INCYTE CORP (Form: 10-Q, Received: 04/30/2015 17:11:55)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2015

o 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: 0-27488

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)

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. x Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). x Yes o No

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

Large accelerated filer x		Accelerated filer o

Non-accelerated filer o		Smaller reporting company o
(Do not check if a smaller reporting company)

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

The number of outstanding shares of the registrant’s Common Stock, $0.001 par value, was 179,042,841 as of April 23, 2015.

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INCYTE CORPORATION

INDEX

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 Loss	5

	Condensed Consolidated Statements of Cash Flows	6

	Notes to Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	37

Item 4.	Controls and Procedures	38

PART II: OTHER INFORMATION		39

Item 1A.	Risk Factors	39

Item 6.	Exhibits	56

	Signatures	57

	Exhibit Index	58

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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, 2015			December 31, 2014*
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	421,822		$	452,297
Marketable securities—available-for-sale	163,602			147,966
Restricted investments	500			500
Accounts receivable	69,604			57,933
Inventory	2,414			358
Deferred income taxes	6,025			19,641
Prepaid expenses and other current assets	28,178			20,519

Total current assets	692,145			699,214

Restricted investments	13,875			14,000
Long term investment	39,829			—
Inventory	17,021			19,078
Property and equipment, net	80,667			81,790
Other assets, net	19,087			15,987

Total assets	$	862,624		$	830,069

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	26,586		$	24,462
Accrued compensation	24,324			34,422
Interest payable	4,443			1,841
Accrued and other current liabilities	70,048			62,270
Deferred revenue—collaborative agreements	12,857			12,880
Convertible senior notes	87,337			85,640

Total current liabilities	225,595			221,515

Convertible senior notes	610,210			603,478
Other liabilities	52,910			54,552
Deferred income taxes	6,025			19,641
Deferred revenue—collaborative agreements	9,297			12,511

Total liabilities	904,037			911,697

Stockholders’deficit:
Preferred stock, $0.001 par value; 5,000,000 shares authorized; none issued or outstanding as of March 31, 2015 and December 31, 2014	—			—
Common stock, $0.001 par value; 400,000,000 shares authorized; 173,386,941 and 170,876,619 shares issued and outstanding as of March 31, 2015 and December 31, 2014, respectively	173			171
Additional paid-in capital	1,760,033			1,701,904
Accumulated other comprehensive income	2,258			1,815
Accumulated deficit	(1,803,877		)	(1,785,518		)
Total stockholders’ deficit	(41,413		)	(81,628		)

Total liabilities and stockholders’deficit	$	862,624		$	830,069

* The condensed consolidated balance sheet at December 31, 2014 has been derived from the audited financial statements at that date.

See accompanying notes.

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INCYTE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

( in thousands, except per share amounts)

(unaudited)

	Three Months Ended March 31,
	2015			2014
Revenues:
Product revenues, net	$	115,330		$	69,651
Product royalty revenues	15,673			9,826
Contract revenues	28,214			10,214
Other revenues	58			101

Total revenues	159,275			89,792

Costs and expenses:
Cost of product revenues	2,974			168
Research and development	118,365			75,585
Selling, general and administrative	44,871			36,974

Total costs and expenses	166,210			112,727

Loss from operations	(6,935		)	(22,935		)
Interest and other income, net	1,630			735
Interest expense	(12,687		)	(11,443		)
Debt exchange expense on senior note conversions	—			(265		)

Loss before provision for income taxes	(17,992		)	(33,908		)

Provision for income taxes	367			49

Net loss	$	(18,359	)	$	(33,957	)

Basic and diluted net loss per share	$	(0.11	)	$	(0.21	)

Shares used in computing basic and diluted net loss per share	172,070			165,357

See accompanying notes.

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INCYTE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

(unaudited)

	Three Months Ended March 31,
	2015			2014

Net loss	$	(18,359	)	$	(33,957	)

Other comprehensive income:
Unrealized gains on restricted investments and marketable securities, net of tax	443			47
Other comprehensive income	443			47

Comprehensive loss	$	(17,916	)	$	(33,910	)

See accompanying notes.

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INCYTE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Three Months Ended March 31,
	2015			2014
Cash flows from operating activities:
Net loss	$	(18,359	)	$	(33,957	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization of debt discounts	11,835			9,623
Stock-based compensation	17,558			15,347
Debt exchange expense on senior note conversions	—			265
Excess tax provision (benefit) from stock based compensation	(3,833		)	31
Changes in operating assets and liabilities:
Accounts receivable	(11,671		)	(11,020		)
Prepaid expenses and other assets	(194		)	(4,899		)
Inventory	1			(506		)
Accounts payable	2,124			(1,152		)
Accrued and other liabilities	1,190			(2,208		)
Deferred revenue — collaborative agreements	(3,237		)	(3,218		)
Net cash used in operating activities	(4,586		)	(31,694		)
Cash flows from investing activities:
Long term investment	(39,829		)	—
Capital expenditures	(3,553		)	(2,663		)
Purchases of marketable securities	(34,467		)	(45,114		)
Maturities of marketable securities	19,274			90
Net cash used in investing activities	(58,575		)	(47,687		)
Cash flows from financing activities:
Release of restricted investments	125			—
Proceeds from issuance of common stock under stock plans	29,180			44,833
Direct financing arrangement repayments	(452		)	—
Excess tax provision (benefit) from stock based compensation	3,833			(31		)
Cash paid in connection with exchange of 4.75% convertible senior notes due 2015	—			(265		)
Net cash provided by financing activities	32,686			44,537
Net decrease in cash and cash equivalents	(30,475		)	(34,844		)
Cash and cash equivalents at beginning of period	452,297			471,429
Cash and cash equivalents at end of period	$	421,822		$	436,585

Supplemental Schedule of Cash Flow Information
Interest paid	$	839		$	—
Incomes taxes paid	$	13		$	—
Reclassification to additional paid in capital in connection with exchange of 4.75% convertible senior notes due 2015	$	—		$	4,446

See accompanying notes.

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INCYTE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2015

(Unaudited)

1. Organization and business

Incyte Corporation (“Incyte,” “we,” “us,” or “our”) is a biopharmaceutical company focused on developing and commercializing proprietary therapeutics, primarily for oncology. Our pipeline includes compounds in various stages, ranging from preclinical to late stage development, and a commercialized product, JAKAFI ® (ruxolitinib). Our operations are treated as one operating segment.

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, 2015 and the condensed consolidated statements of operations, comprehensive loss and cash flows for the three months ended March 31, 2015 and 2014, 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, 2014 has been derived from audited 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, 2014.

Principles of Consolidation. The condensed consolidated financial statements include the accounts of Incyte Corporation and our wholly owned subsidiaries, including Incyte Holdings Corporation, Incyte International Holdings Sarl, and Incyte Europe Sarl. All inter-company accounts, transactions, and profits have been eliminated in consolidation.

Foreign Currency Translation. Operations in non-U.S. entities are recorded in the functional currency of each entity. For financial reporting purposes, the functional currency of an entity is determined by a review of the source of an entity’s most predominant cash flows. The results of operations for any non-U.S. dollar functional currency entities are translated from functional currencies into U.S. dollars using the average currency rate during each month, which approximates the results that would be obtained using actual currency rates on the dates of individual transactions. Assets and liabilities are translated using currency rates at the end of the period. Adjustments resulting from translating the financial statements of our foreign entities that use their local currency as the functional currency into the U.S. dollars are reflected as a component of other comprehensive income (loss). Transaction gains and losses are recorded in interest and other income, net in the condensed consolidated statements of operations. To date, both the translation gains or losses in other comprehensive income and the transaction gains or losses in interest and other income, net have been immaterial.

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.

Concentrations of Credit Risk. Cash, cash equivalents, marketable securities, trade receivables and restricted investments are financial instruments which potentially subject us to concentrations of credit risk. The estimated fair value of financial instruments approximates the carrying value based on available market information. We primarily invest our excess available funds in notes and bills issued by the U.S. government and its agencies and corporate debt securities and, by policy, limit the amount of credit exposure to any one issuer and to any one type of investment, other than securities issued or guaranteed by the U.S. government. Our receivables mainly relate to our product sales of JAKAFI and collaborative agreements with pharmaceutical companies. We have not

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experienced any significant credit losses on cash, cash equivalents, marketable securities, trade receivables or restricted investments to date and do not require collateral on receivables.

Cash and Cash Equivalents. Cash and cash equivalents are held in U.S. banks or in custodial accounts with banks. Cash equivalents are defined as all liquid investments and money market funds with maturity from date of purchase of 90 days or less that are readily convertible into cash.

Marketable Securities—Available-for-Sale. All marketable securities are classified as available-for-sale. Available-for-sale securities are carried at fair value, based on quoted market prices and observable inputs, with unrealized gains and losses, net of tax, reported as a separate component of stockholders’ deficit. We classify marketable securities that are available for use in current operations as current assets on the condensed consolidated balance sheets. Realized gains and losses and declines in value judged to be other than temporary for available-for-sale securities are included in “Interest and other income, net.” The cost of securities sold is based on the specific identification method.

Accounts Receivable. As of March 31, 2015 and December 31, 2014, we had no allowance for doubtful accounts. We provide an allowance for doubtful accounts based on experience and specifically identified risks. Accounts receivable are carried at fair value and charged off against the allowance for doubtful accounts when we determine that recovery is unlikely and we cease collection efforts.

Inventory. Inventories are determined at the lower of cost or market value with cost determined under the specific identification method and may consist of raw materials, work in process and finished goods. We began capitalizing inventory in mid-November 2011 once the U.S. Food and Drug Administration (“FDA”) approved JAKAFI as the related costs were expected to be recoverable through the commercialization of the product. Costs incurred prior to approval of JAKAFI have been recorded as research and development expense in our statements of operations. As a result, cost of product revenues for the next 18 to 21 months will reflect a lower average per unit cost of materials.

The raw materials and work-in-process inventory is not subject to expiration and the shelf life for finished goods inventory is 36 months from the start of manufacturing of the finished goods. We evaluate for potential excess inventory by analyzing current and future product demand relative to the remaining product shelf life. We build demand forecasts by considering factors such as, but not limited to, overall market potential, market share, market acceptance and patient usage. We classify inventory as current on the condensed consolidated balance sheets when we expect inventory to be consumed for commercial use within the next twelve months.

Variable Interest Entities. We perform an initial and on-going evaluation of the entities with which we have variable interests, such as equity ownership, in order to identify entities that (i) do not have sufficient equity investment at risk to permit the entity to finance its activities without additional subordinated financial support or (ii) in which the equity investors lack an essential characteristic of a controlling financial interest as variable interest entities (“VIE” or “VIEs”). If an entity is identified as a VIE, we perform an assessment to determine whether we have both (i) the power to direct activities that most significantly impact the VIE’s economic performance and (ii) have the obligation to absorb losses from or the right to receive benefits of the VIE that could potentially be significant to the VIE. If both of these criteria are satisfied, we are identified as the primary beneficiary of the VIE. As of March 31, 2015, there were no entities in which we held a variable interest which we determined to be VIEs.

Equity Method Investments . In circumstances where we have the ability to exercise significant influence over the operating and financial policies of a company in which we have an investment, the investment is accounted for either (i) under the equity method of accounting or (ii) at fair value by electing the fair value option under U.S. GAAP. In assessing whether we exercise significant influence, we consider the nature and magnitude of our investment, any voting and protective rights we hold, any participation in the governance of the other company, and other relevant factors such as the presence of a collaboration or other business relationship. Under the equity method of accounting, we record within our results of operations our share of income or loss of the investee company. Under the fair value option, our investment is carried at fair value and all changes in fair value are reported in our results of operations.

Property and Equipment. Property and equipment is stated at cost, less accumulated depreciation and amortization. Depreciation is recorded using the straight-line method over the estimated useful lives of the respective assets (generally three to five years). Leasehold improvements are amortized over the shorter of the estimated useful life of the assets or lease term.

Management continually reviews the estimated useful lives of technologically sensitive equipment and believes that those estimates appropriately reflect the current useful life of our assets. In the event that a currently unknown significantly advanced technology became commercially available, we would re-evaluate the value and estimated useful lives of our existing equipment, possibly having a material impact on the financial statements.

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Lease Accounting. We account for operating leases by recording rent expense on a straight-line basis over the expected life of the lease, commencing on the date we gain possession of leased property. We include tenant improvement allowances and rent holidays received from landlords and the effect of any rent escalation clauses as adjustments to straight-line rent expense over the expected life of the lease.

Capital leases are reflected as a liability at the inception of the lease based on the present value of the minimum lease payments or, if lower, the fair value of the property. Assets under capital leases are recorded in property and equipment, net on the condensed consolidated balance sheets and depreciated in a manner similar to other property and equipment.

Certain construction projects may be accounted for as direct financing arrangements, whereby we record, over the construction period, the full cost of the asset in property and equipment, net on the condensed consolidated balance sheets. A corresponding liability is also recorded, net of leasehold improvements paid for by us, and is amortized over the expected lease term through monthly rental payments using the effective interest method.

Income Taxes. We account for income taxes using the asset and liability approach which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and amounts reportable for income tax purposes. In addition, we follow the guidance related to accounting for uncertainty in income taxes. This guidance creates a single model to address uncertainty in tax positions and clarifies the accounting for income taxes by prescribing the minimum recognition threshold a tax position is required to meet before it is recognized in the financial statements.

Financing Costs Related to Long-term Debt. Costs associated with obtaining long-term debt are deferred and amortized over the term of the related debt using the effective interest method. Such costs are included in other assets, net on the condensed consolidated balance sheets.

Grant Accounting. Grant amounts received from government agencies for operations are deferred and are amortized into income over the service period of the grant. Grant amounts received for purchases of capital assets are deferred and amortized into interest and other income, net over the useful life of the related capital assets. Such amounts are recorded in other liabilities on the condensed consolidated balance sheets.

Net Loss Per Share. Our basic and diluted losses per share are calculated by dividing the net loss by the weighted average number of shares of common stock outstanding during all periods presented. Options to purchase stock and shares issuable upon the conversion of convertible debt are included in diluted earnings per share calculations, unless the effects are anti-dilutive.

Accumulated Other Comprehensive Income (Loss). Accumulated other comprehensive income (loss) consists of unrealized gains or losses on marketable securities and restricted cash and investments.

Revenue Recognition. Revenues are recognized when (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3) the price is fixed or determinable and (4) collectability is reasonably assured. Revenues are deferred for fees received before earned or until no further obligations exist. We exercise judgment in determining that collectability is reasonably assured or that services have been delivered in accordance with the arrangement. We assess whether the fee is fixed or determinable based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. We assess collectability based primarily on the customer’s payment history and on the creditworthiness of the customer.

Product Revenues

Our product revenues consist of U.S. sales of JAKAFI and are recognized once we meet all four revenue recognition criteria described above. In November 2011, we began shipping JAKAFI to our specialty pharmacy customers, which in turn dispense JAKAFI to patients in fulfillment of prescriptions.

We recognize revenues for product received by our specialty pharmacy customers net of allowances for customer credits, including estimated rebates, chargebacks, discounts, returns, distribution service fees, patient assistance programs, and Medicare Part D coverage gap reimbursements. Product shipping and handling costs are included in cost of product revenues.

Customer Credits: Our specialty pharmacy customers are offered various forms of consideration, including allowances, service fees and prompt payment discounts. We expect our specialty pharmacy customers will earn prompt payment discounts and, therefore, we deduct the full amount of these discounts from total product sales when revenues are recognized. Service fees are also deducted from total product sales as they are earned.

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Rebates: Allowances for rebates include mandated discounts under the Medicaid Drug Rebate Program. Rebate amounts are based upon contractual agreements or legal requirements with public sector (e.g. Medicaid) benefit providers. Rebates are amounts owed after the final dispensing of the product to a benefit plan participant and are based upon contractual agreements or legal requirements with public sector benefit providers. The accrual for rebates is based on statutory discount rates and expected utilization as well as historical data we have accumulated since product launch. Our estimates for expected utilization of rebates are based on data received from our specialty pharmacy customers. Rebates are generally invoiced and paid in arrears so that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s activity, plus an accrual balance for known prior quarters’ unpaid rebates. If actual future rebates vary from estimates, we may need to adjust prior period accruals, which would affect revenue in the period of adjustment.

Chargebacks: Chargebacks are discounts that occur when contracted customers purchase directly from a specialty pharmacy, or an intermediary distributor. Contracted customers, which currently consist primarily of Public Health Service institutions, non-profit clinics, and Federal government entities purchasing via the Federal Supply Schedule, generally purchase the product at a discounted price. The specialty pharmacy or distributor, in turn, charges back to us the difference between the price initially paid by the specialty pharmacy or distributor and the discounted price paid to the specialty pharmacy or distributor by the customer. The accrual for chargebacks is based on the estimated contractual discounts on the inventory levels on hand in our distribution channel. If actual future chargebacks vary from estimates, we may need to adjust prior period accruals, which would affect revenue in the period of adjustment.

Medicare Part D Coverage Gap: Medicare Part D prescription drug benefit mandates manufacturers to fund 50% of the Medicare Part D insurance coverage gap for prescription drugs sold to eligible patients. Our estimates for the expected Medicare Part D coverage gap are based on historical invoices received and in part from data received from our specialty pharmacy customers. Funding of the coverage gap is generally invoiced and paid in arrears so that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s activity, plus an accrual balance for known prior quarters. If actual future funding varies from estimates, we may need to adjust prior period accruals, which would affect revenue in the period of adjustment.

Co-payment Assistance: Patients who have commercial insurance and meet certain eligibility requirements may receive co-payment assistance. We accrue a liability for co-payment assistance based on actual program participation and estimates of program redemption using data provided by third-party administrators.

Product Royalty Revenues

Royalty revenues on commercial sales for ruxolitinib (marketed as JAKAVI ® outside the United States) by Novartis Pharmaceutical International Ltd. (“Novartis”) are based on net sales of licensed products in licensed territories as provided by Novartis. We recognize royalty revenues in the period the sales occur.

Cost of Product Revenues

Cost of product revenues includes all JAKAFI related costs that are recoverable through the commercialization of the product. Beginning in October 2014, we became obligated to pay tiered, low single digit royalties under our collaboration and license agreement to Novartis on all future sales of JAKAFI in the United States which are included in cost of product revenues.

Contract and License Revenues

Under agreements involving multiple deliverables, services and/or rights to use assets that we entered into prior to January 1, 2011, the multiple elements are divided into separate units of accounting when certain criteria are met, including whether the delivered items have stand-alone value to the customer and whether there is objective and reliable evidence of the fair value of the undelivered items. When separate units of accounting exist, consideration is allocated among the separate elements based on their respective fair values. The determination of fair value of each element is based on objective evidence from historical sales of the individual elements by us to other customers. If such evidence of fair value for each undelivered element of the arrangement does not exist, all revenue from the arrangement is deferred until such time that evidence of fair value for each undelivered element does exist or until all elements of the arrangement are delivered. When elements are specifically tied to a separate earnings process, revenue is recognized when the specific performance obligation tied to the element is completed. When revenues for an element are not specifically tied to a separate earnings process, they are recognized ratably over the term of the agreement. We assess whether a substantive milestone exists at the inception of our agreements. For all milestones within our arrangements that are considered substantive, we recognize revenue upon the achievement of the associated milestone. If a milestone is not considered substantive, we would recognize the applicable milestone payment over the remaining period of performance under the arrangement. As of March 31, 2015, all remaining potential milestones under our collaborative arrangements are considered substantive.

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On January 1, 2011, updated guidance on the recognition of revenues for agreements with multiple deliverables became effective and applies to any agreements we may enter into on or after January 1, 2011. This updated guidance (i) relates to whether multiple deliverables exist, how the deliverables in a revenue arrangement should be separated and how the consideration should be allocated; (ii) requires companies to allocate revenues in an arrangement using estimated selling prices of deliverables if a vendor does not have vendor-specific objective evidence or third-party evidence of selling price; and (iii) eliminates the use of the residual method and requires companies to allocate revenues using the relative selling price method. During the three months ended March 31, 2015 and 2014, we did not enter into any agreements that are subject to this updated guidance. If we enter into an agreement with multiple deliverables after January 1, 2011 or amend existing agreements, this updated guidance could have a material effect on our financial statements.

Our collaborations often include contractual milestones, which typically relate to the achievement of pre-specified development, regulatory and commercialization events. These three categories of milestone events reflect the three stages of the life-cycle of our drugs, which we describe in more detail in the following paragraphs.

The regulatory review and approval process, which includes preclinical testing and clinical trials of each drug candidate, is lengthy, expensive and uncertain. Securing approval by the FDA requires the submission of extensive preclinical and clinical data and supporting information to the FDA for each indication to establish a drug candidate’s safety and efficacy. The approval process takes many years, requires the expenditure of substantial resources, involves post-marketing surveillance and may involve ongoing requirements for post-marketing studies. Before commencing clinical investigations of a drug candidate in humans, we must submit an Investigational New Drug application (“IND”), which must be reviewed by the FDA.

The steps generally required before a drug may be marketed in the United States include preclinical laboratory tests, animal studies and formulation studies, submission to the FDA of an IND for human clinical testing, performance of adequate and well-controlled clinical trials in three phases, as described below, to establish the safety and efficacy of the drug for each indication, submission of a new drug application (“NDA”) or biologics license application (“BLA”) to the FDA for review and FDA approval of the NDA or BLA.

Similar requirements exist within foreign regulatory agencies as well. The time required satisfying the FDA requirements or similar requirements of foreign regulatory agencies may vary substantially based on the type, complexity and novelty of the product or the targeted disease.

Preclinical testing includes laboratory evaluation of product pharmacology, drug metabolism, and toxicity, which includes animal studies, to assess potential safety and efficacy as well as product chemistry, stability, formulation, development, and testing. The results of the preclinical tests, together with manufacturing information and analytical data, are submitted to the FDA as part of an IND. The FDA may raise safety concerns or questions about the conduct of the clinical trials included in the IND, and any of these concerns or questions must be resolved before clinical trials can proceed. We cannot be sure that submission of an IND will result in the FDA allowing clinical trials to commence. Clinical trials involve the administration of the investigational drug or the marketed drug to human subjects under the supervision of qualified investigators and in accordance with good clinical practices regulations covering the protection of human subjects. Clinical trials typically are conducted in three sequential phases, but the phases may overlap or be combined. Phase I usually involves the initial introduction of the investigational drug into healthy volunteers to evaluate its safety, dosage tolerance, absorption, metabolism, distribution and excretion. Phase II usually involves clinical trials in a limited patient population to evaluate dosage tolerance and optimal dosage, identify possible adverse effects and safety risks, and evaluate and gain preliminary evidence of the efficacy of the drug for specific indications. Phase III clinical trials usually further evaluate clinical efficacy and safety by testing the drug in its final form in an expanded patient population, providing statistical evidence of efficacy and safety, and providing an adequate basis for labeling. We cannot guarantee that Phase I, Phase II or Phase III testing will be completed successfully within any specified period of time, if at all. Furthermore, we, the institutional review board for a trial, or the FDA may suspend clinical trials at any time on various grounds, including a finding that the subjects or patients are being exposed to an unacceptable health risk.

Generally, the milestone events contained in our collaboration agreements coincide with the progression of our drugs from development, to regulatory approval and then to commercialization. The process of successfully discovering a new development candidate, having it approved and successfully commercialized is highly uncertain. As such, the milestone payments we may earn from our partners involve a significant degree of risk to achieve. Therefore, as a drug candidate progresses through the stages of its life-cycle, the value of the drug candidate generally increases.

Research and Development Costs. Our policy is to expense research and development costs as incurred. We often contract with clinical research organizations (“CROs”) to facilitate, coordinate and perform agreed upon research and development of a new

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drug. To ensure that research and development costs are expensed as incurred, we record monthly accruals for clinical trials and preclinical testing costs based on the work performed under the contract.

These CRO contracts typically call for the payment of fees for services at the initiation of the contract and/or upon the achievement of certain clinical trial milestones. In the event that we prepay CRO fees, we record the prepayment as a prepaid asset and amortize the asset into research and development expense over the period of time the contracted research and development services are performed. Most professional fees, including project and clinical management, data management, monitoring, and medical writing fees are incurred throughout the contract period. These professional fees are expensed based on their percentage of completion at a particular date. Our CRO contracts generally include pass through fees. Pass through fees include, but are not limited to, regulatory expenses, investigator fees, travel costs, and other miscellaneous costs, including shipping and printing fees. We expense the costs of pass through fees under our CRO contracts as they are incurred, based on the best information available to us at the time. The estimates of the pass through fees incurred are based on the amount of work completed for the clinical trial and are monitored through correspondence with the CROs, internal reviews and a review of contractual terms. The factors utilized to derive the estimates include the number of patients enrolled, duration of the clinical trial, estimated patient attrition, screening rate and length of the dosing regimen. CRO fees incurred to set up the clinical trial are expensed during the setup period. Under our clinical trial collaboration agreements and clinical trial agreements, we may be reimbursed for certain development costs incurred. Such costs are recorded as a reduction of research and development expense in the period in which the related expense is incurred.

Stock Compensation. Share-based payment transactions with employees, which include stock options, restricted stock units (“RSUs”) and performance shares (“PSUs”), are recognized as compensation expense over the requisite service period based on their estimated fair values as well as expected forfeiture rates. The stock compensation process requires significant judgment and the use of estimates, particularly surrounding Black-Scholes assumptions such as stock price volatility over the option term and expected option lives, as well as expected forfeiture rates and the probability of PSUs vesting. The fair value of stock options, which are subject to graded vesting, are recognized as compensation expense over the requisite service period using the accelerated attribution method. The fair value of RSUs, which are generally subject to cliff vesting, are recognized as compensation expense over the requisite service period using the straight line attribution method. The fair value of PSUs are recognized as compensation expense beginning at the time in which the performance conditions are deemed probable of achievement, over the remaining requisite service period. We recorded $17.6 million and $15.3 million of stock compensation expense on our condensed consolidated statements of operations for the three months ended March 31, 2015 and 2014, respectively.

Recent Accounting Pronouncements

In August 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-15, “Presentation of Financial Statements—Going Concern”, to provide guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and about related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about a company’s ability to continue as a going concern within one year from the date the financial statements are issued. This guidance is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. We do not believe the pending adoption of ASU No. 2014-15 will have a material impact on our condensed consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers,” which provides a five step approach to be applied to all contracts with customers. ASU No. 2014-09 also requires expanded disclosures about revenue recognition. On April 1, 2015, the FASB proposed to extend the effective date of ASU No. 2014-09 from reporting periods beginning after December 15, 2016 to reporting periods beginning after December 15, 2017. Early adoption is permitted for reporting periods beginning after December 15, 2016. Once the proposal is formally issued, the public will have 30 days to comment, after which the proposal will be decided upon. We are currently analyzing the impact of ASU No. 2014-09 on our results of operations and, at this time, we are unable to determine the impact on the new standard, if any, on our condensed consolidated financial statements.

3. Fair value of financial instruments

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.

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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.

Our marketable securities consist of investments in U.S. government agencies, corporate debt securities and non-agency mortgage-backed securities that are classified as available-for-sale.

At March 31, 2015 and December 31, 2014, our Level 2 corporate debt securities and mortgage-backed securities are valued using readily available pricing sources which utilize market observable inputs, including the current interest rate and other characteristics for similar types of instruments.

The following fair value hierarchy table presents information about each major category of our financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2015 (in thousands):

	Fair Value Measurement at Reporting Date Using:
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of March 31, 2015
Cash and cash equivalents	$	421,822	$	—	$	—	$	421,822
Corporate debt securities	—		160,180		—		160,180
Long term investment (Note 7)	39,829		—		—		39,829
Mortgage-backed securities	—		3,422		—		3,422
Total assets	$	461,651	$	163,602	$	—	$	625,253

The following fair value hierarchy table presents information about each major category of our financial assets measured at fair value on a recurring basis as of December 31, 2014 (in thousands):

	Fair Value Measurement at Reporting Date Using:
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance as of December 31, 2014
Cash and cash equivalents	$	452,297	$	—	$	—	$	452,297
Corporate debt securities	—		144,402		—		144,402
Mortgage-backed securities	—		3,564		—		3,564
Total assets	$	452,297	$	147,966	$	—	$	600,263

The following is a summary of our marketable security portfolio as of March 31, 2015 and December 31, 2014, respectively.

	Amortized Cost		Net Unrealized Gains		Net Unrealized Losses			Estimated Fair Value
	(in thousands)
March 31, 2015
Corporate debt securities	$	160,008	$	172	$	—		$	160,180
Mortgage backed securities	1,330		2,092		—			3,422
	$	161,338	$	2,264	$	—		$	163,602
December 31, 2014
Corporate debt securities	$	144,684	$	—	$	(282	)	$	144,402
Mortgage backed securities	1,461		2,103		—			3,564
	$	146,145	$	2,103	$	(282	)	$	147,966

Our corporate debt securities generally have contractual maturity dates of between 12 to 18 months. Because of the potential for prepayment on mortgage-backed securities, they are not categorized by contractual maturity.

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4. Concentration of Credit Risk

In December 2009, we entered into a license, development and commercialization agreement with Eli Lilly and Company (“Lilly”). In November 2009, we entered into a collaboration and license agreement with Novartis. The concentration of credit risk related to our collaborative partners is as follows:

	Percentage of Total Contract Revenues for the Three Months Ended, March 31,
	2015		2014

Collaboration Partner A	89	%	68	%
Collaboration Partner B	11	%	32	%

Collaboration Partner A and Collaboration Partner B comprised in the aggregate 23% and 26% of the accounts receivable balance as of March 31, 2015 and December 31, 2014, respectively.

In November 2011, we began commercialization and distribution of JAKAFI to a number of specialty pharmacies. Our product revenues are concentrated in a number of specialty pharmacy customers. The concentration of credit risk related to our specialty pharmacy customers is as follows:

	Percentage of Total Net Product Revenues for the Three Months Ended, March 31,
	2015		2014

Customer A	28	%	29	%
Customer B	20	%	21	%
Customer C	13	%	11	%
Customer D	8	%	9	%

We are exposed to risks associated with extending credit to specialty pharmacy customers related to the sale of products. Customer A, Customer B, Customer C and Customer D comprised in the aggregate 69% and 54% of the accounts receivable balance as of March 31, 2015 and December 31, 2014, respectively.

5. Inventory

Our inventory balance consists of the following:

	March 31, 2015		December 31, 2014
	(in thousands)
Raw materials	$	500	$	591
Work-in-process	16,521		18,487
Finished goods	2,414		358
	19,435		19,436
Inventories—current	2,414		358
Inventories—non-current	$	17,021	$	19,078

Inventories, stated at the lower of cost or market, consist of raw materials, work in process and finished goods. At March 31, 2015, $2.4 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, 2015, $17.0 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 a number of inventory components from single source suppliers due to technology, availability, price, quality or other considerations. The loss of a single source supplier, the deterioration of its relationship with a single source supplier, or any unilateral violation of the contractual terms under which we are supplied components by a single source supplier could adversely affect our total revenues and gross margins.

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6. Property and Equipment

Property and equipment consists of the following:

	March 31, 2015			December 31, 2014
	(in thousands)
Office equipment	$	6,223		$	6,090
Laboratory equipment	27,053			26,800
Computer equipment	19,775			18,648
Building and leasehold improvements	64,862			64,926
	117,913			116,464
Less accumulated depreciation and amortization	(37,246		)	(34,674		)
	$	80,667		$	81,790

In 2013, we entered into a lease agreement for a new corporate headquarters, which consists of approximately 190,000 square feet of laboratory and office space located in Wilmington, Delaware. The term of this lease is 15 years from the date of commencement. The construction of the facility was completed and the lease commenced on October 1, 2014 with a monthly lease rate of $0.5 million for the first 10 years of the lease and with the monthly lease rate increasing annually during the last five years of lease.

We are accounting for the lease as a direct financing arrangement whereby over the construction period, we recorded the value of the facility (consisting of the estimated fair value of the existing shell, plus construction costs incurred) as a capital asset, with a corresponding lease liability, net of build out costs paid for by us during the construction period. The lease liability will be amortized over the term of the lease using the effective interest method. In addition, we have posted a $15.0 million letter of credit for the facility lease for the benefit of the landlord, which is collateralized by a restricted investments account for the same amount. This amount was recorded as restricted investments on the condensed consolidated balance sheets and will be reduced over a period of time during the duration of the lease. The letter of credit could be subject to accelerated reductions if we meet certain pre-defined financial targets. Restricted investments on the condensed consolidated balance sheets at March 31, 2015 and December 31, 2014 were $14.4 million and $14.5 million, respectively.

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 c-MET inhibitor compound capmatinib and certain back-up compounds in all indications. We retained options to co-develop and to co-promote capmatinib in the United States.

Under this agreement, we received an upfront payment and immediate milestone payment totaling $210.0 million and were initially eligible to receive up to $1.2 billion in milestone payments across multiple indications upon the achievement of pre-specified events, including 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 commercialization milestones. As of March 31, 2015, we have recognized in the aggregate $97.0 million for the achievement of development milestones and $160.0 million for the achievement of regulatory milestones.

