAndOtherCurrentLiabilityMemberincy:AriadPharmaceuticalsMember2021-01-012021-12-3100008791692022-03-3100008791692021-12-3100008791692022-04-2600008791692022-01-012022-03-31xbrli:sharesiso4217:USDxbrli:pureincy:itemiso4217:USDxbrli:sharesutr:sqftincy:segment

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

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: 001-12400

INCYTE CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

94-3136539

(State or other jurisdiction of
incorporation or organization)

(IRS Employer
Identification No.)

1801 Augustine Cut-Off

Wilmington, DE 19803

19803

(Address of principal executive offices)

(Zip Code)

(302) 498-6700

(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

Common Stock, $.001 par value per share

INCY

The Nasdaq Stock Market LLC

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.   Yes   No

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).   Yes   No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer 

Accelerated filer 

Non-accelerated filer 

Smaller reporting company 

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.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes   No

The number of outstanding shares of the registrant’s Common Stock, $.001 par value, was 221,505,011 as of April 26, 2022.

INCYTE CORPORATION

INDEX

0

PART I: FINANCIAL INFORMATION

    

3

Item 1.

Financial Statements

3

Condensed Consolidated Balance Sheets

3

Condensed Consolidated Statements of Operations

4

Condensed Consolidated Statements of Comprehensive Income (Loss)

5

Condensed Consolidated Statements of Stockholders’ Equity

6

Condensed Consolidated Statements of Cash Flows

7

Notes to Condensed Consolidated Financial Statements

8

Item 2.

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

26

Forward-Looking Statements

26

Summary Risk Factors

28

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

52

Item 4.

Controls and Procedures

53

PART II: OTHER INFORMATION

53

Item 1A.

Risk Factors

53

Item 6.

Exhibits

82

Signatures

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

$

2,256,759

$

2,057,440

Marketable securities—available-for-sale (amortized cost $291,613 and $291,871 as of March 31, 2022 and December 31, 2021, respectively; allowance for credit losses $0 as of March 31, 2022 and December 31, 2021)

 

287,401

 

290,752

Accounts receivable

 

562,344

 

616,300

Inventory

 

35,457

 

27,904

Prepaid expenses and other current assets

146,130

 

126,278

Total current assets

 

3,288,091

 

3,118,674

Restricted cash and investments

 

1,700

1,720

Long term investments

 

174,681

221,266

Inventory

 

35,384

29,034

Property and equipment, net

 

729,217

723,920

Finance lease right-of-use assets, net

27,392

27,548

Other intangible assets, net

145,371

150,755

Goodwill

155,593

155,593

Deferred income tax asset

465,369

467,538

Other assets, net

 

31,423

37,304

Total assets

$

5,054,221

$

4,933,352

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

152,547

$

172,110

Accrued compensation

 

83,657

 

108,962

Accrued and other current liabilities

 

609,290

 

533,595

Finance lease liabilities

2,796

2,635

Acquisition-related contingent consideration

37,873

37,006

Total current liabilities

 

886,163

 

854,308

Acquisition-related contingent consideration

204,127

206,994

Finance lease liabilities

31,385

31,632

Other liabilities

 

69,474

70,414

Total liabilities

 

1,191,149

 

1,163,348

Commitments and contingencies (Note 14)

Stockholders’ equity:

Preferred stock, $0.001 par value; 5,000,000 shares authorized; none issued or outstanding

 

 

Common stock, $0.001 par value; 400,000,000 shares authorized; 221,409,550 and 221,084,433 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively

 

221

221

Additional paid-in capital

 

4,625,780

4,567,111

Accumulated other comprehensive loss

 

(23,047)

(19,454)

Accumulated deficit

 

(739,882)

(777,874)

Total stockholders’ equity

 

3,863,072

 

3,770,004

Total liabilities and stockholders’ equity

$

5,054,221

$

4,933,352

*   The condensed consolidated balance sheet at December 31, 2021 has been derived from the audited consolidated financial statements at that date.