During the three months ended March 31, 2015, under this agreement, we recognized and received a $25.0 million regulatory milestone triggered by the Committee for Medicinal Products for Human Use of the European Medicines Agency adopting a positive opinion for JAKAVI (ruxolitinib) for the treatment of adult patients with polycythemia vera who are resistant to or intolerant of hydroxyurea. In 2014, we recognized and received a $60.0 million regulatory milestone related to reimbursement of JAKAVI (ruxolitinib) in Europe, recognized and received a $25.0 million regulatory milestone for the approval of JAKAVI in Japan for the treatment of patients with myelofibrosis and a $7.0 million development milestone based on the formal initiation by Novartis of a Phase II clinical trial evaluating capmatinib in non-small cell lung cancer. In 2013, we recognized and received a $25.0 million development milestone payment under this agreement based on the formal initiation by Novartis of a Phase II clinical trial evaluating capmatinib. In 2012, we recognized and received a $40.0 million regulatory milestone payment under this agreement for the

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achievement of a predefined milestone for the European Union regulatory approval of JAKAVI. In 2011, we recognized and received a $15.0 million development milestone payment under this agreement for the achievement of a predefined milestone in the Phase I dose-escalation trial for capmatinib in patients with solid tumors and a $10.0 million regulatory milestone payment for the approval of JAKAFI in the United States. We determined the 2015, 2014, 2013, 2012 and 2011 milestones to be substantive as their achievement required substantive efforts by us and was at risk until the milestones were ultimately achieved. 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. Since the achievement of the $60.0 million regulatory milestone related to reimbursement of JAKAVI in Europe, we are obligated to pay to Novartis tiered royalties in the low single digits on future JAKAFI net sales within the United States. During the three months ended March 31, 2015, such royalties payable to Novartis on net sales within the United States totaled $2.5 million and are reflected in cost of product revenues on the condensed consolidated statement of operations. 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 now responsible for all costs relating to the development and commercialization of capmatinib.

The Novartis agreement will continue on a program-by-program basis until Novartis has no royalty payment obligations with respect to such program or, if earlier, the termination of the agreement or any program in accordance with the terms of the agreement. Royalties are payable by Novartis on a product-by-product and country-by-country basis until the latest to occur of (1) the expiration of the last valid claim of the licensed patent rights covering the licensed product in the relevant country, (2) the expiration of regulatory exclusivity for the licensed product in such country and (3) a specified period from first commercial sale in such country of the licensed product by Novartis or its affiliates or sublicensees. The agreement may be terminated in its entirety or on a program-by-program basis by Novartis for convenience. The agreement may also be terminated by either party under certain other circumstances, including material breach.

At December 31, 2009, we recorded $10.9 million of reimbursable costs incurred prior to the effective date of the agreement as deferred revenue on the consolidated balance sheet. These costs were recognized on a straight line basis through December 2013 consistent with the aforementioned upfront and milestone payments. Future reimbursable costs incurred after the effective date of the agreement with Novartis will be recorded net against the related research and development expenses. At March 31, 2015 and December 31, 2014, $0.5 million and $0.3 million, respectively, of reimbursable costs were included in accounts receivable on the condensed consolidated balance sheets. Research and development expenses for the three months ended March 31, 2015 and 2014 were net of $0.5 million and $1.1 million, respectively, of costs reimbursed by Novartis.

Contract revenue under the Novartis agreement was $25.0 million and $7.0 million for the three months ended March 31, 2015 and 2014, respectively. In addition, for the three months ended March 31, 2015 and 2014, respectively, we recorded $15.7 million and $9.8 million of product royalty revenues related to Novartis net sales of JAKAVI outside of the United States. At March 31, 2015 and December 31, 2014, $15.8 million and $14.8 million, respectively, of product royalties were included in accounts receivable on the condensed consolidated balance sheets.

Lilly

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. We received an upfront payment of $90.0 million, and were initially eligible to receive up to $665.0 million in substantive milestone payments across multiple indications upon the achievement of pre-specified events, including 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 commercialization milestones. As of March 31, 2015, we have recognized and received in the aggregate $99.0 million for the achievement of development milestones.

In 2012, we recognized a $50.0 million development milestone under this agreement for the achievement of a predefined milestone for the initiation of the rheumatoid arthritis Phase III program for baricitinib. In 2010, we recognized and received a $30.0 million development milestone payment based upon the initial three month data in the Phase IIa clinical trial of baricitinib for the treatment of rheumatoid arthritis and a $19.0 million development milestone payment for the Phase IIb clinical trial initiation of baricitinib for the treatment of rheumatoid arthritis. We determined the 2012 and 2010 milestones to be substantive as their achievement required substantive efforts by us and was at risk until the milestones were ultimately achieved. We also could receive tiered, double-digit royalty payments on future global net sales with rates ranging up to 20% if the product is successfully commercialized.

We retained options to co-develop our JAK inhibitors with Lilly on a compound-by-compound and indication-by-indication basis. Lilly is responsible for all costs relating to the development and commercialization of the compounds unless we elect to co-develop any compounds or indications. If we elect to co-develop any compounds and/or indications, we would be responsible for funding 30% of the associated future global development costs from the initiation of a Phase IIb trial through regulatory approval. We

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would receive an incremental royalty rate increase across all tiers resulting in effective royalty rates ranging up to the high twenties on potential future global net sales for compounds and/or indications that we elect to co-develop. We also retained an option to co-promote products in the United States. In July 2010, we elected to co-develop baricitinib with Lilly in rheumatoid arthritis and we are responsible for funding 30% of the associated future global development costs for this indication from the initiation of the Phase IIb trial through regulatory approval. Research and development expenses recorded under the Lilly agreement representing 30% of the global development costs for baricitinib for the treatment of rheumatoid arthritis were $11.6 million and $14.0 million for the three months ended March 31, 2015 and 2014, respectively. We have retained certain mechanisms to give us cost protection as baricitinib advances in clinical development. We can defer our portion of co-development study costs by indication if they exceed a predetermined level. This deferment would be credited against future milestones or royalties and we would still be eligible for the full incremental royalties related to the co-development option. In addition, even if we have started co-development funding for any indication, we can at any time opt out and stop future co-development cost sharing. If we elect to do this we would still be eligible for our base royalties plus an incremental pro-rated royalty commensurate with our contribution to the total co-development cost for those indications for which we co-funded. The Lilly agreement will continue until Lilly no longer has any royalty payment obligations or, if earlier, the termination of the agreement in accordance with its terms. Royalties are payable by Lilly on a product-by-product and country- by-country basis until the latest to occur of (1) the expiration of the last valid claim of the licensed patent rights covering the licensed product in the relevant country, (2) the expiration of regulatory exclusivity for the licensed product in such country and (3) a specified period from first commercial sale in such country of the licensed product by Lilly or its affiliates or sublicensees. The agreement may be terminated by Lilly for convenience, and may also be terminated under certain other circumstances, including material breach.

We determined that there were two deliverables under the agreement: (i) the worldwide license and (ii) our obligations in connection with a co-development option. We concluded that these deliverables should be accounted for as a single unit of accounting and the $90.0 million upfront payment should be recognized on a straight line basis as revenue through December 2016, our estimated performance period under the agreement.

Contract revenue under the Lilly agreement was $3.2 million for the three months ended March 31, 2015 and 2014.

Agenus

In January 2015, we entered into a License, Development and Commercialization Agreement with Agenus Inc. and its wholly owned subsidiary, 4 Antibody AG, which we collectively refer to as Agenus. Under this agreement, the parties have agreed to collaborate on the discovery of novel immuno therapeutics using Agenus’ proprietary Retrocyte Display antibody discovery platform. The agreement became effective on February 18, 2015, upon the expiration of the waiting period under the Hart Scott Rodino Antitrust Improvements Act of 1976 (“HSR Act”).

Under the terms of this agreement, we received exclusive worldwide development and commercialization rights to four checkpoint modulators directed against GITR, OX40, LAG-3 and TIM-3. In addition to the initial four program targets, we and Agenus have the option to jointly nominate and pursue additional targets within the framework of the collaboration. These 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 will be responsible for all costs associated with discovery, preclinical activities, clinical development and commercialization activities. The programs relating to GITR and OX40 are profit share programs and the programs relating to LAG-3 and TIM-3 are royalty bearing programs. For each royalty bearing product, Agenus will be eligible to receive up to $155 million in future contingent development, regulatory and commercialization milestones as well as tiered royalties on global net sales ranging from 6% to 12%. For each profit share product, Agenus will be eligible to receive up to $20 million in future contingent development milestones. Additionally, Agenus retains co-promotion participation rights in the United States on any profit share product. For each royalty bearing product, Agenus has reserved the right to elect to co fund 30% of development costs for a commensurate increase in royalties. The agreement may be terminated by us for convenience and may also be terminated under certain other circumstances, including material breach.

In January 2015, we also entered into a Stock Purchase Agreement with Agenus Inc. pursuant to which we agreed to purchase, subject to expiration of the waiting period under the HSR Act, approximately 7.76 million shares of Agenus Inc. common stock for an aggregate purchase price of $35.0 million in cash, or approximately $4.51 per share. We completed the purchase of the shares on February 18, 2015. On February 18, 2015 the closing price of Agenus Inc. common shares on The NASDAQ Stock Market was $5.13 per share and, therefore, the value of the 7.76 million shares acquired by us was $39.8 million. We have agreed not to dispose of any of the shares of common stock for a period of 12 months and Agenus Inc. has agreed to certain registration rights with respect to the shares of common stock.

Upon closing of the Agenus transaction on February 18, 2015, we paid total consideration of $60.0 million to Agenus Inc. Of the $60.0 million, $39.8 million was allocated to our stock purchase in Agenus Inc. and was recorded as a long term investment on

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the condensed consolidated balance sheets and $20.2 million was allocated to research and development expense on the condensed consolidated statement of operations.

At the February 18, 2015 closing date and at March 31, 2015, we have concluded Agenus Inc. is not a VIE because it has sufficient equity to finance its activities without additional subordinated financial support and its at-risk equity holders have the characteristics of a controlling financial interest. We own approximately 11% of the outstanding shares of Agenus Inc. common stock and conclude that we have the ability to exercise significant influence, but not control, over Agenus Inc. based primarily on our ownership interest, the level of intra-entity transactions between us and Agenus 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 Agenus Inc. 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, 2015, there was no gain or loss recorded as the market price of Agenus Inc.’s common stock at March 31, 2015 was consistent with the fair value on the acquisition date of the investment.

Research and development expenses for the three months ended March 31, 2015, also included $1.8 million of development costs incurred pursuant to the Agenus arrangement. Such costs were included in accrued and other liabilities on the condensed consolidated balance sheets as of March 31, 2015.

8. Stock compensation

We recorded $17.6 million and $15.3 million of stock compensation expense on our condensed consolidated statements of operations for the three months ended March 31, 2015 and 2014, respectively. Stock compensation expense included within our condensed consolidated statements of operations included research and development expense of $10.3 million and $8.3 million for the three months ended March 31, 2015 and 2014, respectively. Stock compensation expense included within our condensed consolidated statements of operations also included selling, general and administrative expense of $7.3 million and $7.0 million for the three months ended March 31, 2015 and 2014, respectively.

We utilized the Black-Scholes valuation model for estimating the fair value of the stock compensation granted, with the following weighted-average assumptions:

	Employee Stock Options For the Three Months Ended				Employee Stock Purchase Plan For the Three Months Ended
	March 31,				March 31,
	2015		2014		2015		2014
Average risk-free interest rates	1.35	%	1.18	%	0.56	%	0.44	%
Average expected life (in years)	5.05		4.47		0.25		0.25
Volatility	50	%	50	%	38	%	52	%
Weighted-average fair value (in dollars)	32.59		26.52		9.56		8.65

The risk-free interest rate is derived from the U.S. Federal Reserve rate in effect at the time of grant. The expected life calculation is based on the observed and expected time to the exercise of options by our employees based on historical exercise patterns for similar type options. Expected volatility is based on the historical volatility of our common stock over the period commensurate with the expected life of the options. A dividend yield of zero is assumed based on the fact that we have never paid cash dividends and have no present intention to pay cash dividends.

Option activity under the 2010 Stock Plan was as follows:

			Shares Subject to Outstanding Options
	Shares Available for Grant		Shares		Weighted Average Exercise Price
Balance at December 31, 2014	5,399,816		14,655,043		$	21.96
Options granted	(1,622,520	)	1,622,520		$	74.03
Options exercised	—		(2,478,752	)	$	15.91
Options cancelled	74,169		(74,169	)	$	42.21
Balance at March 31, 2015	3,851,465		13,724,642		$	29.10

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RSU and PSU award activity under the 2010 Stock Plan was as follows:

			Shares Subject to
	Shares Available		Outstanding Awards
	for Grant		Shares		Grant Date Value
Balance at December 31, 2014	1,001,523		398,477		—
RSUs granted	(175,338	)	175,338		$	74.08
PSUs granted	—		—		—
RSUs cancelled	5,074		(5,074	)	$	64.74
PSUs cancelled	—		—		—
Balance at March 31, 2015	831,259		568,741		—

In January 2014, we began granting RSUs and PSUs to our employees at the share price on the date of grant. Each RSU represents the right to acquire one share of our common stock. We granted a total of 175,338 RSUs during the three months ended March 31, 2015 which will cliff vest in three years and will be recognized as stock compensation expense over this period. Also, in January 2014, Hervé Hoppenot, our President and Chief Executive Officer, was granted a one-time grant of 400,000 RSUs outside of our 2010 Stock Incentive Plan. Vesting of the RSUs will be subject to Mr. Hoppenot’s continued employment on the applicable vesting dates, with one-sixth of the RSUs vesting at the end of each of the calendar years 2014 through 2019, subject to earlier acceleration of vesting upon the occurrence of certain events in accordance with the terms of his employment agreement. As of March 31, 2015, a total of 66,666 RSUs granted to Mr. Hoppenot vested and were released leaving 333,334 RSUs outstanding.

At March 31, 2015, we have only recognized stock compensation expense relating to performance conditions of the outstanding PSUs that are deemed probable of achievement at that date. For PSUs containing performance conditions which have not been deemed probable of achievement at March 31, 2015, no stock compensation expense has been recognized for these awards. The actual number of shares of our common stock into which each PSU may convert are subject to a multiplier of up to 125% based on the level at which the performance conditions are achieved.

Based on our historical experience of employee turnover, we have assumed an annualized forfeiture rate of 5% for our options, PSUs and RSUs. Under the true-up provisions of the stock compensation guidance, we will record additional expense if the actual forfeiture rate is lower than we estimated, and will record a recovery of prior expense if the actual forfeiture is higher than we estimated.

Total compensation cost of options granted but not yet vested, as of March 31, 2015, was $58.1 million, which is expected to be recognized over the weighted average period of 3.0 years. Total compensation cost of RSUs granted but not yet vested, as of March 31, 2015, was $31.8 million, which is expected to be recognized over the weighted average period of 3.0 years. Total compensation cost of PSUs granted but not yet vested, as of March 31, 2015, was $0.7 million, which is expected to be recognized over the weighted average period of 3.0 years, should the underlying performance conditions be deemed probable of achievement.

9. Debt

The components of the convertible notes are as follows (in thousands):

				Carrying Amount
Debt	Interest Rates March 31, 2015		Maturities	March 31, 2015		December 31, 2014
4.75% Convertible Senior Notes due 2015	4.75	%	2015	$	87,337	$	85,640
0.375% Convertible Senior Notes due 2018	0.375	%	2018	318,292		314,752
1.25% Convertible Senior Notes due 2020	1.25	%	2020	291,918		288,726
				697,547		689,118
Less current portion				87,337		85,640
				$	610,210	$	603,478

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The carrying amount and fair value of our convertible notes are as follows (in thousands):

	March 31, 2015				December 31, 2014
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
4.75% Convertible Senior Notes due 2015	$	87,337	$	947,148	$	85,640	$	755,143
0.375% Convertible Senior Notes due 2018	318,292		682,500		314,752		560,156
1.25% Convertible Senior Notes due 2020	291,918		695,861		288,726		577,736
	$	697,547	$	2,325,509	$	689,118	$	1,893,035

The fair values of the 4.75% Convertible Senior Notes due 2015 (the “2015 Notes”), the 0.375% Convertible Senior Notes due 2018 (the “2018 Notes”) and the 1.25% Convertible Senior Notes due 2020 (the “2020 Notes”) are based on data from readily available pricing sources which utilize market observable inputs and other characteristics for similar types of instruments, and, therefore, these convertible senior notes are classified within Level 2 in the fair value hierarchy.

Prior to May 14, 2014, the 2018 and 2020 Notes were not convertible except in connection with a make whole fundamental change, as defined in the respective indentures. Beginning on, and including, May 15, 2014, the 2018 and 2020 Notes are convertible prior to the close of business on the business day immediately preceding May 15, 2018, in the case of the 2018 Notes, and May 15, 2020, in the case of the 2020 Notes, only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on March 31, 2014 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price for the 2018 Notes or 2020 Notes, as applicable, on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of 2018 Notes or 2020 Notes, as applicable, for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate for the 2018 Notes or 2020 Notes, as applicable, on each such trading day; or (3) upon the occurrence of specified corporate events. On or after May 15, 2018, in the case of the 2018 Notes, and May 15, 2020, in the case of the 2020 Notes, until the close of business on the second scheduled trading day immediately preceding the relevant maturity date, the Notes are convertible at any time, regardless of the foregoing circumstances. Upon conversion we will pay or deliver, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock, at our election.

On April 1, 2015, the 2018 Notes and 2020 Notes became convertible through at least June 30, 2015, based on the meeting the conversion criteria related to the sale price of our common stock during the calendar quarter ended March 31, 2015 as described in (1) above. Management’s intent is to settle any conversions of 2018 Notes or 2020 Notes during this period in shares of our common stock and, therefore, the 2018 Notes and 2020 Notes are reflected in long term liabilities on the condensed consolidated balance sheet at March 31, 2015.

During April 2015, certain holders of the 2015 Notes converted a total of $46.9 million in aggregate principal amount of the 2015 Notes for the shares of our common stock into which the 2015 Notes were convertible, aggregating 5.3 million shares.

10. Income taxes

In January 2015, we licensed certain intellectual property rights related to our non-partnered clinical programs to our wholly-owned subsidiary in Switzerland. Although the license of intellectual property rights did not result in any gain or loss in the condensed consolidated statements of operations, the transaction generated a taxable gain in the U.S, and we are utilizing available federal and state net operating loss carryforwards to offset the majority of this gain. Any taxes incurred related to intercompany transactions are treated as prepaid tax in our condensed consolidated balance sheets and amortized to income tax expense over the life of the intellectual property. Any cash taxes anticipated to be paid related to this intercompany transaction are immaterial.

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11. Net loss per share

For all periods presented, both basic and diluted net loss per common share are computed by dividing the net loss by the number of weighted average common shares outstanding during the period. Stock options and potential common shares issuable upon conversion of the 2015 Notes, 2018 Notes and 2020 Notes were excluded from the computation of diluted net loss per share, as their share effect was anti-dilutive for all periods presented.

The potential common shares that were excluded from the diluted net loss per share computation are as follows:

	Three Months Ended March 31,
	2015	2014
Outstanding stock awards	14,626,717	18,027,392
Common shares issuable upon conversion of 4.75% Convertible Senior Notes due 2015	10,353,076	10,441,728
Common shares issuable upon conversion of 0.375% Convertible Senior Notes due 2018	7,245,263	7,245,263
Common shares issuable upon conversion of 1.25% Convertible Senior Notes due 2020	7,245,263	7,245,263
Total potential common shares excluded from diluted net loss per share computation	39,470,319	42,959,646

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our financial condition and results of operations as of and for the three months ended March 31, 2015 should be read in conjunction with the unaudited condensed consolidated financial statements and notes to those statements included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements as of and for the year ended December 31, 2014 included in our Annual Report on Form 10-K for the year ended December 31, 2014 previously filed with the SEC.

This report contains forward-looking statements that involve risks and uncertainties. These statements relate to future periods, future events or our future operating or financial plans or performance. Often, these statements include the words “believe,” “expect,” “target,” “anticipate,” “intend,” “plan,” “seek,” “estimate,” “potential,” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” or “may,” or the negative of these terms, and other similar expressions. These forward-looking statements include statements as to:

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

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

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

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

· the regulatory approval process, including obtaining U.S. Food and Drug Administration and other international health authorities approval for our products in the United States and abroad;

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

· the timing and size of our clinical trials; the compounds expected to enter clinical trials; timing of clinical trial results;

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

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

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

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

· plans to develop and commercialize products on our own;

· plans to use third party manufacturers;

· expected expenses and expenditure levels; expected uses of cash; expected revenues and sources of revenues;

· expected losses; fluctuation of losses; currency translation impact associated with collaboration royalties;

· our profitability; the adequacy of our capital resources to continue operations;

· the need to raise additional capital;

· the costs associated with resolving matters in litigation;

· our expectations regarding competition;

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

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· our patent prosecution and maintenance efforts; and

· our indebtedness, and debt service obligations.

These forward-looking statements reflect our current views with respect to future events, are based on assumptions and are subject to risks and uncertainties. These risks and uncertainties could cause actual results to differ materially from those projected and include, but are not limited to:

· our ability to successfully commercialize JAKAFI;

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

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

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

· our ability to maintain regulatory approvals to market JAKAFI;

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

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

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

· the risk of unanticipated delays in research and development efforts;

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

· risks relating to the conduct of our clinical trials;

· changing regulatory requirements;

· the risk of adverse safety findings;

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

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

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

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

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

· risks relating to our collaborators’ ability to develop and commercialize drug candidates;

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

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

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

· the impact of technological advances and competition;

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

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· risks relating to changes in pricing and reimbursements in the markets in which we may compete;

· competition to develop and commercialize similar drug products;

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

· the impact of changing laws on our patent portfolio;

· developments in and expenses relating to litigation;

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

· our substantial leverage;

· our ability to obtain additional capital when needed;

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

· our history of operating losses; and

· the risks set forth under “Risk Factors.”

Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by federal securities laws, we undertake no obligation to update any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

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

Incyte and JAKAFI are our registered trademarks. We also refer to trademarks of other corporations and organizations in this Quarterly Report on Form 10-Q.

Overview

Incyte is a biopharmaceutical company focused on the discovery, development and commercialization of proprietary therapeutics to treat serious unmet medical needs, primarily in oncology. JAKAFI (ruxolitinib) is our first product to be approved for sale in the United States. It was approved by the U.S. Food and Drug Administration (FDA) in November 2011 for the treatment of patients with intermediate or high-risk myelofibrosis, and in December 2014 for the treatment of patients with polycythemia vera who have had an inadequate response to or are intolerant of hydroxyurea. Myelofibrosis and polycythemia vera are both rare blood cancers.

In April 2015, we announced our intention to establish the new headquarters of Incyte Europe Sarl (Incyte Europe) in Geneva, Switzerland. We intend to use Incyte Europe as the base from which we will conduct our European clinical development operations.

JAKAFI is marketed in the United States through our own specialty sales force and commercial team. Under our collaboration agreement with Novartis International Pharmaceutical Ltd., Novartis received exclusive development and commercialization rights to ruxolitinib outside of the United States for all hematologic and oncologic indications and sells ruxolitinib outside of the United States under the name JAKAVI.

In 2003, we initiated a research and development program to explore the inhibition of enzymes called janus associated kinases (JAK). The JAK family is composed of four tyrosine kinases—JAK1, JAK2, JAK3 and Tyk2—that are involved in the signaling of a number of cytokines and growth factors. JAKs are central to a number of biologic processes, including the formation and development of blood cells and the regulation of immune functions. Dysregulation of the JAK-STAT signaling pathway has been associated with a number of diseases, including myeloproliferative neoplasms, other hematological malignancies, solid tumors, rheumatoid arthritis, psoriasis and other chronic inflammatory diseases. Myeloproliferative neoplasms are a closely related group of blood diseases in which blood cells, specifically platelets, white blood cells, and red blood cells, grow or act abnormally in the bone marrow. These diseases include myelofibrosis (MF), polycythemia vera (PV) and essential thrombocythemia.

We have discovered multiple potent, selective and orally bioavailable JAK inhibitors that are selective for JAK1 or JAK1 and JAK2. JAKAFI is the most advanced compound in our JAK program. It is an oral JAK1 and JAK2 inhibitor and was approved by the FDA in November 2011 as a treatment for patients with intermediate or high-risk MF, which includes primary MF, post-polycythemia

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vera MF and post-essential thrombocythemia MF. We estimate there are between 16,000 and 18,500 patients with MF in the United States. Based on the modern prognostic scoring systems referred to as International Prognostic Scoring System and Dynamic International Prognostic Scoring System, we believe intermediate and high-risk patients represent 80 percent to 90 percent of all patients with MF in the United States and encompass patients over the age of 65, or patients who have or have ever had any of the following: anemia, constitutional symptoms, elevated white blood cell or blast counts, or platelet counts less than 100,000 per microliter of blood.

In December 2014, the FDA approved JAKAFI for the treatment of patients with PV who have had an inadequate response to or are intolerant of hydroxyurea. Current standard treatment for PV is phlebotomy (the removal of blood from the body) plus aspirin. When phlebotomy can no longer control PV, chemotherapy such as hydroxyurea, or interferon, is utilized. Approximately 25,000 patients with PV in the United States are considered uncontrolled because they have an inadequate response to or are intolerant of hydroxyurea, the most commonly used chemotherapeutic agent for the treatment of PV.

JAKAFI was the first FDA-approved JAK inhibitor for any indication and was the first and remains the only product approved by the FDA for use in MF, and also now in PV. The FDA has granted JAKAFI orphan drug status for MF, PV and essential thrombocythemia.

In August 2012, the European Commission approved ruxolitinib as JAKAVI for the treatment of disease-related splenomegaly or symptoms in adult patients with primary MF (also known as chronic idiopathic MF), post-polycythemia vera MF or post-essential thrombocythemia MF. In January 2015, the Committee for Medicinal Products for Human Use of the European Medicines Agency adopted a positive opinion for JAKAVI for the treatment of adult patients with polycythemia vera who are resistant to or intolerant of hydroxyurea, and approval was granted by the European Commission in March 2015.

We have retained all development and commercialization rights to JAKAFI in the United States and are eligible to receive development and commercial milestones as well as royalties from product sales outside the United States. We hold patents that cover the composition of matter and use of ruxolitinib through late 2027, excluding additional potential patent term extensions. We believe ruxolitinib may have potential as a treatment for other cancers.

Full results from the Phase II proof-of-concept RECAP trial of ruxolitinib in patients with refractory metastatic pancreatic cancer were presented in June 2014 and suggest a demonstrable survival benefit in a pre-specified subgroup of patients with elevated C-reactive protein (CRP). The Company and the FDA have agreed on a Special Protocol Assessment (SPA) for a registration trial for advanced or metastatic pancreatic cancer. Under the SPA, the Phase III JANUS 1 trial can be limited to patients with elevated CRP and there is no requirement to develop a companion diagnostic. The global Phase III program includes a second nearly identical Phase III trial, JANUS 2, and both trials are ongoing. The FDA has granted orphan drug status for ruxolitinib for the treatment of pancreatic cancer.

Elevated CRP has negative prognostic significance in many tumor types, and we believe that JAK inhibition may represent a new treatment approach for other solid tumors. To test this hypothesis, we have initiated three blinded proof-of-concept Phase II trials evaluating ruxolitinib in non-small cell lung cancer, breast cancer and colorectal cancer. The primary endpoint for each trial will be overall survival.

We have a second oral JAK1 and JAK2 inhibitor, baricitinib, which is subject to a collaboration agreement with Eli Lilly and Company in which Lilly received exclusive worldwide development and commercialization rights for the compound for inflammatory and autoimmune diseases. We could receive tiered, double-digit royalty payments on future global sales of products subject to the agreement with rates ranging up to 20 percent if the products are successfully commercialized. This collaboration also contains an option for us to co-develop compounds for any inflammatory and autoimmune disease, whereby we fund 30 percent of development costs from Phase IIb through regulatory approval for that indication in exchange for tiered royalties ranging up to the high twenties on potential future sales. We exercised our co-development option for the development of baricitinib in rheumatoid arthritis in 2010. The Phase III program of baricitinib in patients with rheumatoid arthritis is ongoing, and in December 2014, we announced with Lilly that the first of the Phase III trials met the primary endpoint. In February 2015, we announced with Lilly that the second of the Phase III trials also met the primary endpoint. Baricitinib is also in Phase II trials for patients with moderate-to-severe psoriasis and patients with diabetic nephropathy. We have decided not to exercise our co-development option for psoriasis, and the timeframe for exercising our co-development option for diabetic nephropathy has not yet occurred.

We have a portfolio of wholly-owned JAK1 inhibitors. Our lead JAK1 inhibitor, INCB39110, has completed proof-of-concept studies in patients with psoriasis, rheumatoid arthritis and myelofibrosis. While the results of the psoriasis and rheumatoid arthritis studies were positive, for strategic reasons, we are pursuing oncologic indications with INCB39110. We believe that selective JAK1 inhibition has the potential to minimize the myelosuppression associated with JAK2 inhibition, thus potentially enabling the combination of JAK1 selective inhibitors with myelosuppressive chemotherapy. The clinical program to evaluate

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INCB39110 in solid tumors includes an ongoing open-label safety study in combination with gemcitabine and nab-paclitaxel. We have completed the Phase I dose-escalation portion of the trial, and additional first-line pancreatic cancer patients are being recruited into the dose-expansion cohort. INCB39110 is also in two blinded proof-of-concept Phase II trials in non-small cell lung cancer. Both trials are now underway, and both trials are designed with overall survival as the primary endpoint. We have another JAK1 inhibitor, INCB52793, which has recently initiated a Phase I/II trial in advanced malignancies.

We have an oral IDO1 inhibitor, epacadostat (previously INCB24360) which belongs to a new class of agents known as immuno-oncology agents. IDO1 is an enzyme whose increased levels in multiple solid tumor types are associated with decreased survival. IDO1 inhibition shifts the immune system from an immunosuppressive state to an activated state, allowing the body to mount a more effective anti-tumor immune response. While preclinical data suggest that IDO1 inhibition can provide anti-tumor effects as monotherapy, based on the significant synergy exhibited in combination with checkpoint inhibitors as well as emerging clinical data, we believe that the optimal development strategy for our IDO1 inhibitor is in combination with other immuno-oncology therapies. During 2014 we signed clinical trial agreements with Merck, Roche / Genentech, AstraZeneca / MedImmune and Bristol-Myers Squibb to evaluate epacadostat with their respective PD-1 and PD-L1 agents in Phase I/II trials, and all four of these trials are now in progress. The tumor types under investigation under these agreements include non-small cell lung cancer, metastatic melanoma, head and neck cancer, colorectal cancer, ovarian cancer, diffuse large B-cell lymphoma and pancreatic cancer.

We have two PI3K-delta inhibitors in clinical development, INCB40093 and INCB50465. The PI3K-delta pathway mediates oncogenic signaling in B cell malignancies. INCB40093 is being studied as both monotherapy and in combination with our JAK1 inhibitor, INCB39110, in patients with B-lymphoid malignancies.An open-label, dose-escalation study of INCB50465 in subjects with previously treated B-cell malignancies has also been initiated.

We have a c-MET inhibitor, capmatinib, which is licensed to Novartis. c-MET is a clinically validated receptor kinase cancer target. Abnormal c-MET activation in cancer correlates with poor prognosis. Dysregulation of the c-MET pathway triggers tumor growth, formation of new blood vessels that supply the tumor with nutrients, and causes cancer to spread to other organs. Dysregulation of the c-MET pathway is seen in many types of cancers, including kidney, liver, stomach, breast and brain. Several small molecule c-MET kinase inhibitors have demonstrated clinical efficacy in a number of cancers; however, these molecules have limited potency and are relatively non-selective, which could lead to off-target toxicities. We believe that capmatinib has the requisite properties to overcome these limitations, including greater selectivity, improved potency and more effective inhibition of c-MET. Under our agreement, Novartis received worldwide exclusive development and commercialization rights to capmatinib and certain back-up compounds in all indications. Capmatinib is being evaluated in hepatocellular carcinoma, non-small cell lung cancer, and other solid tumors and may have potential utility as a combination agent.

We have recently added two new compounds to our clinical development portfolio. INCB54828 is a selective inhibitor of the FGFR1, FGFR2 and FGFR3 kinases that has demonstrated potency and selectivity in preclinical studies across multiple solid tumor types. The FGFR family of receptor tyrosine kinases can act as oncogenic drivers in several solid and liquid tumor types. INCB54329 is a bromodomain (BRD) inhibitor. BRDs are a family of proteins which play important roles in mediating gene transcription, most notably by facilitating the expression of oncogenes such as MYC, one of the most frequently dysregulated genes in all of human cancer. INCB54329 has shown broad single agent activity in preclinical models of leukemia, lymphoma, multiple myeloma and in some solid tumor settings; INCB54329 can synergize with inhibitors of JAK/STAT signaling, PI3K/AKT signaling and PIM signaling. Clinical trials of INCB54828 are now underway, and we plan to begin clinical trials of INCB54329 in the second quarter of this year.

We have a number of programs in preclinical development, and we intend to continue our investment in drug discovery to expand our pipeline.

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Our current pipeline includes the following compounds:

Target/Drug Compound	Indication	Collaborator (1)	Status
ONCOLOGY
*JAK1 and JAK2*
JAKAFI	Myelofibrosis(2)	Novartis	FDA Approved—Marketed
JAKAFI	Polycythemia Vera(3)	Novartis	FDA Approved—Marketed
ruxolitinib	Pancreatic Cancer	Novartis (opt-in option)	Phase III
ruxolitinib	Breast Cancer	Novartis (opt-in option)	Phase II
ruxolitinib	Non-Small Cell Lung Cancer	Novartis (opt-in option)	Phase II
ruxolitinib	Colorectal Cancer	Novartis (opt-in option)	Phase II
*JAK1*
INCB39110	Pancreatic Cancer	None	Phase II
INCB39110	Non-Small Cell Lung Cancer	None	Phase II
INCB39110	Non-Small Cell Lung Cancer	None	Phase II
INCB52793	Advanced malignancies	None	Phase I/II
*PI3K-delta*
INCB40093	B-lymphoid Malignancies	None	Phase I/II
INCB50465	B-lymphoid Malignancies	None	Phase I/II
*JAK1+PI3K-delta*
INCB39110+INCB40093	B-lymphoid Malignancies	None	Phase I/II
*IDO1*
epacadostat	Metastatic Melanoma	None	Phase II
epacadostat	Non-Small Cell Lung Cancer	Merck	Phase I/II
epacadostat	Non-Small Cell Lung Cancer	Roche / Genentech	Phase I/II
epacadostat	Multiple tumor types	AstraZeneca / MedImmune	Phase I/II
epacadostat	Multiple tumor types	Bristol-Myers Squibb	Phase I/II
*c-MET*
capmatinib	Solid Tumors	Novartis	Phase I/II
capmatinib	Hepatocellular Carcinoma	Novartis	Phase II
capmatinib	Non-Small Cell Lung Cancer	Novartis	Phase II
*FGFR*
INCB54828	Solid Tumors	None	Phase I/II
*BRD*
INCB54329	Hematology / Oncology	None	(4)

INFLAMMATION
*JAK1 and JAK2*
baricitinib	Rheumatoid Arthritis	Lilly	Phase III
baricitinib	Psoriasis	Lilly	Phase IIb
baricitinib	Diabetic Nephropathy	Lilly	Phase II

(1) For information about certain of our agreements with collaborators and other third parties, please see “ Business Relationships ” below and Note 7, License Agreements to our condensed consolidated financial statements included in this report.

(2) JAKAFI is approved for treatment of people with intermediate or high-risk myelofibrosis (MF), including primary MF, post—polycythemia vera MF, and post—essential thrombocythemia MF.

(3) JAKAFI is approved for treatment of people with polycythemia vera (PV) who have had an inadequate response to or are intolerant of hydroxyurea.

(4) Phase I/II clinical trial not yet initiated.

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Business Relationships

As part of our business strategy, we establish business relationships, including collaborative arrangements with other companies and medical research institutions to assist in the clinical development and/or commercialization of certain of our drugs and drug candidates and to provide support for our research programs. We also evaluate opportunities for acquiring products or rights to products and technologies that are complementary to our business from other companies and medical research institutions.

Below is a brief description of our significant relationships and collaborations that expand our pipeline and provide us with certain rights to existing and potential new products and technologies. For more information regarding certain of these relationships, including their ongoing financial and accounting impact on our business, please read Note 7, License Agreements to our condensed consolidated financial statements included in this report.

· 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 including pancreatic cancer, breast cancer, non-small cell lung cancer, and colorectal cancer. Novartis also received worldwide exclusive development and commercialization rights to our c-MET inhibitor compound capmatinib and certain back-up compounds in all indications. We retained options to co-develop and to co-promote capmatinib in the United States. Several JAKAFI clinical trials in patients with myelofibrosis are ongoing, including long-term extension studies, alternative dosing studies, joint global trials with Novartis and trials in patients with low platelet counts.

· Lilly - 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. We retained options to co-develop and co-promote our JAK inhibitors for the treatment of Diabetic Nephropathy, we retained options to co-promote our JAK inhibitors for the treatment of Psoriasis, and we elected to co-develop our JAK inhibitors for the treatment of Rheumatoid Arthritis and retained co-promotion options.

· Merck & Co. - In 2014, we entered into a clinical trial agreement with Merck to evaluate epacadostat with their anti-PD-1immunotherapy, Keytruda (pembrolizumab), for the treatment of non-small cell lung cancer, metastic melanoma, head and neck cancer, colorectal cancer, ovarian cancer, diffuse large B-cell lymphoma and pancreatic cancer. The trial is in progress and is currently in Phase I/II.

· Roche / Genentech - In 2014, we entered into a clinical trial agreement with Roche / Genentech to evaluate epacadostat with their anti-PD-L1 immunotherapy, MPDL3280A, for the treatment of non-small cell lung cancer, metastic melanoma, head and neck cancer, colorectal cancer, ovarian cancer, diffuse large B-cell lymphoma and pancreatic cancer. The trial is in progress and is currently in Phase I/II.

· AstraZeneca / MedImmune - In 2014, we entered into a clinical trial agreement with AstraZeneca / MedImmune to evaluate epacadostat with their anti-PD-L1 immunotherapy, MEDI4736, for the treatment of non-small cell lung cancer, metastic melanoma, head and neck cancer, colorectal cancer, ovarian cancer, diffuse large B-cell lymphoma and pancreatic cancer. The trial is in progress and is currently in Phase I/II.

· Bristol-Myers Squibb - In 2014, we entered into a clinical trial agreement with Bristol-Myers Squibb to evaluate epacadostat with their anti-PD-1 immunotherapy, Opdivo (nivolumab), for the treatment of non-small cell lung cancer, metastic melanoma, head and neck cancer, colorectal cancer, ovarian cancer, diffuse large B-cell lymphoma and pancreatic cancer. The trial is in progress and is currently in Phase I/II.

· Agenus - In 2015, we announced a global license, development and commercialization agreement with Agenus Inc. focused on novel immuno-therapeutics using Agenus’ proprietary Retrocyte Display antibody discovery platform. The alliance will initially focus on the development of checkpoint modulator antibodies directed against GITR, OX40, LAG-3 and TIM-3.

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Critical Accounting Policies and Significant Estimates

The preparation of financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an on-going basis, we evaluate our estimates. We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances, the results of which form our basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from those estimates under different assumptions or conditions.

We believe the following critical accounting policies affect the more significant judgments and estimates used in the preparation of our condensed consolidated financial statements:

· Revenue recognition;

· Research and development costs;

· Stock compensation;

· Investments;

· Inventory; and

· Convertible debt accounting

Revenue Recognition. Revenues are recognized when (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3) the price is fixed or determinable and (4) collectability is reasonably assured. Revenues are deferred for fees received before earned or until no further obligations exist. We exercise judgment in determining that collectability is reasonably assured or that services have been delivered in accordance with the arrangement. We assess whether the fee is fixed or determinable based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. We assess collectability based primarily on the customer’s payment history and on the creditworthiness of the customer.

Product Revenues

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the specialty pharmacy or distributor and the discounted price paid to the specialty pharmacy or distributor by the customer. The accrual for chargebacks is based on the estimated contractual discounts on the inventory levels on hand in our distribution channel. If actual future chargebacks vary from estimates, we may need to adjust prior period accruals, which would affect revenue in the period of adjustment.

Product Royalty Revenues

Royalty revenues on commercial sales for JAKAVI by Novartis are estimated based on information provided by Novartis. We exercise judgment in determining whether the information provided is sufficiently reliable for us to base our royalty revenue recognition thereon. If actual royalties vary from estimates, we may need to adjust prior period which would affect royalty revenue in the period of adjustment.

Cost of Product Revenues

Cost of product revenues includes all JAKAFI related costs that are recoverable through the commercialization of the product. Beginning in October 2014, we became obligated to pay tiered, low single digit royalties to Novartis on all future sales of JAKAFI in the United States, which are included in cost of product revenues.

Contract and License Revenues

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The regulatory review and approval process, which includes preclinical testing and clinical trials of each drug candidate, is lengthy, expensive and uncertain. Securing approval by the U.S. Food and Drug Administration (FDA) requires the submission of extensive preclinical and clinical data and supporting information to the FDA for each indication to establish a drug candidate’s safety and efficacy. The approval process takes many years, requires the expenditure of substantial resources, involves post-marketing surveillance and may involve ongoing requirements for post-marketing studies. Before commencing clinical investigations of a drug candidate in humans, we must submit an Investigational New Drug application (IND), which must be reviewed by the FDA.

The steps generally required before a drug may be marketed in the United States include preclinical laboratory tests, animal studies and formulation studies, submission to the FDA of an IND for human clinical testing, performance of adequate and well-controlled clinical trials in three phases, as described below, to establish the safety and efficacy of the drug for each indication, submission of a new drug application (NDA) or biologics license application (BLA) to the FDA for review and FDA approval of the NDA or BLA.

Research and Development Costs. Our policy is to expense research and development costs as incurred. We often contract with clinical research organizations (CROs) to facilitate, coordinate and perform agreed upon research and development of a new drug. To ensure that research and development costs are expensed as incurred, we record monthly accruals for clinical trials and preclinical testing costs based on the work performed under the contract.

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Under our clinical trial collaboration agreements, we may be reimbursed for certain development costs incurred. Such costs are recorded as a reduction of research and development expense in the period in which the related expense is incurred.

Stock Compensation. Share-based payment transactions with employees, which include stock options, restricted stock units (RSUs) and performance shares (PSUs), are recognized as compensation expense over the requisite service period based on their estimated fair values on the dates of grant. The stock compensation process requires significant judgment and the use of estimates, particularly surrounding Black-Scholes assumptions such as stock price volatility over the option term and expected option lives, as well as expected forfeiture rates and the probability of PSUs vesting. The fair value of stock options, which are subject to graded vesting, are recognized as compensation expense over the requisite service period using the accelerated attribution method. The fair value of RSUs, which are generally subject to cliff vesting, are recognized as compensation expense over the requisite service period using the straight line attribution method. The fair value of PSUs are recognized as compensation expense beginning at the time in which the performance conditions are deemed probable of achievement, over the remaining requisite service period. We recorded $17.6 million and $15.3 million of stock compensation expense for the three months ended March 31, 2015 and 2014, respectively.

Investments. We carry our investments at their respective fair values. We periodically evaluate the fair values of our investments to determine whether any declines in the fair value of investments represent an other-than-temporary impairment. This evaluation consists of a review of several factors, including the length of time and extent that a security has been in an unrealized loss position, the existence of an event that would impair the issuer’s future repayment potential, the near term prospects for recovery of the market value of a security and if we intend to sell or if it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis. If management determines that such an impairment exists, we would recognize an impairment charge. Because we may determine that market or business conditions may lead us to sell our marketable securities prior to maturity, we classify our marketable securities as “available-for-sale.” Investments in securities that are classified as available-for-sale and have readily determinable fair values are measured at fair market value in the balance sheets, and unrealized holding gains and losses for these investments are reported as a separate component of stockholders’ equity until realized. We classify marketable securities that are available for use in current operations as current assets on the condensed consolidated balance sheets.

Inventory. Inventories are determined at the lower of cost or market value with cost determined under the specific identification method and may consist of raw materials, work in process and finished goods. We began capitalizing inventory in mid-November 2011 once the FDA approved JAKAFI as the related costs were expected to be recoverable through the commercialization of the product. Costs incurred prior to approval of JAKAFI have been recorded as research and development expense in our statements of operations. As a result, cost of product revenues for the next 18 to 21 months will reflect a lower average per unit cost of materials.

Convertible Debt Accounting. We perform an assessment of all embedded features of a debt instrument to determine if (1) such features should be bifurcated and separately accounted for, and (2) if bifurcation requirements are met, whether such features should be classified and accounted for as equity or liability instruments. If the embedded feature meets the requirements to be bifurcated and accounted for as a liability, the fair value of the embedded feature is measured initially, included as a liability on the condensed consolidated balance sheets, and re-measured to fair value at each reporting period. Any changes in fair value are recorded in the condensed consolidated statement of operations. We monitor, on an ongoing basis, whether events or circumstances could give rise to a change in our classification of embedded features.

We determined the embedded conversion options in the 0.375% convertible senior notes due 2018 (the 2018 Notes) and the 1.25% convertible senior notes due 2020 (the 2020 Notes) are not required to be separately accounted for as derivatives. However, since the 2018 Notes and the 2020 Notes can be settled in cash or common shares or a combination of cash and common shares at our option, we are required to separate the 2018 Notes and 2020 Notes into a liability and equity component. The carrying amount of the liability component is calculated by measuring the fair value of a similar liability that does not have an associated equity component. The carrying amount of the equity component representing the embedded conversion option is determined by deducting the fair value of the liability component from the initial proceeds. The excess of the principal amount of the liability component over its carrying amount is amortized to interest expense over the expected life of the 2018 Notes and 2020 Notes using the effective interest method. The equity component is not re-measured as long as it continues to meet the conditions for equity classification for contracts in an entity’s own equity.

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The fair value of the liability component of the 2018 Notes was estimated at $299.4 million at issuance. Therefore, the difference between the $375.0 million face value of the 2018 Notes and the $299.4 million estimated fair value of the liability component will be amortized to interest expense over the term of the 2018 Notes through November 15, 2018 using the effective interest method.

The fair value of the liability component of the 2020 Notes was estimated at $274.8 million at issuance. Therefore, the difference between the $375.0 million face value of the 2020 Notes and the $274.8 million estimated fair value of the liability component will be amortized to interest expense over the term of the 2020 Notes through November 15, 2020 using the effective interest method.

The estimated fair value of the liability components at the date of issuance for the 2018 Notes and 2020 Notes were determined using valuation models and are complex and subject to judgment. Significant assumptions within the valuation models included an implied credit spread, the expected volatility and dividend yield of our common stock and the risk free interest rate for notes with a similar term.

Prior to May 14, 2014, the 2018 Notes and 2020 Notes were not convertible except in connection with a make whole fundamental change, as defined in the respective indentures. Beginning on, and including, May 15, 2014, the 2018 Notes and 2020 Notes are convertible prior to the close of business on the business day immediately preceding May 15, 2018, in the case of the 2018 Notes, and May 15, 2020, in the case of the 2020 Notes, only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on March 31, 2014 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price for the 2018 Notes or 2020 Notes, as applicable, on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the measurement period) in which the trading price per $1,000 principal amount of 2018 Notes or 2020 Notes, as applicable, for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate for the 2018 Notes or 2020 Notes, as applicable, on each such trading day; or (3) upon the occurrence of specified corporate events. On or after May 15, 2018, in the case of the 2018 Notes, and May 15, 2020, in the case of the 2020 Notes, until the close of business on the second scheduled trading day immediately preceding the relevant maturity date, the Notes are convertible at any time, regardless of the foregoing circumstances. Upon conversion we will pay or deliver, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock, at our election.

On a quarterly basis, we perform an assessment in order to determine whether the 2018 Notes or 2020 Notes have become convertible at the option of the holder, based on meeting any of the conversion criteria described above. Should either the 2018 Notes or the 2020 Notes become convertible, we then assess our intent and ability to settle the 2018 Notes or the 2020 Notes in cash, shares of common stock, or a combination of cash and shares of common stock, in order to determine the appropriate classification of the 2018 Notes and the 2020 Notes at the balance sheet date. On April 1, 2015, the 2018 Notes and 2020 Notes became convertible through at least June 30, 2015, based on meeting the conversion criteria related to the sale price of our common stock during the calendar quarter ended March 31, 2015 as described above. Management’s intent is to settle any conversions of 2018 Notes or 2020 Notes in common shares and, therefore, the 2018 and 2020 Notes are reflected in long term liabilities on the condensed consolidated balance sheet as of March 31, 2015.

Recent Accounting Pronouncements

In August 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-15, “Presentation of Financial Statements—Going Concern”, to provide guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and about related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about a company’s ability to continue as a going concern within one year from the date the financial statements are issued. This guidance is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. We do not believe the pending adoption of ASU No. 2014-15 will have a material impact on our condensed consolidated financial statements.

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Results of Operations

We recorded a net loss of $18.4 million and basic and diluted net loss per share of $0.11 for the three months ended March 31, 2015, as compared to a net loss of $34.0 million and basic and diluted net loss per share of $0.21 in the corresponding period in 2014.

Revenues.

	For the three months ended, March 31,
	2015		2014
	(in millions)
Product revenues, net	$	115.3	$	69.7
Product royalty revenues	15.7		9.8
Contract revenues	28.2		10.2
Other revenues	0.1		0.1
Total revenues	$	159.3	$	89.8

Our product revenues, net from JAKAFI for the three months ended March 31, 2015 and 2014, were $115.3 million and $69.7 million, respectively. This increase was comprised of a volume increase of $35.3 million and a price increase of $10.3 million. Product revenues from the sale of JAKAFI are recorded net of estimated product returns, pricing discounts including rebates offered pursuant to mandatory federal and state government programs and chargebacks, prompt pay discounts and distribution fees and co-pay assistance. Our revenue recognition policies require estimates of the aforementioned sales allowances each period.

The following table provides a summary of activity with respect to our sales allowances and accruals for the three months ended March 31, 2015:

Three Months Ended March 31, 2015	Discounts and Distribution Fees			Government Rebates and Chargebacks			Co-Pay Assistance and Other Discounts			Product Returns			Total
Balance at January 1, 2015	$	2,057		$	7,906		$	119		$	399		$	10,481
Allowances for current period sales	3,638			13,483			625			266			18,012
Allowances for prior period sales	(156		)	(358		)	—			—			(514		)
Credits/payments for current period sales	(1,853		)	(3,633		)	(540		)	(101		)	(6,127		)
Credits/payments for prior period sales	(1,505		)	(3,387		)	(61		)	(72		)	(5,025		)
Balance at March 31, 2015	$	2,181		$	14,011		$	143		$	492		$	16,827

Government rebates and chargebacks are the most significant component of our sales allowances. Increases in certain government reimbursement rates are limited to a measure of inflation, and when the price of a drug increases faster than this measure of inflation it will result in a penalty adjustment factor that causes a larger sales allowance to those government related entities. We expect government rebates and chargebacks as a percentage of our gross product sales will continue to increase in connection with any future JAKAFI price increases greater than the rate of inflation, and any such increase in these government rebates and chargebacks will have a negative impact on our reported product revenues, net.

We expect our sales allowances to fluctuate from quarter to quarter as a result of the Medicare Part D Coverage Gap, the volume of purchases eligible for government mandated discounts and rebates as well as changes in discount percentages which are impacted by potential future price increases, rate of inflation, and other factors.

Product royalty revenues on commercial sales of JAKAVI by Novartis are based on net sales of licensed products in licensed territories as provided by Novartis. Our net product royalty revenues for the three months ended March 31, 2015 and 2014, were $15.7 million and $9.8 million, respectively.

Our contract revenues were $28.2 million and $10.2 million for the three months ended March 31, 2015 and 2014, respectively. For the three months ended March 31, 2015 and 2014, contract revenues were derived from the straight line recognition of revenue associated with the Lilly upfront fees over the estimated performance period as well as milestone payments from Novartis earned during the periods. The upfront fees related to the Lilly agreement consisted of a $90.0 million upfront payment received in 2010. During the three months ended March 31, 2015, under the Novartis agreement, we recognized a $25.0 million regulatory milestone triggered by the Committee for Medicinal Products for Human Use of the European Medicines Agency adopting a positive opinion for JAKAVI (ruxolitinib) for the treatment of adult patients with polycythemia vera who are resistant to or intolerant of hydroxyurea. During the three months ended March 31, 2014, under the Novartis agreement, we recognized a $7.0 million

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development milestone based on the formal initiation by Novartis of a Phase II clinical trial evaluating capmatinib in non-small cell lung cancer.

Cost of Product Revenues

We began capitalizing inventory in mid-November 2011 once the FDA approved JAKAFI as the related costs were expected to be recoverable through the commercialization of the product. Costs incurred prior to FDA approval of $9.6 million were recorded as research and development expenses in our statements of operations prior to commercialization of JAKAFI. At March 31, 2015, inventory with $2.0 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 18 to 21 months; however, the time period over which this inventory is consumed will depend on a number of factors, including the amount of future JAKAFI sales, and the ability to utilize inventory prior to its expiration date. As a result, cost of product revenues for the next 18 to 21 months will reflect a lower average per unit cost of materials. Commencing in October 2014, we became obligated to pay tiered, low single digit royalties to Novartis on all sales of JAKAFI in the United States, which is included in cost of product revenues.

Cost of product revenues was $3.0 million and $0.2 million for the three months ended March 31, 2015 and 2014, respectively. The increase in cost of product revenues for the three months ended March 31, 2015 as compared to the same period in 2014 is due to increased JAKAFI sales and our obligation that commenced in October 2014 to pay royalties to Novartis on all JAKAFI sales in the United States. We expect future cost of product revenues to range in the mid-single digits as a percentage of net product sales subsequent to the utilization of all of the remaining pre-launch inventory.

Operating Expenses.

Research and development expenses.

	For the three months ended, March 31,
	2015		2014
	(in millions)
Salary and benefits related	$	26.2	$	21.7
Stock compensation	10.2		8.3
Clinical research and outside services	71.8		38.5
Occupancy and all other costs	10.2		7.1

Total research and development expenses	$	118.4	$	75.6

We currently account for research and development costs by natural expense line and not costs by project. Salary and benefits related expense increased from the three months ended March 31, 2014 to the three months ended March 31, 2015 due primarily to increased development headcount to sustain our development pipeline. Stock compensation expense may fluctuate from period to period based on the number of awards granted, stock price volatility and expected award lives, as well as expected award forfeiture rates which are used to value equity-based compensation. The increase in clinical research and outside services expense from the three months ended March 31, 2014 to the three months ended March 31, 2015 was primarily the result of increased development costs to advance our clinical pipeline and the $20.2 million charge related to the upfront payment made to Agenus pursuant to our license, development and commercialization agreement, as well as an additional $1.8 million of research and development costs incurred under the arrangement through March 31, 2015. Research and development expenses for the three months ended March 31, 2015 and 2014 were net of $1.2 million and $1.1 million, respectively, of costs reimbursed by our collaborative partners. Research and development expenses may fluctuate from period to period depending upon the stage of certain projects and the level of pre-clinical and clinical trial related activities. Many factors can affect the cost and timing of our clinical trials, including requests by regulatory agencies for more information, inconclusive results requiring additional clinical trials, slow patient enrollment, adverse side effects among patients, insufficient supplies for our clinical trials and real or perceived lack of effectiveness or safety of our investigational drugs in our clinical trials. In addition, the development of all of our products will be subject to extensive governmental regulation. These factors make it difficult for us to predict the timing and costs of the further development and approval of our products.

In July 2010, we elected to co-develop baricitinib with Lilly in rheumatoid arthritis and we are responsible for funding 30% of the associated future global development costs for this indication from the initiation of the Phase IIb trial through regulatory approval. Research and development expenses recorded under the Lilly agreement representing 30% of the global development costs for baricitinib for the treatment of rheumatoid arthritis were $11.6 million and $14.0 million for the three months ended March 31, 2015 and 2014, respectively. We have retained certain mechanisms to give us cost protection as baricitinib advances in clinical development. We can defer our portion of co-development study costs by indication if they exceed a predetermined level. This deferment would be credited against future milestones or royalties and we would still be eligible for the full incremental royalties related to the co-development option. In addition, even if we have started co-development funding for any indication, we can at any

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time opt out, which will stop future co-development cost sharing. If we elect to do this we would still be eligible for our base royalties plus an incremental pro-rated royalty commensurate with our contribution to the total co-development cost for those indications for which we contributed funding.

Selling, general and administrative expenses.

	For the three months ended, March 31,
	2015		2014
	(in millions)
Salary and benefits related	$	14.2	$	12.8
Stock compensation	7.3		7.0
Other contract services and outside costs	23.4		17.2

Total selling, general and administrative expenses	$	44.9	$	37.0

Salary and benefits related expense increased from the three months ended March 31, 2014 to the three months ended March 31, 2015 due to increased headcount. This increased headcount was due primarily to the ongoing commercialization efforts related to JAKAFI for intermediate or high-risk myelofibrosis and for the commercial launch in uncontrolled polycythemia vera which occurred in December 2014. Stock compensation expense may fluctuate from period to period based on the number of awards granted, stock price volatility and expected award lives, as well as expected award forfeiture rates which are used to value equity-based compensation. The increase in other contract services and outside costs was primarily the result of marketing activities for JAKAFI for intermediate or high-risk myelofibrosis and uncontrolled polycythemia vera.

Other income (expense)

Interest and other income, net. Interest and other income, net, for the three months ended March 31, 2015 and 2014 was $1.6 million and $0.7 million, respectively.

Interest Expense. Interest expense for the three months ended March 31, 2015 and 2014 was $12.7 million and $11.4 million, respectively. Included in interest expense for the three months ended March 31, 2015 and 2014, were $9.2 million and $8.8 million, respectively, of non-cash charges to amortize the discounts on our 4.75% convertible senior notes due 2015 (the 2015 Notes), the 2018 Notes and the 2020 Notes.

Debt exchange expense on senior note conversions. Debt exchange expense on senior note conversions for the three months ended March 31, 2014 was $0.3 million and related to the exchange of $4.9 million in aggregate principal amount of our 2015 Notes for the underlying shares of common stock and cash.

Liquidity and Capital Resources

We had net losses from inception in 1991 through 1996 and in 1999 through March 31, 2015. Because of those losses, we had an accumulated deficit of $1.8 billion as of March 31, 2015. We have funded our research and development operations through sales of equity securities, the issuance of convertible notes, cash received from customers, and collaborative arrangements. At March 31, 2015, we had available cash, cash equivalents and marketable securities of $585.4 million. Our cash and marketable securities balances are held in a variety of interest-bearing instruments, including money market accounts, corporate debt securities and U.S. government agency and non-agency mortgage-backed securities. Available cash is invested in accordance with our investment policy’s primary objectives of liquidity, safety of principal and diversity of investments.

Net cash used in operating activities was $4.6 million for the three months ended March 31, 2015, compared to $31.7 million used in operating activities for the three months ended March 31, 2014. The $27.1 million decrease was due primarily to our lower net loss.

Our investing activities, other than purchases, sales and maturities of marketable securities, have consisted predominantly of capital expenditures and sales and purchases of long term investments. Net cash used in investing activities was $58.6 million for the three months ended March 31, 2015, which represented purchases of marketable securities of $34.5 million, capital expenditures of $3.6 million, and long term investment in Agenus of $39.8 million offset in part by maturities of marketable securities of $19.3 million. Net cash used in investing activities was $47.7 million for the three months ended March 31, 2014, which represented purchases of marketable securities of $45.1 million and capital expenditures of $2.7 million offset by maturities of marketable securities of $0.1 million. In the future, net cash used by investing activities may fluctuate significantly from period to period due to

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the timing of strategic equity investments, acquisitions and capital expenditures and maturities/sales and purchases of marketable securities.

Net cash provided by financing activities was $32.7 million and $44.5 million for the three months ended March 31, 2015 and 2014, respectively, primarily representing proceeds from the issuance of common stock under our stock plans and employee stock purchase plan.

The following summarizes our significant contractual obligations as of March 31, 2015 and the effect those obligations are expected to have on our liquidity and cash flow in future periods (in millions):

	Total		Less Than 1 Year		Years 2 - 3		Years 4 - 5		Over 5 Years
Contractual Obligations:
Principal on convertible senior debt	$	840.8	$	90.8	$	—	$	375.0	$	375.0
Interest on convertible senior debt	38.1		10.4		12.2		10.8		4.7
Non-cancelable lease obligations:
Related to corporate headquarters	87.3		6.9		12.1		12.0		56.3
Total contractual obligations	$	966.2	$	108.1	$	24.3	$	397.8	$	436.0

We have entered into and may in the future seek to license additional rights relating to technologies or drug development candidates in connection with our drug discovery and development programs. Under these licenses, we may be required to pay up front fees, milestone payments, and royalties on sales of future products.

We believe that our cash, cash equivalents and marketable securities will be adequate to satisfy our capital needs for at least the next twelve months. Our cash requirements depend on numerous factors, including our expenditures in connection with our drug discovery and development programs and commercialization operations; expenditures in connection with litigation or other legal proceedings; competing technological and market developments; the cost of filing, prosecuting, defending and enforcing patent claims and other intellectual property rights; our receipt of any milestone or other payments under any collaborative agreements we may enter into, including the agreements with Novartis and Lilly; the extent to which commercialization of JAKAFI is successful; expenditures in connection with potential exchanges of our outstanding convertible senior notes; and expenditures in connection with strategic relationships and license agreements, including our agreement with Agenus, strategic equity investments or potential acquisitions. Changes in our research and development or commercialization plans or other changes affecting our operating expenses may result in changes in the timing and amount of expenditures of our capital resources.

Until we can generate a sufficient amount of product revenues to finance our cash requirements, which we may never do, we expect to finance future cash needs primarily through public or private equity offerings, debt financings, borrowings or strategic collaborations. The sale of equity or additional convertible debt securities in the future may be dilutive to our stockholders, and may provide for rights, preferences or privileges senior to those of our holders of common stock. Debt financing arrangements may require us to pledge certain assets or enter into covenants that could restrict our operations or our ability to incur further indebtedness. We do not know whether additional funding will be available on acceptable terms, if at all. If we are not able to secure additional funding when needed, we may have to scale back our operations, delay or eliminate one or more of our research or development programs, or attempt to obtain funds by entering into an agreement with a collaborator or licensee that would result in terms that are not favorable to us or relinquishing our rights in certain of our proprietary technologies or drug candidates.

Off Balance Sheet Arrangements

We have no off-balance sheet arrangements other than those that are discussed above.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our investments in marketable securities, which are composed primarily of U.S. government agency and non-agency mortgage-backed securities and corporate debt securities, are subject to default, changes in credit rating and changes in market value. These investments are also subject to interest rate risk and will decrease in value if market rate interest rates increase. As of March 31, 2015, marketable securities were $163.6 million. Due to the nature of these investments, if market interest rates were to increase immediately and uniformly by 10% from levels as of March 31, 2015, the decline in fair value would not be material.

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Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures. We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Our disclosure controls and procedures have been designed to meet reasonable assurance standards. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Based on their evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in internal control over financial reporting . There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) for the three months ended March 31, 2015, that materially affected or are reasonably likely to materially affect our internal control over financial reporting.

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PART II: OTHER INFORMATION

Item 1A. Risk Factors

RISKS RELATING TO OUR LEAD PRODUCT JAKAFI

We depend heavily on our lead product, JAKAFI (ruxolitinib), which is marketed as JAKAVI outside the United States. If we are unable to successfully commercialize JAKAFI in its approved indications or to successfully obtain regulatory approval for and commercialize ruxolitinib for the treatment of additional indications, or if we are significantly delayed or limited in doing so, our business may be materially harmed.

JAKAFI is our first product to be approved for sale in the United States. It was approved by the U.S. Food and Drug Administration, or FDA, in November 2011 for the treatment of patients with intermediate or high-risk myelofibrosis and in December 2014 for the treatment of patients with polycythemia vera who have had an inadequate response to or are intolerant of hydroxyurea, which we refer to as uncontrolled polycythemia vera. Although we have received regulatory approval for these indications, such approval does not guarantee future revenues. The commercial success of JAKAFI and our ability to generate and maintain revenues from the sale of JAKAFI will depend on a number of factors, including:

· the number of patients with intermediate or high-risk myelofibrosis or uncontrolled polycythemia vera who are diagnosed with the disease and the number of such patients that may be treated with JAKAFI;

· the acceptance of JAKAFI by patients and the healthcare community;

· whether physicians, patients and healthcare payors view JAKAFI as therapeutically effective and safe relative to cost and any alternative therapies;

· the ability to obtain and maintain sufficient coverage or reimbursement by third-party payors;

· the ability of our third-party manufacturers to manufacture JAKAFI in sufficient quantities with acceptable quality;

· the ability of our company and our third-party providers to provide marketing and distribution support for JAKAFI;

· the label and promotional claims allowed by the FDA;

· the maintenance of regulatory approval for the approved indications in the United States; and

· our ability to develop, obtain regulatory approval for and commercialize ruxolitinib in the United States for additional indications.

If we are not successful in commercializing JAKAFI in the United States, or are significantly delayed or limited in doing so, our business may be materially harmed and we may need to delay other drug discovery and development initiatives or even significantly curtail operations.

In addition, our receipt of royalties under our collaboration agreement with Novartis for sales of JAKAVI outside the United States will depend on factors similar to those listed above for jurisdictions outside the United States.

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

We may not be able to sell JAKAFI on a profitable basis or our profitability may be reduced if we are required to sell JAKAFI at lower than anticipated prices or reimbursement is unavailable or limited in scope or amount. JAKAFI is expensive and almost all patients will require some form of third party coverage to afford its cost. Our future revenues and profitability will be adversely affected if we cannot depend on government and other third-party payors to defray the cost of JAKAFI to the patient. In the United States, there have been, and we expect there will continue to be, efforts to control and reduce healthcare costs. Government and other third-party payors are challenging the prices charged for healthcare products and increasingly limiting and attempting to limit both coverage and level of reimbursement for prescription drugs. If these entities refuse to provide coverage and reimbursement with respect to JAKAFI, determine to provide a lower level of coverage and reimbursement than anticipated, or reduce previously approved

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levels of coverage and reimbursement, then our pricing or reimbursement for JAKAFI may be affected and our product sales, results of operations or financial condition could be harmed.

We depend upon a limited number of specialty pharmacies and group purchasing organizations for a significant portion of any revenues from JAKAFI, and the loss of, or significant reduction in sales to, any one of these specialty pharmacies or group purchasing organizations could adversely affect our operations and financial condition.

We sell JAKAFI primarily to specialty pharmacies and group purchasing organizations, which in turn dispense JAKAFI to patients in fulfillment of prescriptions. We do not promote JAKAFI to specialty pharmacies and group purchasing organizations, and they do not set or determine demand for JAKAFI. Our ability to successfully commercialize JAKAFI will depend, in part, on the extent to which we are able to provide adequate distribution of JAKAFI to patients. Although we have contracted with a number of specialty pharmacies and group purchasing organizations, they are expected generally to carry a very limited inventory and may be reluctant to be part of our distribution network in the future if demand for the product does not increase. Further, it is possible that these specialty pharmacies and group purchasing organizations could decide to change their policies or fees, or both, at some time in the future. This could result in their refusal to carry smaller volume products such as JAKAFI, or cause higher product costs, lower margins or the need to find alternative methods of distributing our product. Although we believe we can find alternative channels to distribute JAKAFI on relatively short notice, our revenue during that period of time may suffer and we may incur additional costs to replace any such specialty pharmacy or group purchasing organization. The loss of any large specialty pharmacy or group purchasing organization as part of our distribution network, a significant reduction in sales we make to specialty pharmacies or group purchasing organizations, or any failure to pay for the products we have shipped to them could materially and adversely affect our results of operations and financial condition.

If we are unable to establish and maintain effective sales, marketing and distribution capabilities, or to enter into agreements with third parties to do so, we will not be able to successfully commercialize JAKAFI.