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

$

605,821

$

504,811

Product royalty revenues

 

122,414

 

99,907

Milestone and contract revenues

 

5,000

 

Total revenues

 

733,235

 

604,718

Costs and expenses:

Cost of product revenues (including definite-lived intangible amortization)

 

42,614

29,220

Research and development

 

353,373

306,896

Selling, general and administrative

 

209,584

153,795

Change in fair value of acquisition-related contingent consideration

6,382

5,526

Collaboration loss sharing

4,742

10,484

Total costs and expenses

 

616,695

 

505,921

Income from operations

 

116,540

 

98,797

Other income (expense), net

 

1,260

(1,407)

Interest expense

 

(680)

(359)

Unrealized loss on long term investments

 

(46,585)

(27,709)

Income before provision for income taxes

 

70,535

 

69,322

Provision for income taxes

 

32,543

15,787

Net income

$

37,992

$

53,535

Net income per share:

Basic

$

0.17

$

0.24

Diluted

$

0.17

$

0.24

Shares used in computing net income per share:

Basic

221,326

219,801

Diluted

222,950

221,867

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

$

37,992

$

53,535

Other comprehensive loss:

Foreign currency translation loss

(782)

(5,308)

Unrealized loss on marketable securities, net of tax

 

(3,093)

(32)

Defined benefit pension gain, net of tax

282

342

Other comprehensive loss

 

(3,593)

 

(4,998)

Comprehensive income

$

34,399

$

48,537

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

$

219

$

4,352,864

$

(15,360)

$

(1,726,455)

$

2,611,268

Issuance of 389,512 shares of Common Stock upon exercise of stock options and settlement of employee restricted stock units, net of shares withheld for taxes

 

1

 

20,027

 

 

 

20,028

Issuance of 1,357 shares of Common Stock for services rendered

108

108

Stock compensation

 

47,903

 

47,903

Other comprehensive loss

 

 

(4,998)

 

(4,998)

Net income

 

 

 

53,535

53,535

Balances at March 31, 2021

$

220

$

4,420,902

$

(20,358)

$

(1,672,920)

$

2,727,844

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

$

221

$

4,567,111

$

(19,454)

$

(777,874)

$

3,770,004

Issuance of 323,582 shares of Common Stock upon exercise of stock options and settlement of employee restricted stock units, net of shares withheld for taxes

 

 

14,237

 

 

 

14,237

Issuance of 1,535 shares of Common Stock for services rendered

112

112

Stock compensation

 

44,320

 

44,320

Other comprehensive loss

 

 

(3,593)

 

(3,593)

Net income

 

 

 

37,992

37,992

Balances at March 31, 2022

$

221

$

4,625,780

$

(23,047)

$

(739,882)

$

3,863,072

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

$

37,992

$

53,535

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

 

16,438

13,838

Stock-based compensation

 

43,841

47,358

Deferred income taxes

2,106

70

Other, net

2,091

4,622

Unrealized loss on long term investments

 

46,585

27,709

Change in fair value of acquisition-related contingent consideration

6,382

5,526

Changes in operating assets and liabilities:

Accounts receivable

 

53,956

84,637

Prepaid expenses and other assets

 

(13,971)

(10,777)

Inventory

 

(13,903)

(4,406)

Accounts payable

 

(19,563)

(13,709)

Accrued and other liabilities

 

53,787

(2,308)

Net cash provided by operating activities

 

215,741

 

206,095

Cash flows from investing activities:

Purchase of long term investments

 

 

(8,662)

Sale of long term investments

1,080

Capital expenditures

 

(17,006)

 

(48,083)

Purchases of marketable securities

 

 

(39,301)

Sale and maturities of marketable securities

 

258

 

35,213

Net cash used in investing activities

 

(16,748)

 

(59,753)

Cash flows from financing activities:

Proceeds from issuance of common stock under stock plans

 

16,398

22,376

Tax withholdings related to restricted and performance share vesting

(2,161)