Prior to our commercialization of JAKAFI, we had no experience selling and marketing drug products and with pricing and obtaining adequate third-party reimbursement for drug products. Under our collaboration and license agreement with Novartis, we have retained commercialization rights to JAKAFI in the United States. We have established commercial capabilities in the United States, but cannot guarantee that we will be able to maintain our own capabilities or enter into and maintain any marketing, distribution or third-party logistics agreements with third-party providers on acceptable terms, if at all. We may not be able to correctly judge the size and experience of the sales and marketing force and the scale of distribution capabilities necessary to successfully market and sell JAKAFI. Establishing and maintaining sales, marketing and distribution capabilities are expensive and time-consuming. Competition for personnel with experience in sales and marketing can be high. Our expenses associated with building and maintaining the sales force and distribution capabilities may be disproportional compared to the revenues we may be able to generate on sales of JAKAFI.

Our reliance on other parties to manufacture JAKAFI could result in a short supply of JAKAFI, increased costs, and withdrawal of regulatory approval.

We do not currently operate manufacturing facilities for commercial production of JAKAFI. Accordingly, we will be subject to the risks described below under “—Other Risks Relating to Our Business—Our reliance on other parties to manufacture our drug products and drug candidates could result in a short supply of the drugs, delays in clinical trials or drug development, increased costs, and withdrawal or denial of a regulatory authority’s approval.”

If we fail to comply with applicable laws and regulations, we could lose our approval to market JAKAFI or be subject to other governmental enforcement activity.

We cannot guarantee that we will be able to maintain regulatory approval to market JAKAFI in the United States. If we do not maintain our regulatory approval to market JAKAFI, our results of operations will be materially harmed. We and our collaborators, third-party manufacturers and suppliers are subject to rigorous and extensive regulation by the FDA and other federal and state agencies. These regulations continue to apply after product marketing approval, and cover, among other things, testing, manufacturing, quality control, labeling, advertising, promotion, risk mitigation, and adverse event reporting requirements.

Our commercialization of JAKAFI is subject to post-regulatory approval product surveillance, and JAKAFI may have to be withdrawn from the market or subject to restrictions if previously unknown problems occur. Regulatory agencies may also require additional clinical trials or testing for JAKAFI, and JAKAFI may be recalled or may be subject to reformulation, additional studies, changes in labeling, warnings to the public and negative publicity.

Failure to comply with the laws and regulations administered by the FDA or other agencies could result in:

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· administrative and judicial sanctions, including warning letters;

· fines and other civil penalties;

· withdrawal of regulatory approval to market JAKAFI;

· interruption of production;

· operating restrictions;

· product recall or seizure;

· injunctions; and

· criminal prosecution.

The occurrence of any such event may have a material adverse effect on our business.

If the use of JAKAFI harms patients, or is perceived to harm patients even when such harm is unrelated to JAKAFI, our regulatory approval could be revoked or otherwise negatively impacted or we could be subject to costly and damaging product liability claims.

The testing of JAKAFI and the manufacturing, marketing and sale of JAKAFI expose us to product liability and other risks. Side effects and other problems experienced by patients from the use of JAKAFI could:

· lessen the frequency with which physicians decide to prescribe JAKAFI;

· encourage physicians to stop prescribing JAKAFI to their patients who previously had been prescribed JAKAFI;

· cause serious harm to patients that may give rise to product liability claims against us; and

· result in our need to withdraw or recall JAKAFI from the marketplace.

If JAKAFI is used by a wide patient population, new risks and side effects may be discovered, the rate of known risks or side effects may increase, and risks previously viewed as less significant could be determined to be significant.

Previously unknown risks and adverse effects of JAKAFI may also be discovered in connection with unapproved, or off-label, uses of JAKAFI. We are prohibited by law from promoting or in any way supporting or encouraging the promotion of JAKAFI for off-label uses, but physicians are permitted to use products for off-label purposes. In addition, we are studying and expect to continue to study JAKAFI in diseases for potential additional indications in controlled clinical settings, and independent investigators are doing so as well. In the event of any new risks or adverse effects discovered as new patients are treated for intermediate or high-risk myelofibrosis or uncontrolled polycythemia vera and as JAKAFI is studied in or used by patients for off-label indications, regulatory authorities may delay or revoke their approvals, we may be required to conduct additional clinical trials, make changes in labeling of JAKAFI, reformulate JAKAFI or make changes and obtain new approvals. We may also experience a significant drop in the sales of JAKAFI, experience harm to our reputation and the reputation of JAKAFI in the marketplace or become subject to lawsuits, including class actions. Any of these results could decrease or prevent sales of JAKAFI or substantially increase the costs and expenses of commercializing JAKAFI.

Patients who have been enrolled in our clinical trials or who may use JAKAFI in the future often have severe and advanced stages of disease and known as well as unknown significant pre-existing and potentially life-threatening health risks. During the course of treatment, patients may suffer adverse events, including death, for reasons that may or may not be related to JAKAFI. Such events could subject us to costly litigation, require us to pay substantial amounts of money to injured patients, delay, negatively impact or end our opportunity to receive or maintain regulatory approval to market JAKAFI, or require us to suspend or abandon our commercialization efforts. Even in a circumstance in which we do not believe that an adverse event is related to JAKAFI, the investigation into the circumstance may be time consuming or inconclusive. These investigations may interrupt our sales efforts, impact and limit the type of regulatory approvals JAKAFI receives or maintains, or delay the regulatory approval process for our collaborator Novartis in other countries.

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Factors similar to those listed above also apply to our collaboration partner Novartis for jurisdictions outside the United States.

If we market JAKAFI in a manner that violates various federal and state health care related laws and regulations, we may be subject to civil or criminal penalties.

In addition to FDA and related regulatory requirements, we are subject to health care “fraud and abuse” laws, such as the federal False Claims Act, the anti-kickback provisions of the federal Social Security Act, and other state and federal laws and regulations. Federal and state anti-kickback laws prohibit, among other things, knowingly and willfully offering, paying, soliciting or receiving remuneration to induce, or in return for purchasing, leasing, ordering or arranging for the purchase, lease or order of any health care item or service reimbursable under Medicare, Medicaid, or other federally- or state-financed health care programs. Federal false claims laws prohibit any person from knowingly presenting, or causing to be presented, a false claim for payment to the federal government, or knowingly making, or causing to be made, a false statement to get a false claim paid. Pharmaceutical companies have been prosecuted under these laws for a variety of alleged promotional and marketing activities.

Although physicians are permitted, based on their medical judgment, to prescribe products for indications other than those approved by the FDA, manufacturers are prohibited from promoting their products for such off-label uses. We market JAKAFI for intermediate or high-risk myelofibrosis and uncontrolled polycythemia vera and provide promotional materials to physicians regarding the use of JAKAFI for these indications. Although we believe that our promotional materials for physicians do not constitute off-label promotion of JAKAFI, the FDA or other agencies may disagree. If the FDA or another agency determines that our promotional materials or other activities constitute off-label promotion of JAKAFI, it could request that we modify our promotional materials or other activities or subject us to regulatory enforcement actions, including the issuance of a warning letter, injunction, seizure, civil fine and criminal penalties. It is also possible that other federal, state or foreign enforcement authorities might take action if they believe that the alleged improper promotion led to the submission and payment of claims for an unapproved use, which could result in significant fines or penalties under other statutory authorities, such as laws prohibiting false claims for reimbursement. Even if it is later determined we are not in violation of these laws, we may be faced with negative publicity, incur significant expenses defending our position and have to divert significant management resources from other matters.

The majority of states also have statutes or regulations similar to the federal anti-kickback law and false claims laws, which apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payor. In recent years, several states and localities, including California, Connecticut, the District of Columbia, Massachusetts, Minnesota, Nevada, New Mexico, Texas, Vermont, and West Virginia, have enacted legislation requiring pharmaceutical companies to establish marketing compliance programs, file periodic reports with the state or make periodic public disclosures on sales, marketing, pricing, clinical trials, and other activities. Similar legislation is being considered in other states. Additionally, as part of the Patient Protection and Affordable Care Act, the federal government has enacted the Physician Payment Sunshine provisions. The Sunshine provisions require manufacturers to publicly report certain payments or other transfers of value made to physicians and teaching hospitals. Many of these requirements are new and uncertain, and the penalties for failure to comply with these requirements are unclear. Nonetheless, if we are found not to be in full compliance with these laws, we could face enforcement action and fines and other penalties, and could receive adverse publicity. See also “—Other Risks Relating to our Business—If we fail to comply with the extensive legal and regulatory requirements affecting the health care industry, we could face increased costs, penalties and a loss of business” below.

Competition for JAKAFI from generic products could potentially harm our business and result in a decrease in our revenue.

As a result of the Drug Price Competition and Patent Term Restoration Act of 1984, commonly known as the Hatch-Waxman Act, in the United States, generic manufacturers may seek approval of a generic version of an innovative pharmaceutical by filing with the FDA an Abbreviated New Drug Application, or ANDA. JAKAFI was approved pursuant to a New Drug Application, or NDA, by the FDA on November 16, 2011. The four-year period after which a generic manufacturer may file an ANDA and challenge the patents related to JAKAFI will expire on November 16, 2015. Since the Hatch-Waxman Act provides significant incentives to generic manufacturers to challenge U.S. patents on successful innovative pharmaceutical products, generic manufacturers may target JAKAFI and challenge our related U.S. patent rights as early as the fourth quarter of 2015. There can be no assurance that our patents will be upheld or that any litigation in which we might engage with any such generic manufacturer would be successful in protecting JAKAFI’s exclusivity. The entry of a generic version of JAKAFI could result in a decrease in JAKAFI sales and have a material adverse effect on our operating results and business.

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OTHER RISKS RELATING TO OUR BUSINESS

We may be unsuccessful in our efforts to discover and develop drug candidates and commercialize drug products.

None of our drug candidates, other than JAKAFI/JAKAVI, has received regulatory approval. Our ability to discover and develop drug candidates and to commercialize additional drug products will depend on our ability to:

· hire and retain key employees;

· identify high quality therapeutic targets;

· identify potential drug candidates;

· develop products internally or license drug candidates from others;

· identify and enroll suitable human subjects, either in the United States or abroad, for our clinical trials;

· complete laboratory testing and clinical trials on humans;

· obtain and maintain necessary intellectual property rights to our products;

· obtain and maintain necessary regulatory approvals for our products, both in the United States and abroad;

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

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

· obtain appropriate coverage and reimbursement levels for the cost of our products from governmental authorities, private health insurers and other third-party payors;

· lease facilities at reasonable rates to support our growth; and

· enter into arrangements with third parties to license and commercialize our products.

We have limited experience with the activities listed above and may not be successful in discovering, developing, or commercializing drug products. Discovery and development of drug candidates are expensive and time-consuming, and we do not know if our efforts will lead to discovery of any drug candidates that can be successfully developed and marketed. Of the compounds or biologics that we identify as potential drug products or that we may in-license from other companies, only a few, if any, are likely to lead to successful drug development programs and commercialized drug products.

We depend heavily on the success of our most advanced drug candidates. We might not be able to commercialize any of our drug candidates successfully, and we may spend significant time and money attempting to do so.

We have invested significant resources in the development of our most advanced drug candidates. Ruxolitinib is in Phase III clinical trials for the treatment of advanced or metastatic pancreatic cancer, as well as in other clinical trials. Further, we have a number of drug candidates in Phase I and Phase II clinical trials. Our ability to generate product revenues will depend on the successful development and eventual commercialization of our most advanced drug candidates. We, or our collaborators or licensees, may decide to discontinue development of any or all of our drug candidates at any time for commercial, scientific or other reasons. For example, in September 2011, we announced that we had discontinued development of our lead sheddase inhibitor, INCB7839, for the treatment of breast cancer. If a product is developed, but is not marketed, we may have spent significant amounts of time and money on it, which could adversely affect our operating results and financial condition.

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Although we obtained a special protocol assessment agreement for ruxolitinib for advanced or metastatic pancreatic cancer, a special protocol assessment agreement does not guarantee any particular outcome from regulatory review, including any regulatory approval.

We have obtained a special protocol assessment, or SPA, agreement with the FDA for a registration trial, which is one of two Phase III trials in the development plan, for ruxolitinib for the treatment of advanced or metastatic pancreatic cancer in a subgroup of patients with elevated CRP. The SPA process allows for FDA evaluation of a clinical trial protocol intended to form the primary basis of an efficacy claim in support of an NDA, and provides a product sponsor with an agreement confirming that the design and size of a trial will be appropriate to form the primary basis of an efficacy claim for an NDA if the trial is performed according to the SPA. Even if we believe that the data from a clinical trial are supportive, an SPA is not a guarantee of approval, and we cannot be certain that the design of, or data collected from, a trial will be adequate to demonstrate safety and efficacy, or otherwise be sufficient to support regulatory approval. There can be no assurance that the terms of an SPA will ultimately be binding on the FDA, and the FDA is not obligated to approve an NDA, if any, even if the clinical outcome is positive. The FDA retains significant latitude and discretion in interpreting the terms of an SPA and the data and results from a clinical trial, and can require trial design changes or additional studies if issues arise essential to determining safety or efficacy. Data may subsequently become available that causes the FDA to reconsider the previously agreed upon scope of review and the FDA may have subsequent safety or efficacy concerns that override an SPA, and we can give no assurance that as clinical trials proceed or as part of an NDA review process, if any, the FDA will determine that a previously approved SPA is still valid.

Additionally, an SPA may be changed only with the written agreement of the FDA, and any further changes we may propose to the protocol will remain subject to the FDA’s approval. The FDA may not agree to any such amendment and, even if they agree, they may request other amendments to the trial design that could require additional cost and time, as well as increase the degree of difficulty in reaching clinical endpoints. As a result, even with an SPA, we cannot be certain that the trial results will be found to be adequate to support an efficacy claim and product approval.

We depend on our collaborators and licensees for the future development and commercialization of some of our drug candidates. Conflicts may arise between our collaborators and licensees and us, or our collaborators and licensees may choose to terminate their agreements with us, which may adversely affect our business.

We have licensed to Novartis rights to ruxolitinib outside of the United States and worldwide rights to our c-MET inhibitor compounds and licensed to Lilly worldwide rights to baricitinib. We have also licensed to Pfizer our portfolio of CCR2 antagonist compounds. Under the terms of our agreements with these collaborators, we have no or limited control over the further clinical development of these drug candidates and any revenues we may receive if these drug candidates receive regulatory approval and are commercialized will depend primarily on the development and commercialization efforts of others.

Conflicts may arise with our collaborators and licensees if they pursue alternative technologies or develop alternative products either on their own or in collaboration with others as a means for developing treatments for the diseases that we have targeted. Competing products and product opportunities may lead our collaborators and licensees to withdraw their support for our drug candidates. Any failure of our collaborators and licensees to perform their obligations under our agreements with them or otherwise to support our drug candidates could negatively impact the development of our drug candidates, lead to our loss of potential revenues from product sales and milestones and delay our achievement, if any, of profitability. Additionally, conflicts may arise if, among other things, there is a dispute about the achievement and payment of a milestone amount or the ownership of intellectual property that is developed during the course of a collaborative relationship.

Our existing collaborative and license agreements can be terminated by our collaborators and licensees for convenience, among other circumstances. If any of our collaborators or licensees terminates its agreement with us, or terminates its rights with respect to certain indications or drug candidates, we may not be able to find a new collaborator for them, and our business could be adversely affected. Should an agreement be terminated before we have realized the benefits of the collaboration or license, our reputation could be harmed, we may not obtain revenues that we anticipated receiving, and our business could be adversely affected.

The success of our drug discovery and development efforts may depend on our ability to find suitable collaborators to fully exploit our capabilities. If we are unable to establish collaborations or if these future collaborations are unsuccessful in the development and commercialization of our drug candidates, our research, development and commercialization efforts may be unsuccessful, which could adversely affect our results of operations and financial condition.

An important element of our business strategy is to enter into collaborative or license arrangements with other parties, under which we license our drug candidates to those parties for development and commercialization or under which we study our drug candidates in combination with such parties’ compounds or biologics. We are evaluating strategic relationships with respect to several of our other programs and may enter into an agreement with respect to one or more of these programs in the future. However, because

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collaboration and license arrangements are complex to negotiate, we may not be successful in our attempts to establish these arrangements. Also, we may not have drug candidates that are desirable to other parties, or we may be unwilling to license a drug candidate to a particular party because such party interested in it is a competitor or for other reasons. The terms of any such arrangements that we establish may not be favorable to us. Alternatively, potential collaborators may decide against entering into an agreement with us because of our financial, regulatory or intellectual property position or for scientific, commercial or other reasons. If we are not able to establish collaboration or license arrangements, we may not be able to develop and commercialize a drug product, which could adversely affect our business and our revenues.

In order for any of these collaboration or license arrangements to be successful, we must first identify potential collaborators or licensees whose capabilities complement and integrate well with ours. We may rely on these arrangements for not only financial resources, but also for expertise or economies of scale that we expect to need in the future relating to clinical trials, manufacturing, sales and marketing, and for licenses to technology rights. However, it is likely that we will not be able to control the amount and timing of resources that our collaborators or licensees devote to our programs or drug candidates. If our collaborators or licensees prove difficult to work with, are less skilled than we originally expected, do not devote adequate resources to the program, pursue alternative technologies or develop alternative products, or do not agree with our approach to development or manufacturing of the drug candidate, the relationship could be unsuccessful. If a business combination involving a collaborator or licensee and a third party were to occur, the effect could be to terminate or cause delays in development of a drug candidate.

If we fail to enter into additional licensing agreements or if these arrangements are unsuccessful, our business and operations might be adversely affected.

In addition to establishing collaborative or license arrangements under which other parties license our drug candidates for development and commercialization or under which we study our drug candidates in combination with such parties’ compounds or biologics, we may explore opportunities to develop our clinical pipeline by in-licensing drug candidates that fit within our focus on oncology, such as our collaboration with Agenus. We may be unable to enter into any additional in-licensing agreements because suitable drug candidates that are within our expertise may not be available to us on terms that are acceptable to us or because competitors with greater resources seek to in-license the same drug candidates. Drug candidates that we would like to develop may not be available to us because they are controlled by competitors who are unwilling to license the rights to the drug candidate to us. In addition, we may enter into license agreements that are unsuccessful and our business and operations might be adversely affected by the termination of a drug candidate and termination and winding down of the related license agreement. We may also need to license drug delivery or other technology in order to continue to develop our drug candidates. If we are unable to enter into additional agreements to license drug candidates, drug delivery technology or other technology or if these arrangements are unsuccessful, our research and development efforts could be adversely affected.

Even if a drug candidate that we develop receives regulatory approval, we may decide not to commercialize it if we determine that commercialization of that product would require more money and time than we are willing to invest.

Even if any of our drug candidates receives regulatory approval, it could be subject to post-regulatory surveillance, and may have to be withdrawn from the market or subject to restrictions if previously unknown problems occur. Regulatory agencies may also require additional clinical trials or testing, and the drug product may be recalled or may be subject to reformulation, additional studies, changes in labeling, warnings to the public and negative publicity. As a result, we may not continue to commercialize a product even though it has obtained regulatory approval. Further, we may decide not to continue to commercialize a product if the market does not accept the product because it is too expensive or because third parties such as insurance companies or Medicare have not approved it for substantial reimbursement. In addition, we may decide not to continue to commercialize a product if competitors develop and commercialize similar or superior products or have proprietary rights that preclude us from ultimately marketing our products.

Any approved drug product that we bring to the market may not gain market acceptance by physicians, patients, healthcare payors and others in the medical community.

Even if we are successful in gaining regulatory approval of any of our drug candidates in addition to JAKAFI, we may not generate significant product revenues and we may not become profitable if these drug products do not achieve an adequate level of acceptance. Physicians may not recommend our drug products until longer-term clinical data or other factors demonstrate the safety and efficacy of our drug products as compared to other alternative treatments. Even if the clinical safety and efficacy of our drug products is established, physicians may elect not to prescribe these drug products for a variety of reasons, including the reimbursement policies of government and other third-party payors and the effectiveness of our competitors in marketing their products.

Market acceptance of our drug products, if approved for commercial sale, will depend on a number of factors, including:

· the willingness and ability of patients and the healthcare community to use our drug products;

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· the ability to manufacture our drug products in sufficient quantities with acceptable quality and to offer our drug products for sale at competitive prices;

· the perception of patients and the healthcare community, including third-party payors, regarding the safety, efficacy and benefits of our drug products compared to those of competing products or therapies;

· the label and promotional claims allowed by the FDA;

· the pricing and reimbursement of our drug products relative to existing treatments; and

· marketing and distribution support for our drug products.

We have limited capacity to conduct preclinical testing and clinical trials, and our resulting dependence on other parties could result in delays in and additional costs for our drug development efforts.

We have limited internal resources and capacity to perform preclinical testing and clinical trials. As part of our development strategy, we often hire clinical research organizations, or CROs, to perform preclinical testing and clinical trials for drug candidates. If the CROs that we hire to perform our preclinical testing and clinical trials do not meet deadlines, do not follow proper procedures, or a conflict arises between us and our CROs, our preclinical testing and clinical trials may take longer than expected, may cost more, may be delayed or may be terminated. If we were forced to find a replacement entity to perform any of our preclinical testing or clinical trials, we may not be able to find a suitable entity on favorable terms, or at all. Even if we were able to find another company to perform a preclinical test or clinical trial, the delay in the test or trial may result in significant additional expenditures. Events such as these may result in delays in our obtaining regulatory approval for our drug candidates or our ability to commercialize our products and could result in increased expenditures that would adversely affect our operating results.

If we are unable to obtain regulatory approval for our drug candidates in the United States and foreign jurisdictions, we will not be permitted to commercialize products resulting from our research.

In order to commercialize drug products in the United States, our drug candidates will have to obtain regulatory approval from the FDA. Satisfaction of regulatory requirements typically takes many years. To obtain regulatory approval, we must first show that our drug candidates are safe and effective for target indications through preclinical testing (animal testing) and clinical trials (human testing). Preclinical testing and clinical development are long, expensive and uncertain processes, and we do not know whether the FDA will allow us to undertake clinical trials of any drug candidates in addition to our compounds currently in clinical trials.

Completion of clinical trials may take several years and failure may occur at any stage of testing. The length of time required varies substantially according to the type, complexity, novelty and intended use of the drug candidate. Interim results of a preclinical test or clinical trial do not necessarily predict final results, and acceptable results in early clinical trials may not be repeated in later clinical trials. For example, a drug candidate that is successful at the preclinical level may cause harmful or dangerous side effects when tested at the clinical level. Our rate of commencement and completion of clinical trials may be delayed by many factors, including:

· the high degree of risk associated with drug development;

· our inability to formulate or manufacture sufficient quantities of materials for use in clinical trials;

· variability in the number and types of patients available for each study;

· difficulty in maintaining contact with patients after treatment, resulting in incomplete data;

· unforeseen safety issues or side effects;

· poor or unanticipated effectiveness of drug candidates during the clinical trials; or

· government or regulatory delays.

Data obtained from clinical trials are susceptible to varying interpretation, which may delay, limit or prevent regulatory approval. Many companies in the pharmaceutical industry, including biotechnology companies, have suffered significant setbacks in

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advanced clinical trials, even after achieving promising results in earlier clinical trials. In addition, regulatory authorities may refuse or delay approval as a result of other factors, such as changes in regulatory policy during the period of product development and regulatory agency review. For example, the FDA has in the past required and could in the future require that we conduct additional trials of any of our drug candidates, which would result in delays.

Compounds or biologics developed by us or with or by our collaborators and licensees may not prove to be safe and effective in clinical trials and may not meet all of the applicable regulatory requirements needed to receive marketing approval. If regulatory approval of a product is granted, this approval will be limited to those disease states and conditions for which the product is demonstrated through clinical trials to be safe and effective. Failure to obtain regulatory approval would delay or prevent us from commercializing products.

Outside the United States, our ability to market a product is contingent upon receiving a marketing authorization from the appropriate regulatory authorities. This foreign regulatory approval process typically includes all of the risks associated with the FDA approval process described above and may also include additional risks. The requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from country to country and may require us to perform additional testing and expend additional resources. Approval by the FDA does not ensure approval by regulatory authorities in other countries, and approval by one foreign regulatory authority does not ensure approval by regulatory authorities in other countries or by the FDA.

We face significant competition for our drug discovery and development efforts, and if we do not compete effectively, our commercial opportunities will be reduced or eliminated.

The biotechnology and pharmaceutical industries are intensely competitive and subject to rapid and significant technological change. Our drug discovery and development efforts may target diseases and conditions that are already subject to existing therapies or that are being developed by our competitors, many of which have substantially greater resources, larger research and development staffs and facilities, more experience in completing preclinical testing and clinical trials, and formulation, marketing and manufacturing capabilities. As a result of these resources, our competitors may develop drug products that render our products obsolete or noncompetitive by developing more effective drugs or by developing their products more efficiently. Our ability to develop competitive products would be limited if our competitors succeeded in obtaining regulatory approvals for drug candidates more rapidly than we were able to or in obtaining patent protection or other intellectual property rights that limited our drug development efforts. Any drug products resulting from our research and development efforts, or from our joint efforts with collaborators or licensees, might not be able to compete successfully with our competitors’ existing and future products, or obtain regulatory approval in the United States or elsewhere.

Our reliance on other parties to manufacture our drug products and drug candidates could result in a short supply of the drugs, delays in clinical trials or drug development, increased costs, and withdrawal or denial of a regulatory authority’s approval.

We do not currently operate manufacturing facilities for clinical or commercial production of JAKAFI and our other drug candidates. We currently hire third parties to manufacture the raw materials, active pharmaceutical ingredient, or API, and finished drug product of JAKAFI and our other drug candidates for clinical trials. In addition, we expect to continue to rely on third parties for the manufacture of commercial supplies of raw materials, API and finished drug product for any drugs that we successfully develop. For JAKAFI and most of our drug candidates, we hire third parties to manufacture the raw materials, another third party to manufacture the API and another to make the finished drug product and to package and label the finished product. The FDA requires that the raw materials, API and finished product for JAKAFI and our other drug candidates be manufactured according to its current Good Manufacturing Practices regulations and regulatory authorities in other countries have similar requirements. There are only a limited number of manufacturers that comply with these requirements. Failure to comply with current Good Manufacturing Practices and the applicable regulatory requirements of other countries in the manufacture of our drug candidates and products could result in the FDA or foreign regulatory authority halting our clinical trials, withdrawing or denying regulatory approval of our drug product, enforcing product recalls or other enforcement actions, which could have a material adverse effect on our business.

We may not be able to obtain sufficient quantities of our drug candidates or any drug products we may develop if our designated manufacturers do not have the capacity or capability to manufacture them according to our schedule and specifications. In addition, we may not be able to arrange for our drug candidates or any drug products that we may develop to be manufactured by one of these parties on reasonable terms, if at all. Also, required raw materials may only be available from a limited number of suppliers and, in the case of JAKAFI, are currently supplied by a single source. As noted above, generally, we have a single source or a limited number of suppliers that are qualified to supply each of the API and finished product of JAKAFI and our other drug candidates. If any of these suppliers were to become unable or unwilling to supply us with raw materials, API or finished product that complies with applicable regulatory requirements, we could incur significant delays in our clinical trials or interruption of commercial supply that could have a material adverse effect on our business. If we have promised delivery of a drug candidate or drug product and are unable to meet the delivery requirement due to manufacturing difficulties, our development programs could be delayed, we may have to

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expend additional sums in order to ensure that manufacturing capacity is available when we need it even if we do not use all of the manufacturing capacity, and our business and operating results could be harmed.

Manufacturers of pharmaceutical products often encounter difficulties in production, especially in scaling up initial production. These problems include difficulties with production costs and yields, quality control and assurance and shortages of qualified personnel, as well as compliance with strictly enforced federal, state and foreign regulations.

In order to obtain approval of our products by the FDA and foreign regulatory agencies, we need to complete testing on both the API and on the finished product in the packaging we propose for commercial sales. This includes testing of stability, identification of impurities and testing of other product specifications by validated test methods. In addition, we will be required to consistently produce the API in commercial quantities and of specified quality on a repeated basis and document our ability to do so. This requirement is referred to as process validation.

We may not be able to adequately manage and oversee the manufacturers we choose, they may not perform as agreed or they may terminate their agreements with us. Foreign manufacturing approval processes typically include all of the risks associated with the FDA approval process for manufacturing and may also include additional risks.

Under our collaboration with Agenus, Agenus has primary responsibility for manufacturing activities, including selecting and monitoring third-party manufacturers. Manufacturing antibodies and products containing antibodies is a more complex process than manufacturing small molecule drugs and subject to additional risks. The process of manufacturing antibodies and products containing antibodies is highly susceptible to product loss due to contamination, equipment failure or improper installation or operation of equipment, vendor or operator error, inconsistency in yields, variability in product characteristics, and difficulties in scaling the production process. Even minor deviations from normal manufacturing processes could result in reduced production yields, product defects and other supply disruptions. If microbial, viral or other contaminations are discovered in our product candidates or in the manufacturing facilities in which our product candidates are made, such manufacturing facilities may need to be closed for an extended period of time to investigate and remedy the contamination.

If we fail to comply with the extensive legal and regulatory requirements affecting the health care industry, we could face increased costs, penalties and a loss of business.

Our activities, and the activities of our collaborators, partners and third-party providers, are subject to extensive government regulation and oversight both in the United States and in foreign jurisdictions. The FDA and comparable agencies in other jurisdictions directly regulate many of our most critical business activities, including the conduct of preclinical and clinical studies, product manufacturing, advertising and promotion, product distribution, adverse event reporting and product risk management. States increasingly have been placing greater restrictions on the marketing practices of healthcare companies. In addition, pharmaceutical and biotechnology companies have been the target of lawsuits and investigations alleging violations of government regulations, including claims asserting submission of incorrect pricing information, impermissible off-label promotion of pharmaceutical products, payments intended to influence the referral of federal or state healthcare business, submission of false claims for government reimbursement, antitrust violations, violations of the Foreign Corrupt Practices Act and similar anti-bribery or anti-corruption laws, or violations related to environmental matters. Violations of governmental regulation may be punishable by criminal and civil sanctions, including fines and civil monetary penalties and exclusion from participation in government programs, including Medicare and Medicaid. In addition to penalties for violation of laws and regulations, we could be required to repay amounts we received from government payors, or pay additional rebates and interest if we are found to have miscalculated the pricing information we have submitted to the government. We cannot ensure that our compliance controls, policies, and procedures will in every instance protect us from acts committed by our employees, collaborators, partners or third-party providers that would violate the laws or regulations of the jurisdictions in which we operate. Whether or not we have complied with the law, an investigation into alleged unlawful conduct could increase our expenses, damage our reputation, divert management time and attention and adversely affect our business.

Health care reform measures could impact the pricing and profitability of pharmaceuticals, and adversely affect the commercial viability of our drug candidates. Our ability to generate revenues will be diminished if we are unable to obtain an adequate level of reimbursement from private insurers, government insurance programs or other third-party payors of health care costs, which could be affected by recent healthcare reform legislation.

Our ability to commercialize our drug candidates successfully will depend in part on the extent to which adequate reimbursement levels for the cost of our products and related treatment are obtained from third-party payors, such as private insurers, government insurance programs, including Medicare and Medicaid, health maintenance organizations (HMOs) and other health care related organizations.

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In recent years, through legislative and regulatory actions, the federal government has made substantial changes to various payment systems under the Medicare and other federal health care programs. Comprehensive reforms to the U.S. healthcare system were recently enacted, including changes to the methods for, and amounts of, Medicare reimbursement. These reforms could significantly reduce payments from Medicare and Medicaid. Reforms or other changes to these payment systems, may change the availability, methods and rates of reimbursements from Medicare, private insurers and other third-party payors for our drug candidates. Some of these changes and proposed changes could result in reduced reimbursement rates, which could reduce the price that we or any of our collaborators or licensees receive for any products, if commercialized, in the future, and which would adversely affect our business strategy, operations and financial results. Further federal and state proposals and health care reforms are possible, which could limit the prices that can be charged for any of our drug candidates and may further limit the commercial viability of our drug candidates. In certain foreign markets, pricing or profitability of prescription pharmaceuticals is subject to government control. If reimbursement for our products, if commercialized, is unavailable, limited in scope or amount, or if pricing is set at unsatisfactory levels, our business could be materially harmed. There may be future changes that result in reductions in current coverage and reimbursement levels for our drug candidates, and we cannot predict the scope of any future changes or the impact that those changes would have on our operations.

Third-party payors are increasingly challenging the prices charged for medical products and services. Also, the trend toward managed health care in the United States, the organizations for which could control or significantly influence the purchase of health care services and products, as well as legislative proposals to reform health care or reduce government insurance programs, may all result in lower prices for or rejection of our products. Adoption of our drug candidates by the medical community may be limited without adequate reimbursement for our products. Cost control initiatives may decrease coverage and payment levels for our drug candidates and, in turn, the price that we will be able to charge for any product, if commercialized. Our drug candidates may not be considered cost-effective, and coverage and reimbursement may not be available or sufficient to allow us to sell our products on a profitable basis. We are unable to predict all changes to the coverage or reimbursement methodologies that will be applied by private or government payors to our drug candidates.

The continuing efforts of third-party payors to contain or reduce the costs of health care, any denial of private or government payor coverage or inadequate reimbursement for our drug candidates could materially and adversely affect our business strategy, operations, future revenues and profitability, and the future revenues and profitability of our potential customers, suppliers, collaborators and licensees and the availability of capital.

As our drug discovery and development operations are conducted at our headquarters in Wilmington, Delaware, the loss of access to this facility would negatively impact our business.

Our facility in Wilmington, Delaware is our headquarters and is also where we conduct all of our drug discovery, research, development and marketing activities. Our lease contains provisions that provide for its early termination upon the occurrence of certain events of default. In addition, natural disasters or actions of activists opposed to aspects of pharmaceutical research may disrupt our experiments or our ability to access or use our facility. The loss of access to or use of our Wilmington, Delaware, facility, either on a temporary or permanent basis, or early termination of our lease would result in an interruption of our business and, consequently, would adversely affect our overall business.

We depend on key employees in a competitive market for skilled personnel, and the loss of the services of any of our key employees or our inability to attract and retain additional personnel would affect our ability to expand our drug discovery and development programs and achieve our objectives.