(2,348)

Payment of finance lease liabilities

 

(668)

(573)

Payment of contingent consideration

(13,473)

(6,620)

Net cash provided by financing activities

 

96

 

12,835

Effect of exchange rates on cash, cash equivalents, restricted cash and investments

210

(2,331)

Net increase in cash, cash equivalents, restricted cash and investments

 

199,299

 

156,846

Cash, cash equivalents, restricted cash and investments at beginning of period

2,059,160

1,514,765

Cash, cash equivalents, restricted cash and investments at end of period

$

2,258,459

$

1,671,611

Supplemental Schedule of Cash Flow Information

Income taxes paid

$

3,472

$

339

Unpaid purchases of property and equipment

$

15,764

$

21,262

Leased assets obtained in exchange for new operating lease liabilities

$

1,618

$

1,898

Leased assets obtained in exchange for new finance lease liabilities

$

584

$

68

See accompanying notes.

7

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 one operating segment.

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.

8

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

$

544,464

$

465,710

ICLUSIG revenues, net

26,069

25,645

PEMAZYRE revenues, net

18,032

13,456

MINJUVI revenues, net

4,502

OPZELURA revenues, net

12,754

Total product revenues, net

605,821

504,811

JAKAVI product royalty revenues

70,867

65,602

OLUMIANT product royalty revenues

48,064

32,258

TABRECTA product royalty revenues

3,483

2,047

Total product royalty revenues

122,414

99,907

Milestone and contract revenues

5,000

Total revenues

$

733,235

$

604,718

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)

$

291,613

$

(4,212)

$

287,401

December 31, 2021

Debt securities (government)

$

291,871

$

(1,119)

$

290,752

Our available-for-sale debt securities generally have contractual maturity dates of between 12 to 18 months. Debt security assets were assessed for risk of expected credit losses. As of March 31, 2022 and December 31, 2021, the available-for-sale debt securities were held in U.S.-government backed securities and in Treasury bonds and were assessed on an individual security basis to have a de minimis risk of credit loss.

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

$

2,256,759

$

$

$

2,256,759

Debt securities (government)

 

 

287,401

 

 

287,401

Long term investments (Note 7)

 

174,681

 

 

 

174,681

Total assets

$

2,431,440

$

287,401

$

$

2,718,841

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

$

2,057,440

$

$

$

2,057,440

Debt securities (government)

 

290,752

 

290,752

Long term investments (Note 7)

 

221,266

 

 

 

221,266

Total assets

$

2,278,706

$

290,752

$

$

2,569,458

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

$

$

$

242,000

$

242,000

Total liabilities

$

$

$

242,000

$

242,000

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

$

$

$

244,000

$

244,000

Total liabilities

$

$

$

244,000

$

244,000

The following is a roll forward of our Level 3 liabilities (in thousands):

2022

Balance at January 1,

$

244,000

Contingent consideration earned during the period but not yet paid

(8,382)

Change in fair value of contingent consideration

6,382

Balance at March 31,

$

242,000

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 18 years, and discounted to present value at a rate of 10%. The fair value of the contingent consideration is remeasured each reporting period, with changes in fair value recorded in the condensed consolidated statements of operations. The valuation inputs utilized to estimate the fair value of the contingent consideration as of March 31, 2022 and December 31, 2021 included a discount rate of 10% and updated projections of future net revenues of ICLUSIG in the European Union and other countries for the approved third line treatment. The change in fair value of the contingent consideration during the three months ended March 31, 2022 was due primarily to the passage of time.

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 $8.4 million and $19.6 million, respectively, and was included in accrued and other current liabilities.

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, 24% and 36% of the accounts receivable balance as of March 31, 2022 and December 31, 2021, respectively.  For further information relating to these collaboration and license agreements, refer to Note 7.