We are highly dependent on the members of our executive management team and principal members of our commercial, development, medical, operations and scientific staff. We experience intense competition for qualified personnel. Our future success also depends in part on the continued service of our executive management team and key personnel and our ability to recruit, train and retain essential personnel for our drug discovery and development programs, and for our medical affairs and commercialization activities. If we lose the services of any of these people or if we are unable to recruit sufficient qualified personnel, our research and product development goals, and our commercialization efforts could be delayed or curtailed. We do not maintain “key person” insurance on any of our employees.

If we fail to manage our growth effectively, our ability to develop and commercialize products could suffer.

We expect that if our drug discovery efforts continue to generate drug candidates, our clinical drug candidates continue to progress in development, and we continue to build our development, medical and commercial organizations, we will require significant additional investment in personnel, management and resources. Our ability to achieve our research, development and commercialization objectives depends on our ability to respond effectively to these demands and expand our internal organization,

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systems, controls and facilities to accommodate additional anticipated growth. If we are unable to manage our growth effectively, our business could be harmed and our ability to execute our business strategy could suffer.

Risks associated with expanding our operations to Europe could adversely affect our business.

We plan to expand our operations and conduct certain development activities in Europe. We have limited experience with conducting activities outside of the United States. International operations and business expansion plans are subject to numerous additional risks, including:

· multiple, conflicting and changing laws and regulations such as tax laws, privacy regulations, export and import restrictions, employment, immigration and labor laws, regulatory requirements, and other governmental approvals, permits and licenses;

· difficulties in staffing and managing foreign operations;

· risks associated with obtaining and maintaining, or the failure to obtain or maintain, regulatory approvals for the sale or use of our products in various countries;

· complexities associated with managing government payor systems, multiple payor-reimbursement regimes or patient self-pay systems;

· financial risks, such as longer payment cycles, difficulty enforcing contracts and collecting accounts receivable and exposure to foreign currency exchange rate fluctuations;

· general political and economic conditions in the countries in operate, including terrorism and political unrest, curtailment of trade and other business restrictions;

· regulatory and compliance risks that relate to maintaining accurate information and control over activities that may fall within the purview of the U.S. Foreign Corrupt Practices Act, its books and records provisions or its anti-bribery provisions, or similar anti-bribery or anti-corruption laws and regulations;

Any of these risks, if encountered, could significantly increase our costs of operating internationally, prevent us from operating in certain jurisdictions, or otherwise significantly harm our future international expansion and operations, which could have a material adverse effect on our business, financial condition and results of operations.

If product liability lawsuits are brought against us, we could face substantial liabilities and may be required to limit commercialization of our products and our results of operations could be harmed.

In addition to the risks described above under “—Risks Relating to Our Lead Product JAKAFI—If the use of JAKAFI harms patients, or is perceived to harm patients even when such harm is unrelated to JAKAFI, our regulatory approval could be revoked or otherwise negatively impacted or we could be subject to costly and damaging product liability claims,” the conduct of clinical trials of medical products that are intended for human use entails an inherent risk of product liability. If any product that we or any of our collaborators or licensees develops causes or is alleged to cause injury during clinical trials or commercialization, we may be held liable. If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities, including substantial damages to be paid to the plaintiffs and legal costs, or we may be required to limit further development and commercialization of our products. Additionally, any product liability lawsuit could cause injury to our reputation, participants and investigators to withdraw from clinical trials, and potential collaborators or licensees to seek other partners, any of which could impact our results of operations.

Our product liability insurance policy may not fully cover our potential liabilities. In addition, we may determine that we should increase our coverage, and this insurance may be prohibitively expensive to us or our collaborators or licensees and may not fully cover our potential liabilities. Our inability to obtain sufficient product liability insurance at an acceptable cost to protect against potential product liability claims could prevent or inhibit the development or commercialization of our drug candidates and products.

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Because our activities involve the use of hazardous materials, we may be subject to claims relating to improper handling, storage or disposal of these materials that could be time consuming and costly.

We are subject to various environmental, health and safety laws and regulations governing, among other things, the use, handling, storage and disposal of regulated substances and the health and safety of our employees. Our research and development processes involve the controlled use of hazardous and radioactive materials and biological waste resulting in the production of hazardous waste products. We cannot completely eliminate the risk of accidental contamination or discharge and any resultant injury from these materials. If any injury or contamination results from our use or the use by our collaborators or licensees of these materials, we may be sued and our liability may exceed our insurance coverage and our total assets. Further, we may be required to indemnify our collaborators or licensees against all damages and other liabilities arising out of our development activities or products produced in connection with these collaborations or licenses. Compliance with the applicable environmental and workplace laws and regulations is expensive. Future changes to environmental, health, workplace and safety laws could cause us to incur additional expense or may restrict our operations or impair our research, development and production efforts.

RISKS RELATING TO OUR FINANCIAL RESULTS

We expect to incur losses in the future and we may not achieve or maintain profitability in the future.

We had net losses from inception in 1991 through 1996 and in 1999 through March 31, 2015. Because of those losses, we had an accumulated deficit of $1.8 billion as of March 31, 2015. We intend to continue to spend significant amounts on our efforts to discover and develop drugs. As a result, we could continue to incur losses in 2015 and in future periods as well.

We anticipate that our drug discovery and development efforts and related expenditures will increase as we focus on the studies, including preclinical tests and clinical trials prior to seeking regulatory approval, that are required before we can sell a drug product.

The development of drug products will require us to spend significant funds on research, development, testing, obtaining regulatory approvals, manufacturing and marketing. To date, we do not have any drug products that have generated significant revenues other than from sales of JAKAFI and we cannot assure you that we will generate significant revenues from the drug candidates that we license or develop, including JAKAFI, for several years, if ever.

We cannot be certain whether or when we will achieve profitability because of the significant uncertainties relating to our ability to generate commercially successful drug products. Even if we are successful in obtaining regulatory approvals for manufacturing and commercializing drug products in addition to JAKAFI, we expect that we will continue to incur losses if our drug products do not generate significant revenues. If we achieve profitability, we may not be able to sustain or increase profitability.

We will need additional capital in the future. If we are unable to generate sufficient funds from operations, the capital markets may not permit us to raise additional capital at the time that we require it, which could result in limitations on our research and development or commercialization efforts or the loss of certain of our rights in our technologies or drug candidates.

Our future funding requirements will depend on many factors and we anticipate that we may need to raise additional capital to fund our business plan and research and development efforts going-forward and to repay our indebtedness.

Additional factors that may affect our future funding requirements include:

· the amount of revenues generated from our business activities;

· any changes in the breadth of our research and development programs;

· the results of research and development, preclinical testing and clinical trials conducted by us or our current or future collaborators or licensees, if any;

· our exercise of any co-development options with collaborators that may require us to fund future development;

· the acquisition of businesses, technologies, or drug candidates, or the licensing of technologies or drug candidates, if any;

· our ability to maintain and establish new corporate relationships and research collaborations;

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· competing technological and market developments;

· the time and costs involved in filing, prosecuting, defending and enforcing patent and intellectual property claims;

· the receipt of contingent licensing or milestone fees or royalties on product sales from our current or future collaborative and license arrangements, if established; and

· the timing of regulatory approvals, if any.

If we require additional capital at a time when investment in companies such as ours, or in the marketplace generally, is limited due to the then prevailing market or other conditions, we may have to scale back our operations, eliminate one or more of our research or development programs, or attempt to obtain funds by entering into an agreement with a collaborator or licensee that would result in terms that are not favorable to us or relinquishing our rights in certain of our proprietary technologies or drug candidates. If we are unable to raise funds at the time that we desire or at any time thereafter on acceptable terms, we may not be able to continue to develop our drug candidates. The sale of equity or additional convertible debt securities in the future may be dilutive to our stockholders, and debt financing arrangements may require us to pledge certain assets or enter into covenants that could restrict our operations or our ability to incur further indebtedness.

We have a large amount of debt and our debt service obligations may prevent us from taking actions that we would otherwise consider to be in our best interests.

As of March 31, 2015, the aggregate principal amount of our total consolidated debt was $840.8 million and our stockholders’ deficit was $41.4 million. Our substantial leverage could have significant negative consequences for our future operations, including:

· increasing our vulnerability to general adverse economic and industry conditions;

· limiting our ability to obtain additional financing for working capital, capital and research and development expenditures, and general corporate purposes;

· requiring the dedication of a substantial portion of our expected cash flow or our existing cash to service our indebtedness, thereby reducing the amount of our cash available for other purposes, including working capital, capital expenditures and research and development expenditures;

· limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we compete; or

· placing us at a possible competitive disadvantage compared to less leveraged competitors and competitors that have better access to capital resources.

We may not generate sufficient cash flow from our operations in the future to enable us to meet our anticipated fixed charges, including our obligations with respect to our outstanding convertible senior notes. As of March 31, 2015, $90.8 million aggregate principal amount of our 4.75% convertible senior notes due 2015 was outstanding and due in October 2015. The remaining interest payments for our 4.75% convertible senior notes through 2015, assuming that none of these notes are converted, repurchased or exchanged, will total $4.3 million. As of March 31, 2015, $375.0 million aggregate principal amount of our 0.375% convertible senior notes due 2018 was outstanding and due in November 2018. Annual interest payments for our 0.375% convertible senior notes through 2018, assuming that none of these notes are converted, repurchased or exchanged, are $1.4 million. As of March 31, 2015, $375.0 million aggregate principal amount of our 1.25% convertible senior notes due 2020 was outstanding and due in November 2020. Annual interest payments for our 1.25% convertible senior notes through 2020, assuming that none of these notes are converted, repurchased or exchanged, are $4.7 million. If we are unable to generate cash from our operations or raise additional cash through financings sufficient to meet the remaining obligations under our convertible senior notes, we will need to use existing cash or liquidate marketable securities in order to fund these obligations, which may delay or curtail our research, development and commercialization programs.

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Our marketable securities and long term investments are subject to certain risks that could adversely affect our overall financial position.

We invest our cash in accordance with an established internal policy and customarily in instruments, corporate bonds and money market funds which historically have been highly liquid and carried relatively low risk. Recently similar types of investments and money market funds have experienced losses in value or liquidity issues which differ from their historical pattern.

Should a portion of our cash or marketable securities lose value or have their liquidity impaired, it could adversely affect our overall financial position by imperiling our ability to fund our operations and forcing us to seek additional financing sooner than we would otherwise. Such financing, if available, may not be available on commercially attractive terms.

Any loss in value of our long term investments could adversely affect our financial position on the condensed consolidated balance sheets and condensed consolidated statements of operations.

Our current revenues are derived from JAKAFI product sales, JAKAVI product royalties, collaborations and from licensing our intellectual property. If we are unable to achieve milestones, develop products or renew or enter into new collaborations, our revenues may decrease, and future milestone and royalty payments may not contribute significantly to revenues for several years, and may never result in revenues.

We derived substantially all of our revenues for the three months ended March 31, 2015 and the year ended December 31, 2014 from JAKAFI product revenues, JAKAVI product royalties and our collaborations and licensing our intellectual property to others. Future revenues from research and development collaborations depend upon continuation of the collaborations, the achievement of milestones and royalties we earn from any future products developed from our research. If we are unable to successfully achieve milestones or our collaborators fail to develop successful products, we will not earn the future revenues contemplated under our collaborative agreements.

RISKS RELATING TO INTELLECTUAL PROPERTY AND LEGAL MATTERS

If we are subject to arbitration, litigation and infringement claims, they could be costly and disrupt our drug discovery and development efforts.

The technology that we use to make and develop our drug products, the technology that we incorporate in our products, and the products we are developing may be subject to claims that they infringe the patents or proprietary rights of others. The success of our drug discovery and development efforts will also depend on our ability to develop new compounds, drugs and technologies without infringing or misappropriating the proprietary rights of others. We are aware of patents and patent applications filed in certain countries claiming intellectual property relating to some of our drug discovery targets and drug candidates. While the validity of issued patents, patentability of pending patent applications and applicability of any of them to our programs are uncertain, if any of these patents are asserted against us or if we choose to license any of these patents, our ability to commercialize our products could be harmed or the potential return to us from any product that may be successfully commercialized could be diminished.

From time to time we have received, and we may in the future receive, notices from third parties offering licenses to technology or alleging patent, trademark, or copyright infringement, claims regarding trade secrets or other contract claims. Receipt of these notices could result in significant costs as a result of the diversion of the attention of management from our drug discovery and development efforts. Parties sending these notices may have brought and in the future may bring litigation against us or seek arbitration relating to contract claims.

We may be involved in future lawsuits or other legal proceedings alleging patent infringement or other intellectual property rights or contract violations. In addition, litigation or other legal proceedings may be necessary to:

· assert claims of infringement;

· enforce our patents or trademarks;

· protect our trade secrets or know-how; or

· determine the enforceability, scope and validity of the proprietary rights of others.

We may be unsuccessful in defending or pursuing these lawsuits, claims or other legal proceedings. Regardless of the outcome, litigation or other legal proceedings can be very costly and can divert management’s efforts. An adverse determination may

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subject us to significant liabilities or require us or our collaborators or licensees to seek licenses to other parties’ patents or proprietary rights. We or our collaborators or licensees may also be restricted or prevented from manufacturing or selling a drug or other product that we or they develop. Further, we or our future collaborators or licensees may not be able to obtain any necessary licenses on acceptable terms, if at all. If we are unable to develop non-infringing technology or license technology on a timely basis or on reasonable terms, our business could be harmed.

We may be unable to adequately protect or enforce our proprietary information, which may result in its unauthorized use, a loss of revenue under a collaboration agreement or loss of sales to generic versions of our products or otherwise reduce our ability to compete in developing and commercializing products.

Our business and competitive position depends in significant part upon our ability to protect our proprietary technology, including any drug products that we create. Despite our efforts to protect this information, unauthorized parties may attempt to obtain and use information that we regard as proprietary. For example, one of our collaborators may disclose proprietary information pertaining to our drug discovery efforts. In addition, while we have filed numerous patent applications with respect to ruxolitinib and our drug candidates in the United States and in foreign countries, our patent applications may fail to result in issued patents. In addition, because patent applications can take several years to issue as patents, there may be pending patent applications of others that may later issue as patents that cover some aspect of ruxolitinib and our drug candidates. Our existing patents and any future patents we may obtain may not be broad enough to protect our products or all of the potential uses of our products, or otherwise prevent others from developing competing products or technologies. In addition, our patents may be challenged and invalidated or may fail to provide us with any competitive advantages if, for example, others were first to invent or first to file a patent application for the technologies and products covered by our patents.

Additionally, when we do not control the prosecution, maintenance and enforcement of certain important intellectual property, such as a drug candidate in-licensed to us or subject to a collaboration with a third party, the protection of the intellectual property rights may not be in our hands. If we do not control the intellectual property rights in-licensed to us with respect to a drug candidate and the entity that controls the intellectual property rights does not adequately protect those rights, our rights may be impaired, which may impact our ability to develop, market and commercialize the in-licensed drug candidate.

Our means of protecting our proprietary rights may not be adequate, and our competitors may:

· independently develop substantially equivalent proprietary information, products and techniques;

· otherwise gain access to our proprietary information; or

· design around patents issued to us or our other intellectual property.

We pursue a policy of having our employees, consultants and advisors execute proprietary information and invention agreements when they begin working for us. However, these agreements may not provide meaningful protection for our trade secrets or other proprietary information in the event of unauthorized use or disclosure. If we fail to maintain trade secret and patent protection, our potential, future revenues may be decreased.

If the effective term of our patents is decreased due to changes in the United States patent laws or if we need to refile some of our patent applications, the value of our patent portfolio and the revenues we derive from it may be decreased.

The value of our patents depends in part on their duration. A shorter period of patent protection could lessen the value of our rights under any patents that we obtain and may decrease the revenues we derive from our patents. The United States patent laws were amended in 1995 to change the term of patent protection from 17 years from patent issuance to 20 years from the earliest effective filing date of the application. Because the time from filing to issuance of biotechnology applications may be more than three years depending on the subject matter, a 20-year patent term from the filing date may result in substantially shorter patent protection.

Additionally, United States patent laws were amended in 2011 with the enactment of the America Invents Act and third parties are now able to challenge the validity of issued U.S. patents through various review proceedings; thus rendering the validity of U.S. patents more uncertain. We may be obligated to participate in review proceedings to determine the validity of our U.S. patents. We cannot predict the ultimate outcome of these proceedings, the conduct of which could result in substantial costs and diversion of our efforts and resources. If we are unsuccessful in these proceedings some or all of our claims in the patents may be narrowed or invalidated and the patent protection for our products and drug candidates in the United States could be substantially shortened. Further, if all of the patents covering one of our products are invalidated, the FDA could approve requests to manufacture a generic version of that product prior to the expiration date of those patents.

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Other changes in the United States patent laws or changes in the interpretation of patent laws could diminish the value of our patents or narrow the scope of our patent protection. For example, the Supreme Court of the United States recently ruled that isolated DNA sequences cannot be patented. Although we no longer receive significant revenues generated from our former information products business, the majority of our gene patent portfolio from that business consists of patents on isolated DNA sequences, and this ruling limits our ability to derive additional revenues from our gene patent portfolio. Additionally, the Supreme Court recently resolved a split among the circuit courts of appeals regarding antitrust challenges to settlements of patent infringement lawsuits under the Hatch-Waxman Act between brand-name drug companies and generic drug companies. The Court rejected the “scope of the patent” test and ruled that settlements involving “reverse payments” from brand-name drug companies to generic drug companies should be analyzed under the rule of reason. This ruling may create uncertainty and make it more difficult to settle patent litigation if a company seeking to manufacture a generic version of one of our products challenges the patents covering that product prior to the expiration date of those patents.

International patent protection is particularly uncertain and costly, and our involvement in opposition proceedings in foreign countries may result in the expenditure of substantial sums and management resources.

Biotechnology and pharmaceutical patent law outside the United States is even more uncertain and costly than in the United States and is currently undergoing review and revision in many countries. Further, the laws of some foreign countries may not protect our intellectual property rights to the same extent as United States laws. For example, certain countries do not grant patent claims that are directed to the treatment of humans. We have participated, and may in the future participate, in opposition proceedings to determine the validity of our foreign patents or our competitors’ foreign patents, which could result in substantial costs and diversion of our efforts. For example, there is a patent opposition proceeding in India against our Indian patent that covers the composition of matter and use of certain Janus Kinase inhibitors, including ruxolitinib phosphate, for the treatment of myeloid proliferative disorders, cancer, immune-related diseases, skin disorders, and other diseases. Successful challenges to our patent or other intellectual property rights through these proceedings could result in a loss of rights in the relevant jurisdiction and allow third parties to use our proprietary technologies without a license from us or our collaborators, which may also result in loss of future royalty payments. In addition, successful challenges may jeopardize or delay our ability to enter into new collaborations or commercialize potential products, which could harm our business and results of operations.

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Item 6. Exhibits

Exhibit Number		Description of Document

10.1†		License, Development and Commercialization Agreement, dated as of January 9, 2015, by and between the Company, Incyte Europe Sarl (a wholly owned subsidiary of the Company), Agenus Inc. and 4-Antibody AG.

10.2		Stock Purchase Agreement, dated as of January 9, 2015, between the Company and Agenus Inc.

10.3#		Amendment, dated as of April 13, 2015, to Employment Agreement between the Company and Hervé Hoppenot, dated as of January 11, 2014

31.1		Rule 13a-14(a) Certification of Chief Executive Officer

31.2		Rule 13a-14(a) Certification of Chief Financial Officer

32.1*		Statement of the Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)

32.2*		Statement of the Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)

101.INS**		XBRL Instance Document

101.SCH**		XBRL Taxonomy Extension Schema Document

101.CAL**		XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB**		XBRL Taxonomy Extension Label Linkbase Document

101.PRE**		XBRL Taxonomy Presentation Linkbase Document

101.DEF**		XBRL Taxonomy Definition Linkbase Document

# Indicates management contract or compensatory plan or arrangement.

* In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act.

** In accordance with Rule 406T of Regulation S-T, the information furnished in these exhibits will not be deemed “filed” for purposes of Section 18 of the Exchange Act. Such exhibits will not be deemed to be incorporated by reference into any filing under the Securities Act or Exchange Act.

† Confidential treatment has been requested with respect to certain portions of this agreement.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	INCYTE CORPORATION

Dated: April 30, 2015	By:	/s/ HERVÉ HOPPENOT
		Hervé Hoppenot
		Chief Executive Officer
		(Principal Executive Officer)

Dated: April 30, 2015	By:	/s/ DAVID W. GRYSKA
		David W. Gryska
		Chief Financial Officer
		(Principal Financial Officer)

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INCYTE CORPORATION

EXHIBIT INDEX

Exhibit Number		Description of Document

10.1†		License, Development and Commercialization Agreement, dated as of January 9, 2015, by and between the Company, Incyte Europe Sarl (a wholly owned subsidiary of the Company), Agenus Inc. and 4-Antibody AG.

10.2		Stock Purchase Agreement, dated as of January 9, 2015, between the Company and Agenus Inc.

10.3#		Amendment, dated as of April 13, 2015, to Employment Agreement between the Company and Hervé Hoppenot, dated as of January 11, 2014

31.1		Rule 13a-14(a) Certification of Chief Executive Officer

31.2		Rule 13a-14(a) Certification of Chief Financial Officer

32.1*		Statement of the Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)

32.2*		Statement of the Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)

101.INS**		XBRL Instance Document

101.SCH**		XBRL Taxonomy Extension Schema Document

101.CAL**		XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB**		XBRL Taxonomy Extension Label Linkbase Document

101.PRE**		XBRL Taxonomy Presentation Linkbase Document

101.DEF**		XBRL Taxonomy Definition Linkbase Document

# Indicates management contract or compensatory plan or arrangement.

† Confidential treatment has been requested with respect to certain portions of this agreement.

Exhibit 10.1

CONFIDENTIAL TREATMENT MATERIAL

CONFIDENTIAL TREATMENT REQUESTED: Information for which confidential treatment has been requested is omitted and is noted with asterisks. An unredacted version of this document has been filed separately with the Securities and Exchange Commission (the “Commission”).

LICENSE, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT

BY AND BETWEEN

AGENUS INC.,

4-ANTIBODY AG,

INCYTE EUROPE SARL,

AND

INCYTE CORPORATION, SOLELY FOR PURPOSES OF SECTION 12.16

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

LICENSE, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT

THIS LICENSE, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT (the “ Agreement ”) is entered into as of January 9, 2015 (the “ Execution Date ”) by and between Agenus Inc., a Delaware corporation having its principal office at 3 Forbes Road, Lexington, Massachusetts 02421, USA (“ Agenus US ”) and its wholly-owned subsidiary, 4-Antibody AG, a stock corporation organized under the laws of Switzerland with an office at Hochbergerstrasse 60C, CH-4057, Basel, Switzerland (“ 4-AB ” and, together with Agenus US other than with respect to Section 12.17(s), “ Agenus ”), and Incyte Europe Sarl, a Swiss limited liability company (a société à responsabilité limitée) having its principal office at Cours de Rive 13, 1204, Geneva, Switzerland (“ Incyte ”) and solely for purposes of Section 12.16, Incyte Corporation, a Delaware corporation having its principal office at 1801 Augustine Cut-off, Wilmington, Delaware 19803 USA (“ Parent ”). Agenus and Incyte may be referred to in this Agreement individually as a “ Party ” and, collectively, as the “ Parties ”.

RECITALS

WHEREAS, Agenus has certain capabilities, technology and know how useful in the discovery of antibodies, including its proprietary technology platform known as the Retrocyte Display technology;

WHEREAS, Agenus is engaged in a number of research and development programs that have arisen out of its technologies;

WHEREAS, Incyte is engaged in the development and commercialization of pharmaceutical and biological products for human disease, primarily in the fields of hematology and oncology;

WHEREAS, Agenus and Incyte are interested in forming an alliance whose goal is to discover, develop and commercialize a robust portfolio of products to address hematologic and oncologic diseases or conditions.

NOW, THEREFORE, in consideration of the respective representations, warranties, covenants and agreements contained herein, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

ARTICLE I: DEFINITIONS

When used in this Agreement, each of the following terms shall have the meanings set forth in this Article I:

1.1 “ Accounting Standards ” with respect to a Party means that such Party shall maintain records and books of accounts in accordance with (a) U.S. generally accepted accounting principles, or (b) to the extent applicable, International Financial Reporting Standards, in each case of (a) and (b), consistently maintained.

1.2 “ Affiliate ” means, as to a Person, any entity which, directly or indirectly, controls, is controlled by, or is under common control with such Person. For the purposes of this

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

definition, “control” refers to any of the following: (a) direct or indirect ownership of [**] or more of the voting securities entitled to vote for the election of directors in the case of a corporation, or of [**] or more of the equity interest with the power to direct management in the case of any other type of legal entity; (b) status as a general partner in any partnership; or (c) any other arrangement where an entity possesses, directly or indirectly, the power to direct the management or policies of another entity, whether through ownership of voting securities, by contract or otherwise . The Parties acknowledge that in the case of certain entities organized under the Laws of certain countries outside of the United States, the maximum percentage ownership permitted by law for a foreign investor may be less than [**], and that in such case such lower percentage shall be substituted in the preceding sentence, provided that such foreign investor has the power to direct the management and policies of such entity.

1.3 “ Agenus IP ” means Agenus Know-How and Agenus Patent Rights.

1.4 “ Agenus Know-How ” means all Know-How other than Agenus Platform Know-How that (a) is Controlled by Agenus or, subject to Section 12.3(b)(ii), any of its Affiliates, as of the Execution Date or during the Term; and (b) is necessary or useful to Develop, Manufacture or Commercialize any Licensed Antibody or Product.

1.5 “ Agenus Platform Know-How ” means Know-How Controlled by Agenus or, subject to Section 12.3(b)(ii), any of its Affiliates, as of the Execution Date or during the Term that relates to the Retrocyte Display Technology.

1.6 “ Agenus Platform Patent Rights ” means Patent Rights Controlled by Agenus or, subject to Section 12.3(b)(ii), any of its Affiliates, to the extent Covering (a) the Retrocyte Display Technology or (b) a Vaccine (including the Prophage Series Vaccines), adjuvant (including the QS-21 Stimulon adjuvant) or heat shock protein technology, in each case Controlled by Agenus as of the Execution Date or during the Term.

1.7 “ Agenus Platform IP ” means Agenus Platform Know-How and Agenus Platform Patent Rights.

1.8 “ Agenus Patent Rights ” means all Patent Rights, other than Agenus Platform Patent Rights, that (a) are Controlled by Agenus or, subject to Section 12.3(b)(ii), any of its Affiliates, as of the Execution Date or during the Term; and (b) (i) Cover a Licensed Antibody or Product or a therapeutic preparation containing a Licensed Antibody or Product, or (ii) are otherwise necessary or useful to Develop, Manufacture or Commercialize a Licensed Antibody or Product.

1.9 “ Allowable Expenses ” means, with respect to a Profit-Share Product and each Calendar Quarter, all FTE Costs and Out-of-Pocket Costs incurred by the Parties or their Affiliates specific to the Development, Manufacture or Commercialization of such Profit-Share Product in the Field and the Territory during the applicable Calendar Quarter, including such FTE Costs and Out-of-Pocket Costs which are: (a) Development Costs, subject to Sections 4.1(c) and 4.4(b); (b) Manufacturing Costs; (c) Commercialization Costs, subject to Section

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

5.1(b); (d) Distribution Costs; (e) Regulatory Costs; (f) Patent and Trademark Costs; (g) Third Party IP Costs; (h) Product Liability Costs; and (i) Medical Affairs Costs; but Allowable Expenses shall exclude in all cases the cost of general corporate overhead and administrative personnel. For clarity, no milestone payment made to Agenus or its Affiliates pursuant to Section 7.5(a) hereof shall be an Allowable Expense.

1.10 “ Antibody ” means one or more molecules, or one or more genes encoding such molecule(s), which comprise or consist of one or more immunoglobulin domains, or fragment(s) thereof, that specifically bind(s) to one or more Targets.

1.11 “ Assumed Project ” means a Discovery Project added to the Program pursuant to Section 4.5.

1.12 “ Assumed Project Antibody ” means any Antibody arising out of an Assumed Project.

1.13 “ Biosimilar Product ” means, with respect to a Product, a biological product that: (1) (a) is biosimilar to such Product based upon data derived from (i) analytical studies that demonstrate that such biological product is highly similar to such Product, (ii) animal studies, or (iii) one or more clinical studies that are sufficient to demonstrate safety, purity, and potency in one or more Indications for which a BLA for such Product has been approved; and (b) utilizes the same mechanism of action as such Product; or (2) (a) (i) in the United States, is “similar” or “interchangeable,” with respect to such Product as evaluated by the FDA and (ii) outside the United States, “similar,” “comparable,” “interchangeable,” “bioequivalent,” or “biosimilar” to such Product, as determined by an applicable Regulatory Authority, and (b) is not an Authorized Generic Version of such Product; where “ Authorized Generic Version ” means any biological product that is sold under the BLA filed by Incyte or its an Affiliate or sublicensee for such Product. A Product licensed or produced by Incyte or its Affiliates will not constitute a Biosimilar Product.

1.14 “ BLA ” means, with respect to a Product, a biologics license application, as defined in the U.S. Public Health Service Act, as amended, and the regulations promulgated thereunder, or any non-U.S. counterpart of the foregoing, and all supplements and amendments that may be filed with respect to the foregoing.

1.15 “ Bullpen Targets ” means Targets that are designated by the JSC during the Discovery Period as a source of potential Discovery Projects to be proposed for inclusion in the Program pursuant to Section 4.5, to consist of a minimum of [**] and a maximum of [**] such Targets at any time.

1.16 “ Business Day ” means a day other than a Saturday or Sunday or Federal holiday in New York, New York, USA.

1.17 “ Calendar Quarter ” means a calendar quarter ending on the last day of March, June, September or December.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

1.18 “ Calendar Year ” means a period of time commencing on January 1 and ending on the following December 31.

1.19 “ Change in Control ” means, with respect to a Party, an event in which: (a) any Third Party not then beneficially owning more than [**] of the voting power of the outstanding securities of such Party acquires or otherwise becomes the beneficial owner of securities of such Party representing more than [**] of the voting power of the then outstanding securities of such Party with respect to the election of directors; or (b) such Party consummates a merger, consolidation or similar transaction with a Third Party where the voting securities of such Party outstanding immediately preceding such transaction represent less than [**] of the voting power of such Party or surviving entity, as the case may be, immediately following such transaction; or (c) such Party sells all or substantially all of its assets relating to this Agreement to a Third Party.

1.20 “ Clinical Trial ” means a Phase 1 Clinical Trial, Phase 2 Clinical Trial, Phase 3 Clinical Trial, Phase 4 Clinical Trial, Pivotal Clinical Trial, or a combination of two (2) of any of the foregoing studies.

1.21 “ Co-Developed Product ” means any Royalty-Bearing Product for which Agenus has exercised the Co-Development Option described in Section 4.4 and has paid all reasonably undisputed Co-Development Quarterly Payments, unless and until Agenus exercises its termination right with respect to such Royalty-Bearing Product pursuant to Section 4.4(d).

1.22 “ Combination Product ” means, with respect to a country, any Royalty-Bearing Product that has received Regulatory Approval in such country to be used or administered for use with an Incyte Product to treat patients in the Field.

1.23 “ Commercialization ” or “ Commercialize ” means any activities directed to new product planning activities, obtaining pricing and/or reimbursement approvals, marketing, promoting, distributing, importing, offering to sell, and/or selling a Product (including establishing the price for such product), whether or not Regulatory Approval for such product has been obtained, including related use and importation and commercial Manufacturing.

1.24 “ Commercialization Costs ” means, on a Profit-Share Product-by-Profit-Share Product basis, FTE Costs and Out-of-Pocket Costs incurred by Incyte or its Affiliates in the Territory and, to the extent Agenus US exercises the Co-Promotion Option for a Profit-Share Product pursuant to Section 5.4 and the Parties enter into a Co-Promotion Agreement, by Agenus US in the United States in accordance with the Co-Promotion Agreement, in Commercializing the relevant Profit-Share Product in the Field in accordance with this Agreement and the applicable Commercialization Plan, subject to Section 5.1(b), including such FTE Costs and Out-of-Pocket Costs which are: (a) Indirect Selling Expenses; (b) Includable Sales and Marketing Operations Costs; (c) Includable Sales Force Costs; and (d) Marketing and Education Expenses; in each case determined from the books and records of Incyte or its Affiliates or, if applicable, Agenus US, in each case maintained in accordance with Accounting Standards.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

1.25 “ Commercially Reasonable Efforts ” of a Party means, with respect to an objective, the reasonable, diligent, good faith efforts of such Party (including the efforts of its Affiliates, and permitted sublicensees), of the type to accomplish such objective as a similarly situated (with respect to size, stage of development, and assets) biopharmaceutical company would normally use to accomplish a similar objective under similar circumstances, it being understood and agreed that, with respect to efforts to be expended in relation to a Product, including implementation of Development, Manufacturing and Commercialization strategies, such efforts shall be substantially equivalent to those efforts and resources that a similarly situated biopharmaceutical company would typically devote to its own internally discovered compound or product, which compound or product is at a similar stage in its development or product life and is of similar market and economic potential as products at a similar stage in its development or product life, taking into account the risks of development, the commercial potential for the Product, its proprietary position and other relevant factors.

1.26 “ Completion ” means, with respect to a Product and a Clinical Trial, the last dosing of a human with the relevant Product in such Clinical Trial.

1.27 “ Confidential Information ” means, subject to Section 11.1(b), (a) all confidential or proprietary information relating to Licensed Antibodies and Products, and (b) all other confidential or proprietary documents, technology, Know-How or other information (whether or not patentable) actually disclosed by one Party to the other Party pursuant to this Agreement or the Prior Confidentiality Agreement.

1.28 “ Control ” or “ Controlled ” means, with respect to any (a) material, document, item of information, method, data or other Know-How or (b) Patent Rights or other Intellectual Property Rights, the possession by a Party or, subject to Section 12.3(b)(ii), any of its Affiliates (whether by ownership or license (other than by a license granted under this Agreement)), of the ability to grant to the other Party access, a license and/or a sublicense as provided herein without requiring the consent of a Third Party or violating the terms of any agreement or other arrangement with any Third Party, in each case as of the Execution Date, or if any of the same are acquired or created after the Execution Date, at the date it is acquired or created by the relevant Party or its Affiliate; provided, however, that if such Party or, subject to Section 12.3(b)(ii), any of its Affiliate later gains the ability to grant such access, license or sublicense, such material, document, item of information, method, data, other Know-How, Patent Right or other Intellectual Property Right without requiring such consent or violating such terms, Control shall be deemed to exist thereafter.

1.29 “ Converted Product ” means any Profit-Share Product for which Agenus has elected to cease sharing in Profit-or-Loss as described in Section 4.6. For clarity, a Converted Product shall be deemed a Royalty-Bearing Product under this Agreement from and after the date such Profit-Share Product becomes a Converted Product.

1.30 “ Co-Promotion ” means, with respect to a Profit-Share Product, the joint Detailing efforts with respect to such Profit-Share Product in the United States, as further described in a Co- Promotion Agreement.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

1.31 “ Cover ”, “ Covering ” or “ Covered ” with respect to a product, technology, process or method, means that, but for Control by, or a license granted to, a Person under a Valid Claim included in the Patent Rights under which such license is granted, the Development, Manufacture, Commercialization and/or other use of such product or the practice of such technology, process or method, by such Person would infringe such Valid Claim (or, in the case of a Valid Claim that has not yet issued, would infringe such Valid Claim if it were to issue).

1.32 “ CPI ” means the Consumer Price Index — Urban Wage Earners and Clerical Workers, U.S. City Average, All Items, 1982-84 = 100, published by the U.S. Department of Labor, Bureau of Labor Statistics (or its successor equivalent index).

1.33 “ Detail ” means (a) face-to-face discussions or other direct communication ( e.g ., e detailing) with physicians and other health care practitioners who are permitted under applicable Laws to prescribe a Product, for the purpose of promoting a Product to such physicians or practitioners or (b) to the extent approved by the JSC or a Subcommittee established by the JSC, other interactions regarding the promotion of a Product with managed health care organizations, group purchasing organizations, pharmacy benefit managers, large employers, long-term care organizations, insurers, formularies, government agencies and programs ( e.g ., Medicare and the Veterans Health Administration and other federal, state and local agencies), or similar organizations.

1.34 “ Development ” or “ Develop ” means, with respect to a Licensed Antibody, a Product, or an Antibody (or therapeutic preparation that contains an Antibody) that Interacts with a Discovery Target, discovery, research and preclinical and clinical development activities, including: the planning and conduct of Clinical Trials, test method development and stability testing, toxicology, formulation and delivery system development, cell line development, process development, pre-clinical and clinical supply, Manufacturing scale-up, development- and clinical-stage Manufacturing, quality assurance/quality control procedure development and performance with respect to clinical materials, performance of Clinical Trials, statistical analysis and report writing and clinical studies, regulatory affairs, and all other pre-Regulatory Approval activities, including related use, importation and Medical Affairs Activities. When used as a verb, “Develop” means to engage in Development.

1.35 “ Development Costs ” means, on a Project-by-Project or Product-by-Product basis (as applicable), FTE Costs and Out-of-Pocket Costs incurred by either Party or its Affiliates in Developing such Project or Product in the Field and in the Territory, in accordance with this Agreement and consistent with the applicable Development Plan, including such FTE Costs and Out-of-Pocket Costs which are: (a) explicitly included in the budget included in the applicable Development Plan, subject to Section 4.1(c) and Section 4.4, (b) Manufacturing Costs for such Product (or the relevant Products in such Project) used in Development, (c) Patent and Trademark Costs for Patent Rights Covering such Product (or the relevant Products in such Project) and (d) Medical Affairs Costs; in each case determined from the books and records of the applicable Party and its Affiliates maintained in accordance with Accounting Standards. Development Costs shall also include Patent and Trademark Costs pertaining to Bullpen Targets as provided in Section 1.103.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

1.36 “ Discovery Period ” means the period beginning on the Effective Date and ending on December 31, 2019, subject to earlier termination as provided below (the “ Initial Discovery Period ”). The Parties may mutually agree prior to December 31, 2018 to extend the Discovery Period for an additional period not to exceed three (3) Calendar Years, in which case the Discovery Period shall terminate at the end of such additional period. Notwithstanding the foregoing, Agenus may (but shall not be obligated to) terminate the Discovery Period upon delivery of written notice following the consummation of a Change in Control of Incyte, provided that (a) such notice of termination must be provided within three (3) months following the consummation of such Change in Control, and (b) such termination shall not have an effect on Projects that have commenced prior to the provision of any such notice of termination.

1.37 “ Discovery Project ” means an Antibody discovery research or development project directed against a Bullpen Target proposed for inclusion in the Program by either Party at any time during the Discovery Period pursuant to Section 4.5.

1.38 “ Distribution Costs ” means, with respect to a Profit-Share Product, FTE Costs and Out-of-Pocket Costs that are specifically identifiable and allocable to the distribution of such Profit-Share Product to a Third Party, including (a) handling, storage, distribution, transportation, customs clearance, containers, freight, shipping, sales, use, excise, value-added and similar customs, taxes, tariffs or duties and insurance (including shipments from Third Party logistics service providers to wholesalers), and (b) customer services including order entry, billing and adjustments, inquiry and credit and collection.

1.39 “ DOJ ” means the United States Department of Justice.

1.40 “ Effective Date ” means the second (2 nd ) Business Day immediately following the HSR Clearance Date.

1.41 “ EMA ” means the European Medicines Agency, or a successor agency thereto.

1.42 “ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

1.43 “ Executive Officers ” means the Chief Executive Officers of each of Agenus US and Incyte (or a senior executive officer of Agenus US or Incyte designated by such Chief Executive Officers).

1.44 “ FDA ” means the United States Food and Drug Administration, or a successor agency thereto.

1.45 “ Field ” means any use of Antibodies for the treatment, control, mitigation, prevention or cure of any or all Indications in humans or animals in the Hematology Field and the Oncology Field.

1.46 “ First Commercial Sale ” means, with respect to a Product, the first sale of such Product intended for use by a patient, to a Third Party by, as applicable, Incyte or an Incyte

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

Related Party in a country following applicable Regulatory Approval (other than applicable governmental price and reimbursement approvals) of such Product in such country. For the avoidance of doubt, sales or transfers of Product for Clinical Trial or other Development purposes, or for compassionate or similar use, shall not be considered a First Commercial Sale.

1.47 “ Force Majeure Event ” means, with respect to a Party, an event, act, occurrence, condition or state of facts, in each case outside the reasonable control of such Party (which may include acts of God, acts of any government, any rules, regulations or orders issued by any governmental authority or by any officer, department, agency or instrumentality thereof, fire, storm, flood, earthquake, accident, war, rebellion, insurrection, riot, terrorism and invasion) that interfere with the normal business operations of such Party.

1.48 “ FTC ” means the United States Federal Trade Commission.

1.49 “ FTE ” means a full-time equivalent person year (consisting of a total of [**] hours per Calendar Year) of scientific, technical or commercial work, as applicable, undertaken by the applicable Party’s or its Affiliates’ employees. For purposes of clarity, a single individual who works more than [**] hours per Calendar Year in a single Calendar Year shall be treated as one (1) FTE regardless of the number of hours worked.

1.50 “ FTE Cost ” means, for any period, the product obtained by multiplying (a) the actual total FTEs (or portion thereof) devoted to a Development, Manufacturing or Commercialization activity pursuant to this Agreement by (b) the applicable FTE Rate.

1.51 “ FTE Rate ” means the rate per FTE (which may be prorated on a daily basis as necessary) of [**] , subject to annual adjustment in each Calendar Year during the Term by the percentage increase or decrease in the CPI as of December 31 of each Calendar Year over the level of the CPI as of December 31 of the prior Calendar Year, with the first such increase to be effective on [**] .

1.52 “ Generic Competition ” means, with respect to a Product in any country in a given Calendar Quarter, that, during such Calendar Quarter, one or more Biosimilar Products are commercially available in such country and such Biosimilar Products in the aggregate have a market share of [**] of the aggregate market share of such Product and Biosimilar Products (based on data provided by IMS International or, if such data is not available, such other reliable data source as agreed by the Parties (such agreement not to be unreasonably withheld)) as measured by unit sales in such country.

1.53 “ GITR ” means glucocorticoid-induced TNFR-related protein.

1.54 “ GITR Antibody ” means an Antibody that Interacts with GITR that is Controlled by Agenus or, subject to Section 12.3(b)(ii), any of its Affiliates, as of the Execution Date or during the Term, or arises out of the GITR Project.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

1.55 “ GITR Project ” means the project conducted under this Agreement directed to the Development, Manufacture and Commercialization of Antibodies that Interact with GITR.

1.56 “ Hematology Field ” means all hematologic Indications as defined in subsections 280 — 289 (Diseases of the blood and blood-forming organs) of the International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM), provided that the Hematology Field shall exclude the Indications set forth in Schedule 1.56 .

1.57 “ HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (15 U.S.C. §18a), and the rules and regulations promulgated thereunder.

1.58 “ HSR Clearance ” means the earlier of (a) notification to the Parties from the FTC or DOJ of early termination of the applicable waiting period under the HSR Act with respect to the HSR Filings, or (b) expiration of the applicable waiting period under the HSR Act with respect to the HSR Filings; provided, however , that if the FTC or DOJ shall commence any investigation by means of a second request or otherwise, HSR Clearance means the termination of such investigation, without action to prevent the Parties from implementing the transactions contemplated by this Agreement with respect to the United States.

1.59 “ HSR Clearance Date ” means the earlier of (a) the date on which the FTC or DOJ shall notify the Parties of early termination of the waiting period under the HSR Act with respect to the HSR Filings, or (b) the date on which the applicable waiting period under the HSR Act with respect to the HSR Filings expires; provided, however , that if the FTC or DOJ shall commence any investigation by means of a second request or otherwise, HSR Clearance Date means the date on which any investigation opened by the FTC or DOJ shall have been terminated, without action to prevent the Parties from implementing the transactions contemplated by this Agreement with respect to the United States.

1.60 “ HSR Filings ” means the filings by the Parties with the FTC and the DOJ of their respective premerger notification and report forms with respect to the matters set forth in this Agreement and the Stock Purchase Agreement, together with all required documentary attachments thereto.

1.61 “ Includable Sales and Marketing Operations Costs ” means, with respect to a Profit-Share Product, FTE Costs incurred (a) in developing advertising, promotional and educational materials, including related training materials and programs, for such Profit-Share Product, and (b) related to payer reimbursement services, each specifically identifiable and allocable to such Profit-Share Product.

1.62 “ Includable Sales Force Costs ” means, with respect to a Profit-Share Product, FTE Costs incurred in the field by sales representatives and regional and district managers, specifically identifiable and allocable to the selling of such Profit-Share Product.

1.63 “ Incremental Royalties ” means, with respect to Co-Developed Product as to which Agenus exercises its right under Section 4.4(d) or a Converted Product, the difference, in

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

Dollars, in royalties actually paid to Agenus on Net Sales of a unit of the applicable Product at the rates set forth in Section 7.6(a)(iii) and those that would have otherwise been payable for the same unit of Product if the royalty rates set forth in Section 7.6(a)(i) had applied.

1.64 “ Incyte IP ” means Incyte Know-How and Incyte Patent Rights.

1.65 “ Incyte Know-How ” means all Know-How that (a) is Controlled by Incyte or, subject to Section 12.3(b)(ii), any of its Affiliates, as of the Execution Date or during the Term; and (b) is necessary or useful to Develop, Manufacture or Commercialize any Licensed Antibody or Product (excluding an Incyte Product).

1.66 “ Incyte Patent Rights ” means all Patent Rights that (a) are Controlled by Incyte or, subject to Section 12.3(b)(ii), any of its Affiliates, as of the Execution Date or during the Term; and (b) (i) Cover a Licensed Antibody or Product (excluding an Incyte Product), or (ii) are otherwise necessary or useful to Develop, Manufacture or Commercialize a Licensed Antibody or Product (excluding an Incyte Product).

1.67 “ Incyte Product ” means, with respect to a Royalty-Bearing Product and a country, a product Controlled by Incyte or, subject to Section 12.3(b)(ii), any of its Affiliates, that (a) contains a compound for which IND-enabling toxicology studies have been initiated prior to or during the Term, and (b) has received a Regulatory Approval in such country that permits such product to be used or administered for use with such Royalty-Bearing Product in the Field.

1.68 “ Incyte Program Know-How ” means all Know-How that is (a) discovered, made or conceived solely by employees of, or others acting on behalf of, Incyte and its Affiliates during and in connection with the Program; and (b) is necessary or useful to Develop, Manufacture or Commercialize any Licensed Antibody or Product. For clarity, Know-How relating solely to an Incyte Other Invention shall not constitute Incyte Program Know-How.

1.69 “ Incyte Program Patent Rights ” means all Patent Rights claiming an Incyte Program Invention. For clarity, Patent Rights claiming an Incyte Other Invention shall not constitute Incyte Program Patent Rights.

1.70 “ Incyte Related Party ” means any of Incyte’s Affiliates or any permitted Third Party licensees or sublicensees of Incyte’s Program Rights to Develop, Manufacture or Commercialize Products in the Field, but not including any Third Party that functions as a distributor.

1.71 “ IND ” means an Investigational New Drug Application filed with the FDA under 21 C.F.R. §312 or similar non-United States application or submission in any country or group of countries for permission to conduct human clinical investigations.

1.72 “ Indication ” means any disease, condition or syndrome.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

1.73 “ Indirect Selling Expenses ” means, with respect to a Profit-Share Product, Out-of-Pocket Costs incurred that are specifically identifiable and allocable to the selling of such Profit-Share Product and to operate and maintain the sales force that promotes such Profit-Share Product in the Territory (excluding corporate and administrative overhead, costs included in Includable Sales Force Costs and all other internal FTE Costs), including the costs of sales meetings, consultants (including fees for territory alignment and sales deployment consulting), call reporting and other Third Party monitoring/tracking costs (including Third Party data purchases), and educational grant funds and charitable contributions related to Profit-Share Products.

1.74 “ Initiation ” means, with respect to a Product and a Clinical Trial, the first dosing in such Clinical Trial of the first human with the relevant Product.

1.75 “ Intellectual Property Rights ” means Patent Rights, trade secrets, trademarks, copyrights and other forms of proprietary or industrial rights pertaining to inventions, Know-How, original works, and other forms of intellectual property.

1.76 “ Interact ” means to bind specifically with a Target. In the event an Antibody binds specifically with more than one Target, it shall be deemed to Interact with whichever such Target it binds with greatest affinity unless the JSC determines otherwise.

1.77 “ Inventions ” means all patentable inventions, discoveries, improvements and other technology, and any Patent Rights based thereon, that are discovered, made or conceived during and in connection with the research, Development, Manufacture and Commercialization of Licensed Antibodies or Products.

1.78 “ Know-How ” means any and all technical information which, at the Execution Date or any time during the Term, is not in the public domain, including information comprising or relating to data, materials, results, inventions, improvements, protocols, formulas, processes, methods, compositions, articles of manufacture, formulations, discoveries, findings, know-how and trade secrets of any kind, including scientific, preclinical, clinical, regulatory, manufacturing, marketing, financial and commercial information or data, Regulatory Approvals and filings therefor, Regulatory Documentation, sequence information, vectors and host cells that include DNA, in each case (whether or not patented or patentable) in written, electronic or any other form now known or hereafter developed; but excluding any such information publicly disclosed in Patent Rights.

1.79 “ LAG-3 ” means lymphocyte-activation gene 3.

1.80 “ LAG-3 Antibody ” means an Antibody that Interacts with LAG-3 that is Controlled by Agenus or, subject to Section 12.3(b)(ii), any of its Affiliates, as of the Execution Date or during the Term, or arises out of the LAG-3 Project.

1.81 “ LAG-3 Project ” means the project conducted under this Agreement directed to the Development, Manufacture and Commercialization of Antibodies that Interact with LAG-3.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

1.82 “ Law ” means any law, statute, rule, regulation, ordinance or other pronouncement having the effect of law, of any federal, national, multinational, state, provincial, county, city or other political subdivision, including, as applicable, (a) good manufacturing practices, good laboratory practices, good clinical practices and adverse event reporting requirements, guidance from the International Conference on Harmonization or other generally accepted conventions, and all other rules, regulations and requirements of the FDA and other applicable Regulatory Authorities; (b) the Foreign Corrupt Practices Act of 1977, as amended, or any comparable laws in any country; and (c) all export control laws.

1.83 “ Licensed Antibody ” means a Profit-Share Antibody or a Royalty-Bearing Antibody.

1.84 “ LICR ” means the Ludwig Institute for Cancer Research Ltd.

1.85 “ LICR Agreement ” means that certain License Agreement dated December 5, 2014 between 4-AB and LICR, as may be amended in accordance with this Agreement.

1.86 “ Major EU Countries ” means [**] .

1.87 [**] .

1.88 “ Manufacture ” or “ Manufacturing ” means, as applicable, all activities and operations associated with the production, manufacture, supply, receipt, processing, filling, finishing, inspections, testing, packaging, labeling, shipping, warehousing, storage and handling of a Product, including: cell line development; process and formulation development; process validation; stability and release testing; manufacturing scale-up; pre-clinical, clinical and commercial manufacture and supply; qualification and validation of Third Party contract manufacturers, scale up, process and equipment validation, and initial manufacturing licenses, approvals and inspections; analytical development and product characterization; quality assurance and quality control development; testing and release; packaging development and final packaging and labeling; shipping configurations and shipping studies; and overseeing the conduct of any of the foregoing.

1.89 “ Manufacturing Costs ” means, with respect to a Product, the FTE Costs and Out-of-Pocket Costs incurred by either Party or any of their respective Affiliates in Manufacturing such Product, in accordance with this Agreement and consistent with the applicable Development Plan or, if applicable, the Commercialization Plan, including: (a) to the extent that such Product or its corresponding Licensed Antibody is Manufactured by a Third Party manufacturer, the Out-of-Pocket Costs incurred by a Party or its Affiliates to the Third Party manufacturer for the Manufacture and supply (including packaging and labeling) thereof, determined in accordance with the books and records of such Party or its Affiliates maintained in accordance with Accounting Standards; and (b) to the extent that such Product or its corresponding Licensed Antibody is Manufactured by a Party or its Affiliates, direct material costs and FTE Costs attributable to the Manufacture of such Product or its corresponding Licensed Antibody (excluding the cost of general corporate overhead and administrative

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

personnel), determined in accordance with the books and records of such Party or its Affiliates maintained in accordance with Accounting Standards.

1.90 “ Marketing and Education Expense ” means, with respect to a Profit-Share Product, Out-of-Pocket Costs (excluding corporate and administrative overhead and all internal FTE Costs) that are specifically identifiable and allocable to the advertising, promotion and marketing of such Profit-Share Product consistent with the applicable Commercialization Plan, and related professional education in the Field (to the extent not performed by sales representatives), including such Out-Of Pocket Costs for (i) promotional/educational materials, (ii) reimbursement and patient assistance programs and health outcomes programs, (iii) development of information and data specifically identifiable for national accounts, managed care organizations and group purchasing organizations of such Profit-Share Product consistent with the Commercialization Plan, (iv) development of competitive intelligence, (v) branding expenses, (vi) packaging and labeling expenses, (vii) advertisements appearing in journals, newspapers, magazines or other media, including direct mail and electronic media, (viii) external market research, (ix) the Profit-Share Product-specific public relations programs, (x) sales operations and reimbursement services, and (xi) training programs and materials; provided, however , that such expenses shall exclude Indirect Selling Expenses and Medical Affairs Costs.

1.91 “ Medical Affairs Activities ” means, with respect to a Product, activities designed to ensure or improve appropriate medical use of, conduct medical education of, or further research regarding, such Product in the Territory, including, with respect to such Product: (a) conducting service based medical activities including providing input and assistance with consultancy meetings, recommending investigators for Clinical Trials and providing input in the design of such trials and other research related activities, and delivering non-promotional communications and conduct non-promotional activities including presenting new clinical trial data and other scientific information; (b) grants to support continuing medical education, symposia, or Third Party research specifically related to such Product in the Territory; (c) development, publication and dissemination of Publications relating to such Product and relevant disease states in the Territory; (d) medical information services provided in response to inquiries communicated via sales representatives or received by letter, phone call or email; (e) conducting advisory board meetings or other consultant programs; (f) support of investigator-initiated Clinical Trials; (g) managing relationships with cooperative groups, physician/hospital networks and advocacy groups; (h) establishing and implementing risk, evaluation and mitigation strategies; and (i) Phase 4 Clinical Trials.

1.92 “ Medical Affairs Costs ” means, with respect to a Product, FTE Costs and Out-of-Pocket Costs incurred in accordance with this Agreement and consistent with the applicable Development Plan or Commercialization Plan that are specifically identifiable and allocable to Medical Affairs Activities with respect to such Product in the Field.

1.93 “ MHLW ” means the Japanese Ministry of Health, Labor and Welfare, or a successor agency thereto.

1.94 “ MSKCC ” means the Memorial Sloan-Kettering Cancer Center.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

1.95 “ Named Target ” means, as applicable, GITR, LAG-3, OX-40, TIM-3 or the Target as to which an Assumed Project is directed.

1.96 “ Net Sales ” means, with respect to any Product, the gross amount invoiced by Incyte and Incyte Related Parties on sales or other dispositions of such Product, and with respect to any Terminated Product, the gross amount invoiced by Agenus and its Affiliates, licensees and sublicensees on sales or other dispositions of such Terminated Product, as applicable, to Third Parties, or otherwise directly or indirectly paid to or earned by Incyte or an Incyte Related Party with respect to the sale of such Product, or Agenus and its Affiliates and sublicensees with respect to the sale of such Terminated Product, in each case less the following:

(a) trade, cash and/or quantity discounts not already reflected in the amount invoiced, to the extent related to the gross amount invoiced;

(b) allowances and adjustments credited or payable, including credit for spoiled, damaged, outdated, recalled and returned Product or Terminated Product, to the extent related to the gross amount invoiced and substantiated by reasonable documentation;

(c) freight, insurance and other transportation charges incurred in shipping such Product or Terminated Product to Third Parties, to the extent identified as such in the invoice to the Third Party, to the extent included in the gross amount invoiced;

(d) amounts repaid or credited by reason of rejections, defects, recalls or returns or because of chargebacks, refunds, rebates (including wholesaler inventory management fees, retroactive price reductions, commissions, discounts or billing errors, and any other allowances which effectively reduce the net selling price);

(e) all tariffs, duties, excises, sales taxes, or other taxes (including value-added tax) and custom duties imposed on such Product or Terminated Product, in each case to the extent invoiced to customers or otherwise included within gross amounts invoiced; and

(f) other similar and customary deductions which are in accordance with the applicable Accounting Standards.

Net Sales will not include sales between or among Incyte and Incyte Related Parties, or Agenus and its Affiliates or sublicensees, as applicable; provided, however , that any resale to Third Parties shall be included in Net Sales.

Net Sales shall be calculated in accordance with Accounting Standards. In the case of any sale or other disposal for value, such as barter or counter-trade, of a Product or Terminated Product, or part thereof, other than in an arm’s length transaction exclusively for cash, Net Sales shall be calculated as above on the value of the non-cash consideration received or the fair market price (if higher) of such Product or Terminated Product in the country of sale or disposal, as determined in accordance with Accounting Standards. Donated Product or Terminated Product in reasonable quantities will be excluded from Net Sales.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

1.97 “ North America ” means the United States of America, Canada and Mexico and their respective territories and possessions.

1.98 “ Oncology Field ” means all oncology Indications as defined in subsections 140 — 239 (Neoplasms) of the International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM), including all hematologic malignancies, solid tumors and myeloproliferative diseases (including myelofibrosis, polycythemia rubra vera and essential thrombocythemia) as listed in ICD-9-CM.

1.99 “ Out-of-Pocket Costs ” means, with respect to specified activities hereunder, direct expenses paid or payable by either Party or its Affiliates to Third Parties (other than employees of such Party or its Affiliates) that are specifically identifiable and incurred to conduct such activities for Products, and have been recorded in accordance with Accounting Standards.

1.100 “ OX-40 ” means the member of the tumor necrosis factor superfamily of receptors that is otherwise known as CD-134.

1.101 “ OX-40 Antibody ” means an Antibody that Interacts with OX-40 that is Controlled by Agenus or, subject to Section 12.3(b)(ii), any of its Affiliates, as of the Execution Date or during the Term, or arises out of the OX-40 Project.

1.102 “ OX-40 Project ” means the project conducted under this Agreement directed to the Development, Manufacture and Commercialization of Antibodies that Interact with OX-40.

1.103 “ Patent and Trademark Costs ” means, with respect to a Product, FTE Costs and Out-of-Pocket Costs incurred by either Party or its Affiliates in connection with (a) the Prosecution of Agenus Patent Rights, Incyte Program Patent Rights, or Joint Patent Rights that Cover such Product in the Field in the Territory, reasonably allocated to such Products in the Field if such Patent Rights Cover products other than Products or Indications outside of the Field; (b) conducting patentability, landscape and freedom to operate analyses (including preparing opinions of invalidity or non-infringement) with respect to Inventions and Patent Rights of potential relevance to such Product; (c) when mutually agreed by internal or external patent counsel to the Parties with notice to the JSC, conducting opposition, invalidation, reexamination, reissue, post-grant review, inter partes review, or other similar administrative proceeding, administrative appeal thereof, or litigation thereof with respect to Third Party Patent Rights of potential relevance to such Product; (d) enforcing the Agenus Patent Rights, Incyte Program Patent Rights and Joint Patent Rights Covering such Product in the Field in the Territory in accordance with this Agreement; (e) defending Third Party Infringement Claims and Invalidity Claims with respect to the Agenus Patent Rights, Incyte Program Patent Rights and Joint Patent Rights Covering such Product in the Field in the Territory; and (f) establishing, maintaining and enforcing Product-specific trademarks in the Territory. Patent and Trademark Costs shall include the foregoing activities as they pertain to Bullpen Targets if and to the extent mutually agreed by internal or external patent counsel to the Parties with notice to the JSC.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

1.104 “ Patent Rights ” means United States and non-U.S. patents, patent applications and/or provisional patent applications, utility models and utility model applications, design patents or registered industrial designs and design applications or applications for registration of industrial designs, and all substitutions, divisionals, continuations, continuation-in-part applications, continued prosecution applications, reissues, reexaminations and extensions thereof.

1.105 “ Patent Term Extension ” means any patent term extension under 35 U.S.C. §156 or any non-U.S. counterpart of the foregoing, including supplemental protection certificates.

1.106 “ PD-1 ” means programmed cell death protein 1.

1.107 “ PD-1 Antibody ” means an Antibody that Interacts with PD-1 that is Controlled by Agenus or, subject to Section 12.3(b)(ii), any of its Affiliates as of the Effective Date or arises out of an internal discovery project conducted by Agenus or, subject to Section 12.3(b)(ii) any of its Affiliates during the period beginning on the Effective Date and ending [**] thereafter.

1.108 “ Permitted Subcontractor ” means an Affiliate or a Third Party to which a Party may subcontract portions of the activities allocated to it under a Development Plan or Commercialization Plan in accordance with the terms of this Agreement.

1.109 “ Person ” means any natural person, general or limited partnership, corporation, limited liability company, limited liability partnership, firm, association or organization or other legal entity.

1.110 “ Phase 1 Clinical Trial ” means a study in humans which provides for the first introduction into humans of a product, conducted in healthy volunteers or patients to obtain information on product safety, tolerability, pharmacological activity or pharmacokinetics, as more fully defined in 21 C.F.R. §312.21(a) (or the non-United States equivalent thereof).

1.111 “ Phase 2 Clinical Trial ” means a study in humans of the safety, dose ranging and efficacy of a product, which is prospectively designed to generate sufficient data (if successful) to commence pivotal clinical trials, as further defined in 21 C.F.R. §312.21(b) (or the non-United States equivalent thereof).

1.112 “ Phase 3 Clinical Trial ” means a controlled study in humans of the efficacy and safety of a product, which is prospectively designed to demonstrate statistically whether such product is effective and safe for use in a particular Indication in a manner sufficient to file a BLA to obtain regulatory approval to market the product, as further defined in 21 C.F.R. §312.21(c) (or the non-United States equivalent thereof).

1.113 “ Phase 4 Clinical Trial ” means a human clinical trial which is conducted on a product after Regulatory Approval of the product has been obtained from an appropriate Regulatory Authority, and includes (a) trials conducted voluntarily for enhancing marketing or

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

scientific knowledge of an approved Indication or (b) trials conducted after Regulatory Approval due to request or requirement of a Regulatory Authority or as a condition of a previously granted Regulatory Approval.

1.114 “ Pivotal Clinical Trial ” means (a) a Phase 2 Clinical Trial that is prospectively designed to generate sufficient data (if successful) to file for accelerated approval of a BLA or (b) a Phase 3 Clinical Trial.

1.115 “ Prior Confidentiality Agreement ” means the Confidentiality Agreement between Incyte and Agenus US, dated May 13, 2014, as amended on August 12, 2014.

1.116 “ Product Liability Costs ” means, with respect to a Product, FTE Costs and Out-of-Pocket Costs incurred by either Party or its Affiliates associated with (a) any recall of such Product in the Field in the Territory, including the cost of any investigations or corrective actions with respect thereto, and (b) any Excess Product Liability Costs to the extent set forth in Section 9.3.

1.117 “ Product ” or “ Products ” means, collectively, Profit-Share Products and Royalty-Bearing Products. For clarity, Products includes Combination Products.

1.118 “ Profit-or-Loss ” means, on a Profit-Share Product-by-Profit-Share Product basis with respect to a Calendar Quarter: (a) Net Sales of such Profit-Share Product in the Field in the Territory by Incyte and Incyte Related Parties, plus (b) Profit-Share Product Proceeds, minus (c) Allowable Expenses, to the extent such deductions have not already or otherwise been deducted, and determined from the books and records of the Parties and their respective Affiliates and Permitted Subcontractors, in accordance with Accounting Standards. For purposes of clarity, it is understood that (A) there shall be no double-counting of expenses within the definition of Profit-or-Loss and (B) the Profit-or-Loss shall be calculated and payable in accordance with Section 7.3 even if there are no Net Sales and prior to the First Commercial Sale.

1.119 “ Profit-Share Antibodies ” means GITR Antibodies, OX-40 Antibodies and Assumed Project Antibodies arising out of an Assumed Project designated by Agenus as a Profit-Share Project pursuant to Section 4.5(b)(i).

1.120 “ Profit-Share Product ” means any therapeutic preparation that contains one or more Profit-Share Antibodies; provided, however , that prior to the commencement of Development of any therapeutic preparation that contains both a Profit-Share Antibody and a Royalty-Bearing Antibody, the Parties (through the JSC) shall discuss in good faith and agree on the appropriate financial arrangements relating to such therapeutic preparation, which could include agreement upon an allocation of Allowable Expenses and Profit-and-Loss between the Parties with respect thereto.

1.121 “ Profit-Share Projects ” means the GITR Project, the OX-40 Project, and each Assumed Project designated by Agenus as a Profit-Share Project pursuant to Section 4.5(b)(i).

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

1.122 “ Profit-Share Product Proceeds ” means, with respect to a Profit-Share Product, any proceeds received by Incyte or its Affiliates from Third Parties with respect to the Development, Manufacture or Commercialization of such Profit-Share Product in the Field and in the Territory, including proceeds attributable to a grant of a license or sublicense, or a grant of distribution rights, to permitted sublicensees and distributors under this Agreement, to Develop, Manufacture or Commercialize such Profit-Share Product (or, if rights in addition to such rights to such Profit-Share Product are granted to such Third Party, then reasonably allocated to the rights granted to such Third Party with respect to such Profit-Share Product), but excluding:

(a) amounts received by Incyte or any of its Affiliates as payments for their actual reasonably allocated direct costs (including FTE Costs and Out-of-Pocket Costs) to perform Development, Manufacturing or Commercialization activities undertaken by Incyte or its Affiliates for, or in collaboration with, such Third Party with respect to such Profit-Share Product, to the extent such costs have not been included in Allowable Expenses;

(b) amounts received by Incyte or any of its Affiliates from such Third Party as the purchase price for Incyte’s or any of its Affiliates’ debt or equity securities, except that amounts which exceed the fair market value of such debt or equity securities shall not be so excluded to the extent otherwise falling within this definition;

(c) those Patent and Trademark Costs paid by Incyte or its Affiliates, and reimbursed by such Third Party, with respect to such Profit-Share Product or, if incurred with respect to multiple Profit-Share Products and/or other products, then reasonably allocated to the relevant Profit-Share Product, to the extent such costs have not been included in Allowable Expenses; and

(d) amounts received by Incyte as reimbursement for costs borne solely by Incyte, with respect to Third Party claims for which the Third Party is obligated to indemnify Incyte.

1.123 “ Program ” means the program to Develop, Manufacture and Commercialize Products in the Field and the Territory under this Agreement.

1.124 “ Program Right ” means the right to Develop, Manufacture and Commercialize Products pursuant to this Agreement.

1.125 “ Projects ” means, collectively, the GITR Project, the LAG-3 Project, the OX-40 Project, the TIM-3 Project, and all Assumed Projects.

1.126 “ Prosecution ” or “ Prosecute ” means, with respect to a particular Patent Right, all activities associated with the preparation, filing, prosecution and maintenance of such Patent Right (and patent application(s) derived from such Patent Right), as well as re-examinations, reissues, applications for patent term adjustments and extensions, supplementary protection certificates and the like with respect to that Patent Right, together with the conduct of interference, opposition, invalidation, reexamination, reissue proceeding, post-grant review, inter

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

partes review, derivation proceeding or other similar administrative proceeding or administrative appeal thereof, with respect to that Patent Right.