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

    

19

%  

18

%  

Customer B

 

12

%  

13

%  

Customer C

 

18

%  

17

%  

Customer D

 

6

%  

10

%  

Customer E

 

10

%  

%  

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, 36% and 31% of the accounts receivable balance as of March 31, 2022 and December 31, 2021, respectively. The concentration of credit risk relating to our other product revenues or accounts receivable is not significant.

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 no allowance for doubtful accounts.

Note 6.     Inventory

Our inventory balance consists of the following (in thousands):

March 31,

December 31,

    

2022

    

2021

 

Raw materials

$

14,717

$

1,275

Work-in-process

37,267

39,895

Finished goods

 

18,857

 

15,768

Total inventory

$

70,841

$

56,938

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, $35.5 million of inventory was classified as current on the condensed consolidated balance sheet as we expect this inventory to be consumed for commercial use within the next twelve months. At March 31, 2022, $35.4 million of inventory was classified as non-current on the condensed consolidated balance sheet as we did not expect this inventory to be consumed for commercial use within the next twelve months. We obtain some inventory components from a limited number of suppliers due to technology, availability, price, quality or other considerations. The loss of a supplier, the deterioration of our relationship with a supplier, or any unilateral violation of the contractual terms under which we are supplied components by a supplier could adversely affect our total revenues and gross margins.

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 $69.9 million of product costs incurred prior to FDA approval had not yet been sold. We expect to sell the pre commercialization inventory over the next 31 months and, as a result, cost of product revenues will reflect a lower average per unit cost of materials.

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 $174.0 million for the achievement of development milestones, up to $495.0 million for the achievement of regulatory milestones and up to $500.0 million for the achievement of sales milestones. In addition, we are eligible to receive up to $75.0 million of additional potential development and regulatory milestones relating to graft-versus-host-disease (“GVHD”). We have recognized and received, in the aggregate, $157.0 million for the achievement of development milestones, $280.0 million for the achievement of regulatory milestones and $200.0 million for the achievement of sales milestones through March 31, 2022.

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 12% to 14%. We are obligated to pay to Novartis tiered royalties in the low single-digits on future JAKAFI net sales within the United States contingent on certain conditions. During the three months ended March 31, 2022 and 2021, such royalties on net sales within the United States totaled $21.7 million and $17.8 million, respectively, and were reflected in cost of product revenues on the condensed consolidated statements of operations. At March 31, 2022 and December 31, 2021, $162.1 million and $148.1 million, respectively, of accrued royalties were included in accrued and other current liabilities on the condensed consolidated balance sheets. 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.

For the three months ended March 31, 2022 and 2021, we recorded $70.8 million and $65.6 million, respectively, of product royalty revenues related to Novartis net sales of JAKAVI outside the United States. For the three months ended March 31, 2022 and 2021, we recorded $3.5 million and $2.0 million, respectively, of product royalty revenues related to Novartis net sales of TABRECTA worldwide.

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 $150.0 million for the achievement of development milestones, up to $365.0 million for the achievement of regulatory milestones and up to $150.0 million for the achievement of sales milestones. We have recognized and received, in aggregate, $149.0 million for the achievement of development milestones, $265.0 million for the achievement of regulatory milestones and $50.0 million for the achievement of sales milestones through March 31, 2022.

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 $48.0 million and $32.3 million, respectively.  

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 $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 March 2022, the positive recommendation from the European Medicines Agency for regulatory approval of ruxolitinib in the GVHD field triggered an additional $20.0 million milestone payment to Lilly, which was recorded as research and development expense in our condensed consolidated statements of operations.

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 four checkpoint modulators directed against GITR, OX40, LAG-3 and TIM-3 as well as two undisclosed targets. 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.   There are currently no profit-share programs. For each royalty-bearing product other than GITR, OX40 and one undisclosed target, Agenus will be eligible to receive tiered royalties on global net sales ranging from 6% to 12%.  For GITR, OX40 and one undisclosed target, Agenus will be eligible to receive 15% royalties on global net sales. 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.