1.127 “ Publication ” means any publication in a scientific journal, any abstract to be presented to any scientific audience not subject to confidentiality obligations, any presentation at any scientific conference, including slides and texts of oral or other public presentations presented to a scientific audience not subject to confidentiality obligations, any other scientific presentation and any other oral, written or electronic disclosure directed to a scientific audience not subject to confidentiality obligations, in each case which pertains to a Product or the use of a Licensed Antibody or Product in the Field.

1.128 “ Regulatory Approval ” means, with respect to a Product, all approvals (including any applicable governmental price and reimbursement approvals), licenses, registrations, and authorizations of any federal, national, multinational, state, provincial or local Regulatory Authority, department, bureau and other governmental entity that are necessary for the marketing and sale of such Product in a country or group of countries.

1.129 “ Regulatory Authority ” means, with respect to a country, the regulatory authority or regulatory authorities of such country with authority over the testing, manufacture, use, storage, importation, promotion, marketing, pricing or sale of a biological product in such country.

1.130 “ Regulatory Costs ” means, with respect to a Product, FTE Costs and Out-of-Pocket Costs incurred by a Party or its Affiliates associated with the preparation and filing of INDs and BLAs, and the maintenance of Regulatory Approvals, for such Product in the Field, including such FTE Costs and Out-of-Pocket Costs which are (a) fees paid to Regulatory Authorities directly related to INDs, BLAs and Regulatory Approvals for such Product in the Field, (ii) costs of any Regulatory Interactions with respect to such Product in the Field, and (iii) costs to establish and maintain the Global Safety Database for such Product.

1.131 “ Regulatory Documentation ” means, with respect to a Product, all INDs, BLAs and other regulatory applications submitted to any Regulatory Authority, copies of Regulatory Approvals, orphan drug designations, “fast-track”, “breakthrough” or similar designations, regulatory materials, drug dossiers, master files (including Drug Master Files, as defined in 21 C.F.R. §314.420 and any non-United States equivalents), and any other reports, records, regulatory correspondence and other materials relating to Regulatory Approval of such Product, or required to manufacture, distribute or sell such Product, including any information that relates to pharmacology, toxicology, chemistry, manufacturing and controls data, batch records, safety and efficacy, and any safety database required to be maintained for Regulatory Authorities.

1.132 “ Regulatory Exclusivity ” means, with respect to a Product, that Third Parties are prevented from legally Developing, Manufacturing or Commercializing a product that could compete with such Product in a country, either through data exclusivity rights, orphan drug designation, or such other rights conferred by a Regulatory Authority in such country, other than through Patent Rights.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

1.133 “ Regulatory Interactions ” means (a) all regulatory actions, communications and filings with, and submissions to, all Regulatory Authorities with respect to a Product, and (b) interfacing, corresponding and meeting with the Regulatory Authorities with respect to a Product.

1.134 “ Retrocyte Display Technology ” means (a) the Patent Rights Controlled by Agenus or its Affiliates that Cover, or Know-How Controlled by Agenus or its Affiliates that relate to, the discovery and optimization of Antibodies and other molecules against Targets of interest, including Patent Rights arising from PCT Application Publication Nos. WO03/068819, WO09/109368 and WO11/061336, (b) platforms embodying components, component steps or other portions of any of the foregoing, and (c) any Retrocyte Display Improvement, but, for clarity excluding any Know-How that is specific to any Licensed Antibody(ies) or Product(s) and any Patent Right that Covers any Licensed Antibody(ies) or Product(s).

1.135 “ Retrocyte Display Improvement ” means any Invention constituting an improvement, enhancement, modification, or adaptation of the Retrocyte Display Technology, and all Patent Rights Covering any such Invention, and all Know-How that is specific to, and constitutes an improvement, enhancement, modification, or adaptation of, the Retrocyte Display Technology.

1.136 “ Royalty-Bearing Antibodies ” means TIM-3 Antibodies, LAG-3 Antibodies and Assumed Project Antibodies arising out of an Assumed Project designated by Agenus as a Royalty-Bearing Project pursuant to Section 4.5(b)(i).

1.137 “ Royalty-Bearing Product ” means, subject to Section 1.120, any therapeutic preparation that contains one or more Royalty-Bearing Antibodies.

1.138 “ Royalty-Bearing Projects ” means the TIM-3 Project, the LAG-3 Project and each Assumed Project designated by Agenus as a Royalty-Bearing Project pursuant to Section 4.5(b)(i).

1.139 “ Target ” means a protein or its corresponding DNA or RNA sequence.

1.140 “ Territory ” means the entire world.

1.141 “ Third Party ” means any Person other than a Party or its Affiliates.

1.142 “ Third Party IP Costs ” means, with respect to a Profit-Share Product, royalties, license fees or other payments, as applicable, that are (a) reasonably allocable to, and necessary or useful for, the Development, Manufacture or Commercialization of such Product in the Field in the Territory, (b) incurred by either Party or its Affiliates to license Intellectual Property Rights from a Third Party, and (c) are first licensed by such Party or its Affiliate after the Effective Date.

1.143 “ TIM-3 ” means T cell immunoglobulin mucin-3.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

1.144 “ TIM-3 Antibody ” means an Antibody that Interacts with TIM-3 that is Controlled by Agenus or, subject to Section 12.3(b)(ii), any of its Affiliates, as of the Execution Date or during the Term, or arises out of the TIM-3 Project.

1.145 “ TIM - 3 Project ” means the project conducted under this Agreement directed to the Development, Manufacture and Commercialization of Antibodies that Interact with TIM-3.

1.146 “ Vaccine ” means an immunogen, the administration of which is intended to stimulate the immune system to result in the prevention, amelioration or therapy of any Indication.

1.147 “ Valid Claim ” means (a) a claim of an issued patent that has not expired or been abandoned, or been revoked, held invalid or unenforceable by a patent office, court or other governmental agency of competent jurisdiction in a final and non-appealable judgment (or judgment from which no appeal was taken within the allowable time period); or (b) a claim within a patent application that was filed in good faith and which has not been abandoned or finally disallowed without the possibility of appeal or refiling of such application, provided that [**].

1.148 “ Voting Stock ” means securities of any class or series of a corporation, limited liability company, association or other entity, the holders of which are ordinarily, in the absence of contingencies, entitled to vote generally in matters put before the shareholders or members of such corporation, limited liability company, association or other entity, including the right to vote for the election of directors or members of an equivalent governing body.

1.149 Additional Definitions . Each of the following definitions is set forth in the section of this Agreement indicated below:

Definition		Section Number
4-AB		Introduction
Abandoned Commercialization		5.3
Abandoned Development		4.3
Agreement		Introduction
Agenus		Introduction
Agenus Indemnified Parties		9.1(a)
Agenus US		Introduction
Authorized Generic Version		1.13
Bankruptcy Code		2.4(a)
Biosimilar Notice		6.3(a)
Breaching Party		8.2(b)
Co-Development Option		4.4
Co-Development Quarterly Payment		4.4(b)
Co-Development Royalty		4.4(c)
Commercialization Plan		5.1(b)
Co-Promotion Agreement		5.4(b)

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

Co-Promotion Option		5.4(a)
Development Plan		4.1(b)
Disclosing Party		11.1(a)
Discovery Option		4.5(b)(iii)
Discovery Target		4.5(a)
Excess Product Liability Costs		9.3
Execution Date		Introduction
Expert		Schedule 12.2
Global Safety Database		4.7(c)
Incyte		Introduction
Incyte Indemnified Parties		9.2(a)
Incyte Other Invention		6.1(a)
Incyte Program Invention		6.1(a)
Initial Discovery Period		1.36
Insolvency Proceeding		2.4(b)
Invalidity Claim		6.5
JAMS		Schedule 12.2
Joint Inventions		6.1(a)
Joint Patent Rights		6.1(a)
JSC		3.1(a)
Licensed IP Infringement		6.3(a)
Losses		9.1(a)
Negotiation Notice		2.3(d)
Negotiation Period		2.3(d)
Non-Breaching Party		8.2(b)
Option Period		4.5(b)(iii)(B)
Option Product		4.5(b)(iii)(F)
Paragraph IV Notice		6.3(a)
Parent		Introduction
Party; Parties		Introduction
Payee		7.9
Payment		7.9
Payor		7.9
PD-1 Negotiation Notice		2.8
PD-1 Negotiation Period		2.8
PD-1 Territory		2.8
PD-1 Trigger Period		2.8
Project Management Team		3.2
Recipient		11.1(a)
ROFN Trigger Period		2.3(d)
Royalty Term		7.6(b)(i)
SEC		11.2(b)
Severed Clause		12.11
[**]		7.5(b)(ii)

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

Stock Purchase Agreement		10.5(c)
Subcommittee		3.2
Term		8.1
Terminated Product		8.3(a)
Terminated Project		8.3(a)
Third Party Infringement Claim		6.4
Triggering Information		4.4(a)
[**]		7.5(b)(ii)
UCC		5.4(b)(iii)
Voting Securities		10.5(a)(i)
Withhold		7.9
Withholding Tax		7.9

ARTICLE II: LICENSES

2.1 Rights Granted by Agenus . Subject to the terms of this Agreement and, as applicable with respect to the relevant Agenus IP, any retained rights of LICR and MSKCC under the LICR Agreement, Agenus hereby grants Incyte, during the Term, an exclusive, royalty-bearing, non-transferable (except in accordance with Section 12.3) license or sublicense, as applicable, under the Agenus IP to Develop, Manufacture and Commercialize Licensed Antibodies and Products in the Territory and in the Field.

2.2 Rights Granted by Incyte . Subject to the terms of this Agreement, Incyte hereby grants to Agenus:

(a) a non-exclusive, royalty-free, non-transferable (except in accordance with Section 12.3) license or sublicense, as applicable, under the Incyte IP, solely to the extent necessary to permit Agenus and its Affiliates to exercise their respective rights and to perform their respective obligations under this Agreement; and

(b) a non-exclusive, fully paid-up, sublicensable license or sublicense, as applicable, under the Incyte Program Patent Rights and the Incyte Program Know-How to Develop, Manufacture and Commercialize Licensed Antibodies and Products (excluding Combination Products) in the Territory outside of the Field.

2.3 Sublicense Rights .

(a) Each Party shall have the right to grant sublicenses under the licenses granted to the other Party under Sections 2.1 and 2.2 to its Affiliates and, subject to Sections 2.3(b)-(d), as applicable, to Third Parties.

(b) Incyte and its Affiliates may freely sublicense the Agenus IP to Third Parties, directly or indirectly, through multiple tiers, except that any sublicense under Agenus IP (i) licensed to Agenus by LICR pursuant to the LICR Agreement shall require the prior written consent of Agenus (such consent not to be unreasonably withheld, delayed or conditioned), and

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

(ii) Covering the Commercialization of a Product in the Field shall be subject to the provisions of subsection (d) below. Incyte shall provide Agenus with a copy of any such sublicense agreement within [**] after the execution thereof. Each sublicense of the Agenus IP shall be consistent with the terms and conditions of this Agreement and, if applicable, the LICR Agreement as set forth in Section 2.6 below, and Incyte shall guarantee the performance of its Affiliates and permitted sublicensees with respect to any sublicense granted pursuant to this Section 2.3(b).

(c) Agenus may freely sublicense the rights granted to Agenus under the Incyte Program Patent Rights and the Incyte Program Know-How outside of the Field to Third Parties, subject to the provisions of Section 2.7. Agenus shall provide Incyte with a copy of any such sublicense agreement within [**] after the execution thereof. Each sublicense of the Incyte Program Patent Rights or Incyte Program Know-How outside of the Field shall be consistent with the terms and conditions of this Agreement, and Agenus shall guarantee the performance of its permitted sublicensees with respect to any sublicense granted pursuant to this Section 2.3(c).

(d) In the event that Incyte desires to commence negotiations with any Third Party (other than Permitted Subcontractors or Third Party distributors) to license and sublicense all or a portion of Incyte’s Program Rights to Commercialize a Product in the Field, Incyte shall promptly notify Agenus of its intent to enter into such a transaction, identifying the specific Product that will be the subject of such transaction. Within [**] after receipt of such notification (the “ ROFN Trigger Period ”), Agenus shall notify Incyte in writing either that (i) Agenus is interested in negotiating an agreement with respect to such Program Rights (the “ Negotiation Notice ”) or (ii) Agenus has no interest and therefore waives its right of first negotiation with respect to such Program Rights. If Agenus notifies Incyte in writing within such [**] period that Agenus desires to negotiate an agreement with respect to such Program Rights, the Parties shall negotiate in good faith for up to [**] from the date of such notification (the “ Negotiation Period ”), or such longer period as agreed between the Parties, regarding the terms pursuant to which the Parties would enter into a transaction with respect to such Program Rights. Failure by Agenus to give written notice of its interest or lack of interest in negotiating such agreement within [**] after receipt of written notice from Incyte as described in the first sentence of this Section 2.3(d) shall be deemed to constitute a waiver by Agenus of its right of first negotiation with respect to such Program Rights. If Agenus provided the Negotiation Notice within the ROFN Trigger Period, but Incyte and Agenus are unable to reach agreement during the Negotiation Period, Incyte may offer its Program Rights in the applicable Product to a Third Party; provided, however , that [**] .

2.4 Section 365(n) .

(a) All rights and licenses granted under or pursuant to any section of this Agreement, including all rights to sublicense, are, and shall otherwise be deemed to be, for purposes of Section 365(n) of Title 11 of the U.S. Code (the “ Bankruptcy Code ”), licenses of rights to “intellectual property” as defined in Section 101(35A) of the Bankruptcy Code. The Parties shall retain and may fully exercise all of their respective rights and elections under the Bankruptcy Code. Each Party agrees that the other Party, to the extent that it is a licensee of such rights under this Agreement, shall retain and may fully exercise all of its rights and

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

elections under the Bankruptcy Code, and that upon commencement of a bankruptcy proceeding by or against one Party under the Bankruptcy Code, the other Party shall be entitled to a complete duplicate of or complete access to (as such other Party deems appropriate), any such intellectual property and all embodiments of such intellectual property, provided that such other Party continues to fulfill its obligations as specified herein in full. Such intellectual property and all embodiments thereof shall be promptly delivered to the other Party (i) upon any such commencement of a bankruptcy proceeding upon written request therefor by the other Party, unless the Party subject to such bankruptcy proceeding elects to continue to perform all of its obligations under this Agreement or (ii) if not delivered under (i) above, upon the rejection of this Agreement by or on behalf of the Party subject to such bankruptcy proceeding, upon written request therefor by the other Party. The foregoing is without prejudice to any rights that either Party may have arising under the Bankruptcy Code or other applicable law.

(b) Nothing in this Section 2.4 shall be deemed any admission that this Agreement is an executory contract or that this Agreement or any obligation hereunder is otherwise subject to rejection or disavowal in the bankruptcy, liquidation, reorganization, receivership, assignment for the benefit of creditors, administration, insolvency, or similar proceeding or circumstance (an “ Insolvency Proceeding ”) of any Party, nor any admission that upon any such proceeding or circumstance involving a Party, or upon any such rejection or disavowal by a Party, the other Party (or any sublicensee thereof) would lose or not be able to enforce or benefit from any right hereunder (or under any applicable sublicense.

(c) Each of the Parties agrees and acknowledges, as a licensor of intellectual property under this Agreement, in entering this Agreement and granting the rights it respectively grants under this Agreement, and in its efforts to protect its own valuable intellectual property, it has relied on the particular skills and business qualities of the other Party as recipient of such rights. Such skills and business qualities include the expected future innovation of the other Party, and the particular market segments addressed by the other Party in its business. Each of the Parties further agrees and acknowledges that upon the occurrence of any Insolvency Proceeding, this Agreement is of the type described in Section 365(c)(1) and (e)(2) of the Bankruptcy Code, and under any other applicable Law, for such reasons.

2.5 No Implied Licenses or Rights; Retained Rights .

(a) No Implied Licenses or Rights . Except as expressly provided in Section 2.1 or elsewhere in this Agreement, all rights in and to the Agenus IP, and any other Patent Rights or Know-How of Agenus and its Affiliates, are hereby retained by Agenus and its Affiliates. Except as expressly provided in Section 2.2 or elsewhere in this Agreement, all rights in and to the Incyte IP, and any other Patent Rights or Know-How of Incyte and its Affiliates, are hereby retained by Incyte and its Affiliates. For the purposes of clarity, and notwithstanding any other provision of this Agreement, the licenses granted in Section 2.1 give Incyte no rights to utilize or exploit, (i) the Agenus IP, a Licensed Antibody or a Product outside of the Field, (ii) the Retrocyte Display Technology, Retrocyte Display Improvements, or any Patent Rights or Know-How Controlled by Agenus and its Affiliates Covering the foregoing, or (iii) Patent Rights or Know-How Controlled by Agenus and its Affiliates Covering a Vaccine (including the

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

Prophage Series Vaccines), adjuvant (including the QS-21 Stimulon adjuvant) or heat shock protein technologies.

(b) Retained Rights . Notwithstanding the exclusive licenses granted to Incyte pursuant to Section 2.1, Agenus retains the right to practice under the Agenus IP (i) to exercise its rights and to perform (and to sublicense Third Parties to perform) its obligations under this Agreement and (ii) for all purposes outside of the Field, subject to the provisions of Section 2.7.

2.6 LICR Agreement . Incyte acknowledges and agrees that certain of the licenses hereunder are subject to the following terms and conditions of the LICR Agreement: (a) the reporting and record-keeping obligations with respect to sales of Products as provided in Sections 2.6 and 3.8 of the LICR Agreement, (b) indemnification under Section 5.4(a)(ii) of the LICR Agreement, and (iii) obligations of non-use of name as provided in Section 6.5 of the LICR Agreement. In the event of any conflict or inconsistency between any applicable provision of this Agreement and such provisions of the LICR Agreement, such provisions of the LICR Agreement shall prevail with respect to the relevant Agenus IP licensed to Agenus by LICR pursuant to the LICR Agreement, except to the extent such inconsistency results from a breach by Agenus of Section 10.6. For purposes of clarity, all financial obligations of Agenus under the LICR Agreement shall be the sole responsibility of Agenus.

2.7 Non-Compete .

(a) [**] , neither Agenus nor, subject to Section 12.3(b)(ii), its Affiliates shall Develop, Manufacture or Commercialize outside of the Field any Licensed Antibody or Product that is identified in, and is being Developed, Manufactured or Commercialized under, a Development Plan or Commercialization Plan hereunder.

(b) [**] , neither Incyte nor, subject to Section 12.3(b)(ii), its Affiliates shall Develop, Manufacture or Commercialize any Licensed Antibody or Product outside of the Field.

(c) [**] , neither Party nor, subject to Section 12.3(b)(ii), any of its Affiliates, shall independently, or with a Third Party, conduct Development of, Manufacture or Commercialize in the Territory any Antibody that Interacts with a Named Target (including, for clarity, any Licensed Antibody) or a Bullpen Target, or a therapeutic preparation containing such an Antibody, in the Field other than as part of the Program, except (i) if the prior written consent of the other Party has been obtained, (ii) in the case of a Party, for any Antibody that Interacts with a Bullpen Target that is the subject of a Discovery Project that the other Party has declined to include in the Program as an Assumed Project pursuant to Section 4.5(b)(ii), so long as such Antibody does not Interact with a Named Target or another Bullpen Target, (iii) each Party may conduct preclinical or other nonclinical research (including screening and comparative pharmacology) using an Antibody obtained from a Third Party or owned by a Third Party in order to help advance and position the efforts of the Parties in the Program, and (iv) each Party may screen any Antibody for purposes of determining that such Antibody does not Interact with a Named Target or a Bullpen Target. For clarity, if the JSC elects to remove a Target from the list of Bullpen Targets, any Antibody that Interacts with such Bullpen Target shall no longer be

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

subject to this Section 2.7(c) but only if such Antibody does not Interact with a Named Target or another Bullpen Target.

(d) During the period beginning on the Effective Date and ending [**] thereafter or, if later, the expiration of the PD-1 Negotiation Period, neither Incyte nor, subject to Section 12.3(b)(ii), any of its Affiliates, shall independently, or with a Third Party, conduct Development of, Manufacture or Commercialize in the Territory any Antibody that Interacts with PD-1, or a therapeutic preparation containing such an Antibody, in the Field except (i) if the prior written consent of Agenus has been obtained, and (ii) Incyte may screen any Antibody for purposes of determining that such Antibody does not Interact with PD-1.

(e) In the event either Party or its Affiliate acquires control (as “control” is defined in Section 1.2) of any Third Party, the activities of such Third Party shall not constitute a breach of this Agreement; provided that (i) no later than [**] following consummation of the transaction in which such Party or its Affiliate acquires control of such Third Party, the acquiring Party or Affiliate takes appropriate action, through presentation of the applicable product to the other Party pursuant to Section 4.5, divestiture of assets, or otherwise, to cause such Party to come into compliance with the terms of this Agreement; (ii) during such [**] period, the acquiring Party or Affiliate keeps such acquired Third Party’s activities with respect to the Antibodies and therapeutic preparations that would otherwise breach Sections 2.7(a), 2.7(b), 2.7(c) or 2.7(d) separate from the Development, Manufacturing and Commercialization programs for Licensed Antibodies and Products, and ensures that no Confidential Information is utilized in such activities; and (iii) the acquiring Party continues to meet its other obligations hereunder.

(f) In the event that a Party undergoes a Change in Control, then the research, development, manufacture or commercialization in the Field in the Territory of an Antibody that Interacts with a Named Target or a Bullpen Target, or a therapeutic preparation containing such an Antibody, that, as of the date of such Change in Control is being researched, developed, manufactured or commercialized by the assignee or acquirer of such Party, or any Person which, immediately prior to such Change in Control, is an Affiliate of such assignee or acquirer, shall not constitute a breach of this Agreement; provided that (i) such assignee or acquirer or Affiliate keeps such research, development, manufacturing or commercialization program for such other Antibody, and any products containing such an Antibody, separate from the Development, Manufacture and Commercialization programs for Licensed Antibodies and Products, and ensures that no Confidential Information is utilized in such program; and (ii) the acquired or assigning Party continues to meet its obligations hereunder.

2.8 PD-1 Negotiation Right . In the event that Agenus desires to commence negotiations with a Third Party with respect to the grant of commercialization rights in the Field for PD-1 Antibodies in North America and/or the European Union (the “ PD-1 Territory ”) at any time during the period beginning on the Effective Date and ending [**] thereafter or if, during such period, Agenus desires to continue such negotiations which were begun on or after the Execution Date but before the Effective Date, Agenus shall promptly notify Incyte of its intent to enter into such a transaction. Within [**] after receipt of such notice (the “ PD-1 Trigger

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

Period ”), Incyte shall notify Agenus in writing either that (i) Incyte is interested in negotiating an agreement with respect to such PD-1 Antibodies in the Field in all or a portion of the PD-1 Territory (the “ PD-1 Negotiation Notice ”) or (ii) Incyte has no interest and therefore waives its right of first negotiation. If Incyte notifies Agenus in writing within the PD-1 Trigger Period that Incyte desires to negotiate an agreement, the Parties shall negotiate in good faith for up to [**] from the date of such notification (the “ PD-1 Negotiation Period ”), or such longer period as agreed between the Parties, regarding the terms pursuant to which the Parties would enter into a transaction with respect to such PD-1 Antibodies in the Field in the PD-1 Territory. Failure by Incyte to give written notice of its interest or lack of interest in negotiating such agreement within the PD-1 Trigger Period in all or a portion of the PD-1 Territory shall be deemed to constitute a waiver by Incyte of its right of first negotiation. If Incyte provided the PD-1 Negotiation Notice within the PD-1 Trigger Period, but Incyte and Agenus are unable to reach agreement during the PD-1 Negotiation Period, Agenus may offer the PD-1 Antibody rights in the Field in the PD-1 Territory to a Third Party; provided, however , that [**] .

ARTICLE III: GOVERNANCE

3.1 Joint Steering Committee .

(a) Establishment . The Parties shall establish a joint steering committee (“ JSC ”) within thirty (30) days after the Effective Date that will have the responsibility for the overall coordination and oversight of the Development, Manufacture and Commercialization of Licensed Antibodies and Products under this Agreement. As soon as practicable following the Effective Date (but in no event more than thirty (30) days following the Effective Date), each Party shall designate its initial three (3) representatives on the JSC. Each Party’s representatives and any substitute for a representative shall be bound by the obligations of confidentiality set forth in Article XI. A representative from Incyte shall act as the chairperson of the JSC; provided, however , that following consummation of a Change in Control of Incyte, a representative from Agenus shall act as the chairperson of the JSC. The chairperson shall not have any greater authority than any other representative on the JSC, but shall be responsible for the following activities: (i) calling meetings of the JSC; (ii) preparing and issuing minutes of each such meeting within thirty (30) days thereafter; (iii) ensuring that any decision-making delegated to the JSC is carried out in accordance with Section 3.5; and (iv) preparing and circulating an agenda for the upcoming meeting; provided that the chairperson shall include any agenda items proposed by the other Party. Each Party shall be free to change its representatives on notice to the other Party or to send a substitute representative to any JSC meeting; provided, however , that each Party shall ensure that at all times during the existence of the JSC, its representatives on the JSC are appropriate in terms of expertise and seniority for the then-current stage of Development or Commercialization of the Products.

(b) Responsibilities . The JSC shall have responsibility for: (i) overseeing the initial transfer of information and designated activities between the Parties relating to the Development of Licensed Antibodies and Products; (ii) providing general oversight over the Development of Licensed Antibodies and Products, including the periodic review and approval of the Development Plans (and any material updates, amendments and modifications thereto) and

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

the review and evaluation of the progress under the Development Plans; (iii) reviewing, amending and, subject to Sections 4.1(c) and 4.4(b), approving the Development budget for each Project; (iv) selecting Indications for Development of Products in the Field; (v) determining which of the Parties will be responsible for Regulatory Interactions with respect to a Product; (vi) reviewing the regulatory approach and filing strategy with respect to seeking and obtaining Regulatory Approval of Products in the Field in the Territory; (vii) determining which of the Parties will be responsible for selecting and monitoring the Manufacturing vendors and otherwise being responsible for Manufacturing activities with respect to Products; (viii) managing the list of Bullpen Targets, including adding and removing Targets from such list; (ix) discussing potential Discovery Projects; (x) developing a Publication plan for each Project and approving all Publications; (xi) providing general oversight over the Commercialization of Products, including the periodic review and approval of the Commercialization Plans for the Profit-Share Products (and any material updates, amendments and modifications thereto); (xii) reviewing, amending and, subject to Section 5.1(b), approving the Commercialization budget for Profit-Share Products; and (xiii) performing such other functions as expressly set forth in this Agreement or appropriate to further the purposes of this Agreement, as mutually agreed upon by the Parties in writing.

3.2 Project Management Teams; Other Subcommittees . The JSC shall establish one or more project management teams (each, a “ Project Management Team ”) with one such Project Management Team being established for each Project unless otherwise agreed by the JSC (and, for clarity, the JSC may instead determine that there should be a single Project Management Team for the Program, or different Project Management Teams for early stage vs. late stage Development activities for all Projects, or any other approach approved by the JSC). The Project Management Teams shall have responsibility for coordinating, expediting and controlling the Development of Products to obtain Regulatory Approvals. Each Project Management Team will, with respect to the applicable Project (unless otherwise agreed by the JSC), (a) develop and recommend to the JSC updates to the Development Plan (including annual Development budgets), (b) facilitate the flow of information with respect to Development work being conducted for each Product in the Territory, and (c) discuss and cooperate regarding the conduct of such Development work. The JSC may establish and disband such other subcommittees as deemed necessary by the JSC (each, a “ Subcommittee ”). Each Project Management Team and Subcommittee shall consist of the same number of representatives designated by each Party, which number shall be mutually agreed by the Parties. For the avoidance of doubt, either Party may designate the same representatives to serve on multiple or all Project Management Teams or Subcommittees or on the JSC and any Project Management Team or Subcommittee. Each Party shall be free to change its representatives on notice to the other or to send a substitute representative to any Project Management Team or Subcommittee meeting; provided, however , that each Party shall ensure that at all times during the existence of any Project Management Team or Subcommittee, its representatives on such Project Management Team or Subcommittee are appropriate in terms of expertise and seniority for the then-current stage of Development of the applicable Products in the Field in the Territory. Each Party’s representatives and any substitute for a representative shall be bound by the obligations of confidentiality set forth in Article XI. No Project Management Team or Subcommittee shall

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

have the authority to bind the Parties hereunder and each Project Management Team or Subcommittee shall report to, and any decisions shall be made by, the JSC.

3.3 Committee Meetings . The JSC and each of the Project Management Teams and Subcommittees shall each hold at least one (1) meeting per Calendar Quarter at such times during such Calendar Quarter as the chairperson elects to do so. Except where a Party fails to appoint a member or members to the JSC or the Project Management Teams or Subcommittees or fails to participate in meetings of the JSC or the Project Management Teams or Subcommittees pursuant to Section 3.6, meetings of the JSC and the Project Management Teams or Subcommittees, respectively, shall be effective only if at least one (1) representative of each Party is present or participating. The JSC and each Project Management Team or Subcommittee may meet either (a) in person at either Party’s facilities in the United States or at such locations as the Parties may otherwise agree or (b) by audio or video teleconference; provided that no less than one (1) JSC meeting during each Calendar Year shall be conducted in person. Other representatives of each Party involved with the relevant Products may attend meetings as non-voting participants, subject to the confidentiality provisions set forth in Article XI. Additional meetings of the JSC, Project Management Teams or Subcommittees may also be held with the consent of each Party, and neither Party shall unreasonably withhold its consent to hold such additional meetings, or as required under this Agreement. Each Party shall be responsible for all of its own expenses incurred in connection with participating in all such meetings, and such expenses shall not be Development Costs or Allowable Expenses hereunder.

3.4 Authority . The JSC, each Project Management Team and any Subcommittee shall have only the powers assigned expressly to it in this Article III and elsewhere in this Agreement, and shall not have any power to amend, modify or waive compliance with this Agreement. In furtherance thereof, each Party shall retain the rights, powers and discretion granted to it under this Agreement and no such rights, powers or discretion shall be delegated or vested in the JSC or any Project Management Team or Subcommittee unless such delegation or vesting of rights is expressly provided for in this Agreement or the Parties expressly so agree in writing.

3.5 Decisions .

(a) Initial Dispute Resolution Procedures . Subject to the provisions of this Section 3.5, actions to be taken by the JSC and each of the Project Management Teams or Subcommittees shall be taken only following a unanimous vote, with each Party (through its representatives) having one (1) vote. If any Project Management Team or Subcommittee fails to reach consensus on a matter before it for decision for a period in excess of thirty (30) days, either Party shall have the right to refer the matter to the JSC.

(b) Final Decision-Making . If the JSC fails to reach unanimous agreement on a matter properly before it (in accordance with this Article III) for decision for a period in excess of thirty (30) days, the JSC representatives appointed by Incyte shall have the deciding vote; provided, however , that after the consummation of a Change in Control of Incyte, Agenus shall have the deciding vote with respect to all matters subject to approval by the JSC relating to

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

the Profit-Share Projects. The Party that does not have the deciding vote shall have the right to appeal any such decision of the JSC to the Executive Officers for resolution pursuant to Section 12.2.

(c) Limits on Decision-Making . Notwithstanding the foregoing, a Party shall not exercise its right to finally resolve a dispute pursuant to Section 3.5(b): (i) in a manner that expands such Party’s rights or excuses such Party from any of its obligations specifically enumerated under this Agreement; (ii) in a manner that negates any consent rights or other rights specifically allocated to the other Party under this Agreement; (iii) in a manner that imposes additional Development Costs or Allowable Expenses on the other Party which would not be reimbursed hereunder by the resolving Party, except as expressly provided in Sections 4.1(c), 4.4(b) or 5.1(b); (iv) to resolve any dispute regarding whether a milestone event set forth herein has been achieved; (v) to designate or undesignate a Target as a Bullpen Target; (vi) to determine whether an Antibody that binds specifically with more than one Target shall not be deemed to Interact with whichever such Target it binds to with greatest affinity; or (vii) in a manner that would require a Party to perform any act that it reasonably believes to be inconsistent with any Law or any approval, order, policy or guidelines of a Regulatory Authority.

3.6 Committee Membership .

(a) Appointment is a Right . The appointment of members of the JSC and any Project Management Team or Subcommittees is a right of each Party and not an obligation and shall not be a “deliverable” as referenced in any existing authoritative accounting literature. Each Party shall be free to determine not to appoint members to the JSC or any Project Management Team or Subcommittee.

(b) Consequence of Non-Appointment . If a Party does not appoint members of the JSC or any Project Management Team or Subcommittee, it shall not be a breach of this Agreement, nor shall any consideration be required to be returned, and unless and until such members are appointed, the Party that has made the requisite appointments may unilaterally discharge the roles of the JSC or any Project Management Team or Subcommittee for which members were not appointed, provided that neither Party shall unilaterally discharge the roles of the JSC or any Project Management Team or Subcommittee as permitted under this Section 3.6(b) unless the other Party has not appointed any members within thirty (30) days after the first Party has completed its appointment of its members.