As of March 31, 2022, we have paid Agenus milestones totaling $30.0 million and Agenus is eligible to receive up to an additional $500.0 million in future contingent development, regulatory and commercialization milestones across all programs in the collaboration.

In addition, in 2017 we also agreed to purchase 10.0 million shares of Agenus common stock for an aggregate purchase price of $60.0 million in cash, or $6.00 per share. The fair market value of our long term investment in Agenus as of March 31, 2022 and December 31, 2021 was $29.7 million and $38.9 million, respectively. In 2020, we sold an aggregate of approximately 3.7 million shares of Agenus common stock resulting in gross proceeds of approximately $17.2 million. In 2021, we sold an aggregate of approximately 2.0 million shares of Agenus common stock resulting in gross proceeds of approximately $10.5 million. As of March 31, 2022, we owned less than 5% of the outstanding shares of Agenus common stock.

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 $9.2 million and $5.9 million, respectively, based on the change in fair value of Agenus Inc.’s common stock during the respective periods.

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 ten independent programs.  

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 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.  

For each program as to which Merus does not have commercialization or development co-funding rights, Merus is 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 is 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. As of March 31, 2022, we have paid Merus milestones totaling $2.0 million.

In addition, in 2016 we entered into a Share Subscription Agreement with Merus, pursuant to which we agreed to purchase 3.2 million common shares of Merus for an aggregate purchase price of $80.0 million in cash, or $25.00 per share. The fair market value of our total long term investment in Merus as of March 31, 2022 and December 31, 2021 was $93.9 million and $112.9 million, respectively. In January 2021, we purchased 350,000 common shares in Merus’ underwritten public offering of 4,848,485 common shares at the public offering price of $24.75 per share, or an aggregate purchase price of $8.7 million. As of March 31, 2022, we owned approximately 8% of the outstanding common shares of Merus.

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 $19.0 million and an unrealized gain of $9.4 million, respectively, based on the change in fair value of Merus’ common shares during the respective periods.  

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 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.

15

As of March 31, 2022, we have paid Calithera milestones totaling $12.0 million. Calithera delivered notice of its decision to opt out of its co-funding obligation, effective on September 30, 2020.  As a result, the U.S. profit sharing will no longer be in effect, we will be responsible for funding all of the development costs of INCB01158 and any other licensed products, and the agreement provides that we will 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 is eligible to receive $720.0 million in potential future development, regulatory and sales milestone payments and will have no further rights to research, develop or co-detail INCB001158. We will have the right to take over the conduct of all activities related to the research, development and commercialization of INCB001158 for all indications in the hematology/oncology field.

In addition, in 2017, we entered into a Stock Purchase Agreement with Calithera for the purchase of 1.7 million common shares of Calithera for an aggregate purchase price of $8.0 million in cash, or $4.65 per share. The fair market value of our long term investment in Calithera at March 31, 2022 and December 31, 2021 was $0.7 million and $1.1 million, respectively. As of March 31, 2022, we owned approximately 2% of the outstanding shares of Calithera common stock.

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 $0.5 million and $4.3 million, respectively, based on the change in fair value of Calithera’s common stock during the respective periods.

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 $70.0 million.  MacroGenics is eligible to receive up to an additional $365.0 million in future contingent development and regulatory milestones, and up to $330.0 million in sales milestones as well as tiered royalties ranging from 15% to 24% of global net sales.

Research and development expenses for the three months ended March 31, 2022 and 2021 also included $13.5 million and $13.6 million, respectively, of development costs incurred pursuant to the MacroGenics agreement. At March 31, 2022 and December 31, 2021, a total of $0.4 million and $0.7 million of such costs were included in accrued and other liabilities on the condensed consolidated balance sheets.  

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

16

milestones and up to $65.0 million in potential sales milestones. Syros is also eligible to receive low single-digit royalties on net sales of products resulting from the collaboration.

In addition, in 2018, we entered into a Stock Purchase Agreement with Syros for the purchase of 0.8 million shares of common stock of Syros for an aggregate purchase price of $