3.7 Future Adjustments in Governance . The Parties may at any time by mutual written agreement create or delete governance committees or subcommittees or make other modifications to the governance structures contemplated by this Agreement in order to promote the efficient operation of the Program.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

ARTICLE IV: DEVELOPMENT

4.1 Conduct of Development Activities .

(a) Generally . Each Party shall use Commercially Reasonable Efforts to Develop and obtain Regulatory Approvals for Products in the Field and in the Territory as soon as practicable, all in accordance with the Development Plan for such Products. Without limiting the foregoing, the Parties shall use Commercially Reasonable Efforts to Develop at least [**] Licensed Antibody or Product arising out of each Project until the first BLA for a Product arising out of such Project has been filed. Without limiting the foregoing, the Parties shall also use Commercially Reasonable Efforts to cause the first IND for a Profit-Share Product or a Product containing a TIM-3 Antibody to be filed on or before [**] . The Parties agree to cooperate with each other in carrying out the Development Plan for each Product. Neither Party shall be required to undertake activities in furtherance of the Development Plan if the other Party is not meeting its funding, technology transfer or other commitments set forth in this Agreement that are reasonably necessary to have been performed in order for the such first Party to perform the relevant activities under the Development Plan.

(b) Development Plans . The Development activities with respect to each Project shall be conducted by the Parties under a development plan and associated budget (each, a “ Development Plan ”) that will describe the proposed overall program of Development for each Product therein, including preclinical studies, toxicology, formulation, Clinical Trials and regulatory plans and other key elements necessary to obtain Regulatory Approvals for such Product. For each Project, the Development Plan shall encompass: (i) with respect to Products for which an IND filing has not occurred, a rolling one (1) Calendar Year period; and (ii) with respect to Products which an IND filing has occurred, a rolling three (3) Calendar Year period. Each Development Plan shall include a summary of estimated Development Costs expected during the Development process during the applicable time period and a detailed description of and budget for all Development activities proposed for each Calendar Year for each Product.

(c) Initial and Updated Development Plan . The JSC shall use reasonable efforts to agree upon an initial high-level Development Plan for each Project for the period beginning on the Effective Date and ending on December 31, 2015 within one hundred twenty (120) days of the Effective Date, provided that until such Development Plan has been adopted by the JSC, the Parties will work in good faith on the commencement of activities for each Project in accordance with the preliminary action plan and associated budget set forth in Schedule 4.1 and any Development costs incurred thereunder shall be considered Development Costs hereunder. Each Development Plan shall be updated at least annually by Incyte, in consultation with Agenus, and in each case submitted to the JSC for review and approval not later than October 31 of each Calendar Year during the Term. Each such updated Development Plan shall include, with respect to the relevant Project, and the Products therein, to the extent possible, (i) an outline of an overall Development plan for each Product that sets forth all major Development tasks remaining to be accomplished prior to submission of filings for Regulatory Approvals to the extent such tasks are known or can reasonably be ascertained, (ii) a detailed description of, and allocation of responsibility for, all proposed Development activities for the time period

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

applicable to each such Product, and (iii) a detailed financial forecast containing a committed budget for the next Calendar Year and, solely for Products for which an IND has been filed, good faith estimates of the budget for the following two (2) Calendar Years. The members of each Project Management Team, on a Project-by-Project basis, shall actively consult with one another throughout the Term so as to adjust the specific work performed under the applicable Development Plan to conform to evolving developments in technology and the results of the Development work performed; provided, however , that, while minor adjustments to such Development Plan that do not result in budgeted funding exceeding [**] of the then-total amount budgeted in any Calendar Year for such Project may be made from time to time upon approval of the applicable Project Management Team, significant changes in the scope or direction of the work and any changes in budgeted funding exceeding [**] of the then-total amount budgeted in any Calendar Year for such Project must be approved by the JSC, in the absence of which approval the most recently approved Development Plan and budget shall remain in effect. Notwithstanding the foregoing, if the JSC does not approve the budget increase and such increase is (1) associated with an activity for which one of the Parties has primary responsibility as described in Section 4.1(d) below, the Party responsible for such activity may fund such activity itself and such expenditure shall not be a Development Cost or Allowable Expense, as applicable, hereunder, or (2) subject to clause (1), associated with an activity for which Agenus has primary responsibility as described in Section 4.1(d) below, Incyte may, in its sole discretion, fund such activity and such expenditure shall be considered an Allowable Expense if such expenditure relates to a Profit-Share Product or a Profit-Share Project but will only be included in the calculation of Profit-or-Loss under Section 7.3 after the First Commercial Sale in any country of such Profit-Share Product (or the first Profit-Share Product under such Profit-Share Project), or may be credited against any amounts payable by Incyte to Agenus pursuant to Section 7.6 with respect to the relevant Royalty-Bearing Product if such expenditure relates to such Royalty-Bearing Product or the relevant Royalty-Bearing Project; provided, however , that any such credit, together with any other offsets against royalties provided under this Agreement, shall not reduce the royalties payable to Agenus in any Calendar Quarter, as applicable, by more than [**] with any such credits not applied in any Calendar Quarter due to the foregoing limit to be carried forward to future Calendar Quarters).

(d) Execution and Performance . The Development Plan for each Project shall allocate between the Parties responsibility for each of the activities described therein. Each Party may subcontract portions of the activities allocated to it under a Development Plan to a Permitted Subcontractor, provided that (i) the subcontracting Party shall be responsible for the performance of its Permitted Subcontractors, and (ii) the subcontracting Party shall use reasonable efforts to have all Inventions discovered, made or conceived by each Permitted Subcontractor in the course of the performance of such activities assigned to the subcontracting Party in a manner consistent with Section 6.1 below and licensed to the other Party pursuant to Article II above. The Parties shall use, and shall cause their Permitted Subcontractors to use, Commercially Reasonable Efforts to conduct the activities described in each Development Plan and in so doing shall prepare and maintain proper records, including laboratory notebooks prepared and maintained in accordance with commercial scientific practice, detailing such activities. The Parties acknowledge and agree that each Development Plan shall presumptively

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

allocate primary responsibility for (x) Antibody discovery, Antibody engineering, preclinical development and IND preparation to Agenus, (y) Clinical Trials, Medical Affairs Activities and Commercialization to Incyte, and (z) Manufacturing, including vendor selection and oversight, to Agenus unless and until the JSC determines, acting in good faith, that such allocation of responsibility would have a material adverse effect on the applicable Project. Notwithstanding the foregoing allocations of responsibility: (A) the Project Management Team will coordinate and supervise activities under each Development Plan, including ensuring that each Party is optimizing its allocation of resources in order to achieve success in the areas in which it is allocated primary responsibility and (B) all INDs shall be submitted by Incyte (or by Agenus on behalf of Incyte) unless the JSC allocates such responsibility to Agenus.

4.2 Development Reports . Each Project Management Team shall provide the JSC with a written report at least once each Calendar Quarter summarizing in reasonable detail the Parties’ and their respective Affiliates’ activities and progress related to the Development of Licensed Antibodies and Products in the Field in the Territory, including information concerning the conduct of non-clinical activities and Clinical Trials, applications for and securing of Regulatory Approvals, Medical Affairs Activities, and any future planned Development activities.

4.3 Abandoned Development . If, on a Project-by-Project basis, at any point in time prior to First Commercial Sale of a Product arising out of such Project, (i) no Development activities conducted in good faith with the intention of advancing at least one Product arising out of such Project (and not for the sole purpose of preserving rights hereunder), have occurred by any Party, its Affiliate or any licensee or sublicensee during at least the preceding [**] , (ii) no significant constraints on such Development imposed by a Regulatory Authority or a Force Majeure Event have been in effect at any time during such period, and (iii) Agenus has complied with its obligations under the relevant Development Plan during such time period, then Incyte shall be deemed to have abandoned Development of such Project (“ Abandoned Development ”). If Agenus reasonably concludes that Incyte has Abandoned Development, then Agenus shall deliver written notice to Incyte setting out the basis for Agenus’ conclusion. If Incyte disagrees with Agenus’ conclusion that Incyte has Abandoned Development, then the JSC will meet within thirty (30) days to discuss the disagreement. If the JSC cannot agree after such discussion, then the terms of Section 12.2 shall apply to resolve the dispute. If Incyte agrees, or the JSC or the dispute resolution mechanism of Section 12.2 concludes, that Incyte has Abandoned Development with respect to any Project, and (y) if Incyte has not previously been properly deemed to have Abandoned Development with respect to such Project, then within [**] thereafter, Incyte may either (1) [**] ; provided , that, if Incyte fails to take such actions within such [**] period, then Agenus shall have the right to terminate this Agreement with respect to such Project in accordance with Section 8.2(d), or (2) provide Agenus with written notice that it chooses not to provide [**] , in which case Agenus shall have the right to terminate this Agreement with respect to such Project in accordance with Section 8.2(d).

4.4 Co-Development Option . On a Royalty-Bearing Product-by-Royalty-Bearing Product basis, Agenus shall have the option to co-fund Development of such Royalty-Bearing Product (the “ Co-Development Option ”) as follows:

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

(a) Within [**] prior to the anticipated Initiation of the first Pivotal Clinical Trial of a Royalty-Bearing Product, Incyte shall notify Agenus of such anticipated initiation and shall provide Agenus with the following information: all material pre-clinical and clinical data and related analysis and regulatory information submitted to any Regulatory Authorities (to the extent such data and information was not provided by or on behalf of Agenus), and an update to the then-current Development Plan and associated budget (including an estimate of the overall costs of each Clinical Trial, annualized over the course of such Clinical Trial) with respect to such Royalty-Bearing Product (collectively, the “ Triggering Information ”). Agenus shall have the option to co-fund further Development of such Royalty-Bearing Product, exercisable by providing Incyte written notice within [**] after receipt of such information, in which case Agenus shall co-fund thirty percent (30%) of the Development Costs for such Royalty-Bearing Product incurred after the date on which such Pivotal Clinical Trial is Initiated.

(b) If Agenus timely exercises the Co-Development Option, then, within [**] following the end of each Calendar Quarter, Incyte shall prepare and deliver to Agenus a quarterly report detailing its Development Costs incurred during such period with respect to such Co-Developed Product and Agenus shall prepare and deliver to Incyte a quarterly report detailing its Development Costs incurred during such period with respect to such Co-Developed Product. Each Party shall submit any supporting information reasonably requested by the other Party related to such Development Costs included in its report within [**] after its receipt of such request. Incyte shall issue an invoice to Agenus so that Agenus shall have paid thirty percent (30%) of the aggregate Development Costs identified in such quarterly reports (the “ Co-Development Quarterly Payment ”); provided that such invoiced amount, together with all other Development Costs invoiced to Agenus for Development activities conducted by the Parties and their respective Affiliates during such Calendar Year, does not exceed o [**] of the total Development Costs budgeted in the Development Plan (except to the extent such excess is approved by the JSC pursuant to Section 4.1(c) hereof). Agenus shall pay all amounts payable under any such invoice within forty-five (45) days after its receipt of such invoice, subject to this Section 4.4(b).

(c) If Agenus exercises its Co-Development Option with respect to a Royalty-Bearing Product and pays all reasonably undisputed Co-Development Quarterly Payments, the royalty rate in Section 7.6(a)(iii) (the “ Co-Development Royalty ”) shall apply on annual Net Sales of such Co-Developed Product.

(d) Agenus may, at any time upon [**] prior written notice to Incyte (or [**] prior written notice following consummation of a Change in Control of Incyte), elect to cease funding its portion of Development Costs with respect to a Co-Developed Product. In such an event, (i) such Product shall no longer be considered a Co-Developed Product and (ii) Incyte shall be obligated to pay the Co-Development Royalty on Net Sales of such Product, if any, only until such time as Agenus has received Incremental Royalties equal to [**] of the total amount of Development Costs paid by Agenus with respect to the Development of such Product after the exercise of the Co-Development Option under Section 4.4(b), after which time the royalty rate in Section 7.6(a)(i) shall apply.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

4.5 Addition of Projects to Program .

(a) On an ongoing basis during the Discovery Period, either Party may provide notice to the other Party of its interest in collaborating on a Discovery Project, which notice shall include the identity of the Bullpen Target proposed to be pursued (the “ Discovery Target ”), a reasonably detailed description of the scientific and clinical rationale for such project, all material pre-clinical and clinical data related to Antibodies arising out of such proposed Discovery Project (if any), and a draft research and development plan and budget for the conduct of such Discovery Project. Interactions between the Parties regarding the identification, presentation, review and discussion of Discovery Projects and the selection of Discovery Projects for inclusion in the Program as Assumed Projects, shall be conducted by, or coordinated through, the JSC.

(b) Within [**] of receipt of such notice, the Party receiving such proposal shall provide written notice to the proposing Party of:

(i) its interest in including such Discovery Project in the Program, at which time (A) such Discovery Project shall immediately become an Assumed Project for purposes of this Agreement; (B) Agenus shall stipulate whether such Assumed Project will be a Profit-Share Project or Royalty-Bearing Project for purposes of this Agreement; (C) the JSC shall prepare a Development Plan and budget for such Assumed Project, based as appropriate on the research and development plan and budget included by the proposing Party in its notice and (D) the Bullpen Target to which such Discovery Project is directed shall cease to be a Bullpen Target and shall immediately become a Named Target for purposes of this Agreement;

(ii) its lack of interest in including such Discovery Project in the Program, in which case the non-proposing Party shall irrevocably waive any development, manufacturing and commercialization rights to such Discovery Project, and the proposing Party shall be free to develop, manufacture and commercialize the Antibodies and products arising out of such Discovery Project, itself or with its Affiliates or Third Parties, without any further obligation (financial or otherwise) to the other Party; or

(iii) where Agenus is the proposing Party, Incyte may indicate its interest in extending the period of time for making a decision regarding the inclusion of such Discovery Project in the Program (the “ Discovery Option ”), in which case:

(A) Incyte shall reimburse Agenus for [**] of the Development Costs incurred by Agenus and its Affiliates in the conduct of such Discovery Project in accordance with the research and development plan and budget previously presented (and updated by Agenus no later than October 31 of each Calendar Year thereafter, which updated plan and budget shall be consistent with the level of detail required for the Development Plans and Development budgets hereunder), within [**] following receipt by Incyte of an invoice therefor

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

(invoiced on a quarterly basis), but only to the extent that such invoiced amount, together with all other Development Costs reimbursed by Incyte for Development activities conducted by Agenus and its Affiliates during such Calendar Year, does not exceed [**] of [**] of the total Development Costs budgeted in the research and development plan for the relevant Discovery Project;

(B) the Discovery Option may be exercised by Incyte upon written notice to Agenus, delivered at any time during the period beginning [**] following Incyte’s receipt of notice that the first IND for a product arising out of such Discovery Project has been filed, and ending [**] following Incyte’s receipt of notice that the first Phase 2 Clinical Trial of a product arising out of such Discovery Project has been Completed and receipt of the relevant data and analysis (the period extending through the earlier of such end date or the date on which Incyte exercises or terminates the Discovery Option, the “ Option Period ”);

(C) from time to time during the Option Period, Incyte may reasonably request ( provided that a request no more frequent than semi-annually shall not be considered unreasonable), and Agenus shall promptly provide Incyte, all material pre-clinical and clinical data and related analysis and regulatory information submitted to any Regulatory Authorities with respect to such product;

(D) Incyte may, at any time upon written notice to Agenus, (1) exercise the Discovery Option to include such Discovery Project in the Program, whereupon the provisions of Section 4.5(b)(i) shall apply (and, Agenus shall have the right to exercise the Co-Development Option for such product at the time set forth in Section 4.4), or (2) indicate its lack of interest in including such Discovery Project in the Program, whereupon the provisions of Section 4.5(b)(ii) and 4.5(b)(iii)(G) shall apply;

(E) upon timely exercise of the Discovery Option by Incyte, Incyte shall pay to Agenus, no later than [**] following delivery of the notice under which the Discovery Option is exercised, a license fee in the amount set forth in the table below based on the stage of development of the most advanced product arising out of such Discovery Project at the time the Discovery Option is exercised:

Stage of Development of the Product Arising Out of the Discovery Project		License Fee
[]**		[]**

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

[]**		[]**
[]**		[]**
[]**		[]**

(F) If Incyte timely exercises the Discovery Option, and Agenus stipulates that such Discovery Project shall be a Royalty-Bearing Project, Incyte shall reimburse Agenus for fifty percent (50%) of the Development Costs incurred by Agenus and its Affiliates in the conduct of such Discovery Project ( i.e. , with the result that Incyte would reimburse Agenus for one hundred percent (100%) of the Development Costs incurred by Agenus with respect thereto but only to the extent that such amount, together with all other Development Costs reimbursed by Incyte pursuant to Section 4.5(b)(iii)(A), does not exceed [**] of the total Development Costs budgeted in the research and development plan for the applicable Discovery Project) within [**] following delivery of the notice under which the Discovery Option is exercised. In addition, (1) if Incyte exercises the Discovery Option prior to the Completion of the first Phase 2 Clinical Trial for the product arising out of such Discovery Project and Agenus stipulates that such Discovery Project shall be a Royalty-Bearing Project, then Agenus shall be entitled to receive the royalty set forth in Section 7.6(a)(i) on Net Sales of all Products arising out of such Royalty-Bearing Project, and (2) if Incyte exercises the Discovery Option on or after Completion of the first Phase 2 Clinical Trial for the product arising out of such Discovery Project and Agenus stipulates that such Discovery Project shall be a Royalty-Bearing Project, then such product shall be considered an “ Option Product ” hereunder and Agenus shall be entitled to receive the royalty set forth in Section 7.6(a)(iv) on Net Sales of such Option Product; and

(G) If Incyte does not exercise the Discovery Option, prior to the expiration of the Discovery Period or otherwise notifies Agenus of its lack of interest in including such Discovery Project in the Program, then, during the [**] period following the earlier of the expiration of the Discovery Period or delivery of such notice, Incyte and, subject to Section 12.3(b)(ii), its Affiliates shall not, independently, or with a Third Party, Develop, Manufacture or Commercialize in the Field in the Territory any Antibody that Interacts with the applicable Discovery Target, or any product containing such an Antibody.

(c) Notwithstanding anything contained in this Section 4.5 to the contrary, during each Calendar Year of the Discovery Period beginning with the Calendar Year

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

commencing on January 1, 2016, the Parties shall consider in good faith the selection of at least [**] Discovery Projects for inclusion in the Program as Assumed Projects absent a compelling scientific or business reason to the contrary.

4.6 Conversion of Profit-Share Product . Agenus may, at any time [**] prior written notice to Incyte (or [**] prior written notice following consummation of a Change in Control of Incyte), elect to cease funding its share of Profit-or-Loss with respect to a Profit-Share Product and to convert the Program as to which such Profit-Share Product relates from a Profit-Share Program to a Royalty-Bearing Program effective as the end of the applicable notice period. In such an event, such Profit-Share Product shall become a Converted Product as of the end of the applicable notice period, and the royalty rate in Section 7.6(a)(v) shall apply on annual Net Sales of such Converted Product only until such time as Agenus has received Incremental Royalties equal to [**] of the total amount, if any, of any aggregate cumulative negative amount of Profit-or-Loss ( e.g ., losses) incurred by Agenus with respect to the Converted Product under Section 7.3, after which time the royalty rate set forth in Section 7.6(a)(i) shall apply.

4.7 Regulatory Matters .

(a) Responsibility . Incyte will control all Regulatory Interactions with respect to each Product in accordance with the applicable Development Plan unless the JSC allocates such responsibility to Agenus (in which case references to Incyte in this Section 4.7 shall be deemed to refer to Agenus and vice versa). To facilitate the filing of an IND for each Product, the Project Management Team for the applicable Project shall agree upon an appropriate plan for transferring Regulatory Documentation from Agenus to Incyte, with Agenus’ approval to any plan not to be unreasonably withheld. Agenus shall use Commercially Reasonable Efforts to transfer Regulatory Documentation in accordance with such plan. Incyte shall keep Agenus reasonably informed in connection with the preparation of all Regulatory Documentation, Regulatory Authority review of Regulatory Documentation, and Regulatory Approvals, annual reports, annual re-assessments, and variations and labeling, in each case with respect to such Product; provided that Incyte shall have the right to redact any information to the extent not related to such Product. Incyte shall respond within a reasonable time frame to all reasonable inquiries by Agenus with respect to any information provided pursuant to this Section 4.7(a). Any information disclosed pursuant to this Section 4.7(a) shall be the Confidential Information of Incyte, unless such information is already the Confidential Information of Agenus. Each Party shall use Commercially Reasonable Efforts to conduct the activities described in this Section 4.7 for which such Party is responsible.

(b) Regulatory Meetings and Correspondence . Agenus shall have the right to have a senior, experienced employee reasonably acceptable to Incyte who is bound by the obligations of confidentiality set forth in Article XI, attend as an observer in material or scheduled face-to-face meetings, video conferences and any teleconferences, involving participation of personnel beyond regulatory experts, with the FDA, EMA, and MHLW, and shall be provided with advance access to Incyte’s material documentation prepared for such meetings. Prior to submission of material correspondence to the applicable Regulatory Authority, Incyte shall, sufficiently in advance for Agenus to review and comment, provide

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

Agenus any material correspondence with the FDA, EMA and MHLW related to such meetings. Incyte shall also provide Agenus with copies of any material correspondence with the FDA, EMA, and MHLW relating to Development of, or the process of obtaining Regulatory Approval for, Products, and respond within a reasonable time frame to all reasonable inquiries by Agenus with respect thereto.

(c) Global Safety Database . Following the Initiation of the first Phase 1 Clinical Trial of each Product, Incyte shall establish, hold and maintain a global safety database for such Product (each, a “ Global Safety Database ”) into which it shall enter information on all serious adverse events and suspected reactions concerning the Product occurring anywhere in the world and reported to either of the Parties. Such database shall comply in all material respects with all Laws reasonably applicable to pharmacovigilance anywhere where the Products are being Developed or Commercialized.

4.8 Manufacture and Supply . Agenus shall have responsibility for selecting and monitoring the Manufacturing vendors, and for otherwise being responsible for Manufacturing activities, with respect to each Product in the Field and in the Territory in accordance with the applicable Development Plan. At any time that the JSC determines, acting in good faith, that some or all Manufacturing responsibilities for a particular Project should be transferred from Agenus to Incyte because the failure to transfer such responsibilities would be reasonably likely to have a material adverse effect on such Project, the Project Management Team for the applicable Project shall agree upon an appropriate plan for transferring the applicable Manufacturing activities, and all related Know-How, to Incyte with Agenus having the right to approve any plan involving its activities, such approval not to be unreasonably withheld, conditioned or delayed. Agenus shall use Commercially Reasonable Efforts to transfer any such Manufacturing activities and related Know-How in accordance with such plan. Any such transfer shall be considered a Development Cost or Allowable Expense. The Party responsible for Manufacturing shall keep the other Party reasonably informed, through the JSC, in connection with the performance of all Manufacturing activities for Products in the Field. The responsible Party shall respond within a reasonable time frame to all reasonable inquiries by the other Party with respect to any information provided pursuant to this Section 4.8. Any information disclosed pursuant to this Section 4.8 shall be the Confidential Information of the responsible Party, unless such information is already the Confidential Information of the other Party. Each Party shall use Commercially Reasonable Efforts to conduct the activities described in this Section 4.8 for which such Party is responsible.

4.9 Medical Affairs Activities . Incyte shall oversee, monitor and coordinate all Medical Affairs Activities with respect to Products in the Field in the Territory which, with respect to any Co-Developed Product, shall be in accordance with the applicable Development Plan, or, with respect to any Profit-Share Product, shall be in accordance with the applicable Development Plan or Commercialization Plan, as applicable. Incyte shall keep Agenus reasonably informed in connection with the performance of all Medical Affairs Activities for Co-Developed Products and Profit-Share Product in the Field. Incyte shall respond within a reasonable time frame to all reasonable inquiries by Agenus with respect to any information provided pursuant to this Section 4.9. Unless already the Confidential Information of Agenus,

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

any information disclosed pursuant to this Section 4.9 shall be the Confidential Information of Incyte. Incyte shall use Commercially Reasonable Efforts to conduct the activities described in this Section 4.9.

ARTICLE V: COMMERCIALIZATION

5.1 Conduct of Commercialization Activities .

(a) Generally . During the Term, and subject to Sections 5.1(b) and 5.4, Incyte shall have the sole right, and shall use Commercially Reasonable Efforts, to Commercialize Products in the Territory for use in the Field. Such right includes the right to make all business decisions regarding the design, sale, pricing, and promotion of Products in the Field in the Territory, and approve all materials used in the promotion of Products in the Field in the Territory, including product packaging, materials used in Detailing, product messaging and content used in the promotion of such Products. Incyte shall use Commercially Reasonable Efforts to seek Commercialization of Products in [**] , and shall use Commercially Reasonable Efforts to Commercialize Products in the Field in the Territory promptly after receipt of Regulatory Approval therefor.

(b) Commercialization Plans . Incyte shall conduct its Commercialization activities with respect to any Profit-Share Product under a rolling three (3) year commercialization plan and associated budget (each, a “ Commercialization Plan ”) that will describe the proposed overall program of Commercialization of such Product in the Field. An initial Commercialization Plan for each Profit-Share Product shall be prepared no later than the earlier of the Initiation of the second Phase 2 Clinical Trial of such Product or the Initiation of the first Phase 3 Clinical Trial of such Product. Each Commercialization Plan shall be updated annually by Incyte, in consultation with Agenus, and submitted to the JSC for review and approval not later than October 31 of each Calendar Year during the Term. Each such updated Commercialization Plan shall include (i) an overall Commercialization plan for the applicable Profit-Share Product that sets forth all major Commercialization tasks remaining to be accomplished prior to First Commercial Sale, (ii) a detailed description for the Commercialization activities proposed for the following three (3) Calendar Years, and (iii) a detailed, rolling three (3) year financial forecast containing a good faith estimated revenue forecast and a committed budget for the first Calendar Year and good faith estimates of the budget for the following two (2) Calendar Years. While minor adjustments to the Commercialization Plan may be made from time to time in Incyte’s discretion, any changes in budgeted funding exceeding [**] of the then-total amount budgeted in any Calendar Year for such Profit-Share Product must be approved by the JSC, in the absence of which approval the most recently approved Commercialization Plan and budget shall remain in effect. Notwithstanding the foregoing, if the JSC does not approve the budget increase, and (1) such increase is for an activity to be conducted by Agenus for a Co-Promotion Product, Incyte may, in its sole discretion, fund such activity and such expenditure shall be an Allowable Expense hereunder, or (2) subject to clause (1), Incyte may fund such amounts itself, and such expenditures shall not be an Allowable Expense hereunder.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

(c) Execution and Performance . Incyte may subcontract portions of its Commercialization activities to a Permitted Subcontractor, provided that (i) Incyte shall not subcontract to a Third Party any Detailing activities for a Profit-Share Product as to which Agenus US has exercised its Co-Promotion Option without first offering Agenus US the right to perform such activities; (ii) Incyte shall be responsible for the performance of its Permitted Subcontractors and (iii) Incyte shall use reasonable efforts to have all Inventions discovered, made or conceived by each Permitted Subcontractor in the course of the performance of such activities assigned to Incyte in a manner consistent with Section 6.1 below and licensed to Agenus, if applicable, pursuant to Article II above. Incyte shall use, and shall cause its Permitted Subcontractors to use, Commercially Reasonable Efforts to conduct the activities described in each Commercialization Plan.

(d) Trademarks . Incyte shall select its own trademarks under which it will market Products ( provided that no such trademark shall contain the word “4-Antibody” or “Agenus”) and shall own such trademarks. Incyte shall use, in connection with all packaging, literature, labels and other printed matters, to the extent permitted by Law, an expression to the effect that the Products were developed under license from Agenus, together with the Agenus logo.

5.2 Commercialization Reports . Incyte shall at the JSC meetings, provide a reasonably detailed report on Incyte’s activities and progress related to the Commercialization of Products in the Field in the Territory, including information concerning any future planned Commercialization activities.

5.3 Abandoned Commercialization . If, on a Project-by-Project basis, at any point in time after the First Commercial Sale of a Product arising out of such Project, Incyte, itself or through its Affiliates, licensees, sublicensees, Agenus, Permitted Subcontractors or Third Party distributors, has not conducted any Commercialization activities for at least [**] arising out of such Project in at least [**] for a period of at least the preceding [**] and during that period: (i) Incyte has not reasonably determined that Commercialization in at least [**] is likely to reduce the overall commercial viability of any such Products in the Field in the Territory; (ii) no significant constraints on such Commercialization imposed by a Regulatory Authority have been in effect in [**] and no significant constraints on any such Products imposed by a Regulatory Authority in any jurisdiction in the Territory have been in effect with respect to any such Products which constraint(s) Incyte reasonably believes is likely to reduce the overall commercial viability of any such Products in the Field in the Territory, which may include a regulatory hold or recall; (iii) no Force Majeure Event has been in effect which affect the Commercialization of such Products in or for [**] ; (iv) Incyte, itself or through its Affiliates or licensees or sublicensees, is not actively seeking Regulatory Approval, or pricing and reimbursement approval, in [**] ; and (v) if any such Products are Co-Promotion Products, Agenus has complied with its Co-Promotion obligations during such time period; then Incyte shall be deemed to have abandoned Commercialization of such Products (“ Abandoned Commercialization ”). If Agenus reasonably concludes that Incyte has Abandoned Commercialization, then Agenus shall deliver written notice to Incyte setting out the basis for Agenus’ conclusion. If Incyte disagrees with Agenus’ conclusion that Incyte has Abandoned

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

Commercialization, then the JSC will meet within thirty (30) days to discuss the disagreement. If the JSC cannot agree after such discussion, then the terms of Section 12.2 shall apply to resolve the dispute. If Incyte agrees, or the JSC or the dispute resolution mechanism of Section 12.2 concludes, that Incyte has Abandoned Commercialization with respect to any Product, and (y) if Incyte has not previously been properly deemed to have Abandoned Commercialization with respect to such Project, then within [**] thereafter, Incyte may either (1) [**] ; provided that if Incyte fails to take such actions within such [**] period, then Agenus shall have the right to terminate this Agreement with respect to such Project in accordance with Section 8.2(d), or (2) provide Agenus with written notice that it chooses not to provide [**] , in which case Agenus shall have the right to terminate this Agreement with respect to such Project in accordance with Section 8.2(d).

5.4 Co-Promotion Option .

(a) Co-Promotion Option . On a Profit-Share Product, by Profit-Share Product basis, Agenus US shall have the option to Co-Promote such Profit-Share Product in the United States on the terms and conditions set forth in this Section 5.4 (each, a “ Co-Promotion Option ”). Incyte shall notify Agenus US at least [**] prior to the anticipated filing date of the first BLA for such Profit-Share Product in the United States and shall provide Agenus US with the following information: Incyte’s then-current promotional plan with respect to such Profit-Share Product, which plan shall include: (i) a description of the short- and long-term vision for such Profit-Share Product and its product positioning; (ii) a Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis; (iii) a summary of the minimum level of sales efforts to be dedicated to the promotion of the Profit-Share Product, including the anticipated number of Details and targets of such Details; and (iii) a good faith estimated budget for the Detailing activities for such Profit-Share Product in each of the first [**] periods after First Commercial Sale of such Profit-Share Product in the U.S. Agenus US may exercise its Co-Promotion Option by providing Incyte written notice at any time after receipt of Incyte’s notice and not later than [**] prior to the anticipated First Commercial Sale of such Profit-Share Product in the United States.

(b) Effects of Exercise of Co-Promotion Option . If Agenus US exercises its Co-Promotion Option with respect to a Profit-Share Product, the Parties shall in good faith negotiate the terms of a written agreement setting forth Agenus’ rights and responsibilities with respect to Detailing such Profit-Share Product in the United States (such agreement, the relevant “ Co-Promotion Agreement ”), which agreement would include the following provisions:

(i) The Parties shall, no later than [**] prior to the anticipated First Commercial Sale of such Profit-Share Product in the United States, set out the number of FTE sales representatives Detailing such Profit-Share Product in the United States. Absent a decision of the JSC to the contrary, in no event shall Agenus US be responsible for a number of FTE sales representatives Detailing such Profit-Share Product which exceeds [**] of the total FTEs for such Profit-Share Product in the United States.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

(ii) All Includable Sales Force Costs and Indirect Selling Expenses incurred by Agenus US in conducting Co-Promotion activities in accordance with the Co-Promotion Agreement shall be Allowable Expenses hereunder.

(iii) The Parties shall establish a joint U.S. Commercialization Committee (“ UCC ”) to oversee the Detailing of the relevant Profit-Share Product in the United States. Agenus US shall be entitled to have one (1) representative sit on the UCC or any group carrying out the UCC’s function after the Effective Date but prior to the UCC’s establishment. The UCC shall have responsibility for general oversight of all promotion and Detailing activities with respect to such Profit-Share Product in the United States. The UCC (or any group carrying out the UCC’s function after the exercise of the Co-Promotion Option but prior to the UCC’s establishment) will meet quarterly or more frequently as agreed by the Parties. The term of the UCC will be determined by the Parties. Incyte shall have the right to make the final decision with respect to all matters within the purview of the UCC related to Commercialization of the relevant Profit-Share Product.

(iv) Agenus US’s sales representatives will be included in training programs with respect to the applicable Profit-Share Product that Incyte provides to its own sales representatives Detailing such Profit-Share Product. All FTE Costs and reasonable Out-of-Pocket Costs of each Party associated with such training shall be considered Allowable Expenses.

(v) Agenus US’s sales representatives shall be provided with the same promotional materials, including literature and samples, as Incyte provides to its own similarly-situated representatives, with the costs for such materials considered Allowable Expenses.

(vi) Agenus US shall comply with all applicable Laws, with Incyte’s Commercialization compliance program and other compliance related practices and procedures.

(vii) The circumstances under which such Co-Promotion Agreement may be terminated.

(c) Additional Activities . Incyte shall consider in good faith requests by Agenus US for involvement in marketing and other Commercialization activities for Profit-Share Products in the United States, including the participation of a single employee of Agenus US on any brand team or similar body established by Incyte with responsibility for the overall Commercialization of a Product. The costs incurred by Agenus US in connection with the participation of its employee on a brand team or similar body shall not be considered an Allowable Expense hereunder.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

ARTICLE VI: INTELLECTUAL PROPERTY

6.1 Inventions .

(a) Ownership . Except as expressly set forth herein, as between the Parties each Party shall solely own any Invention and other Know-How that is made, conceived or otherwise discovered solely by employees, independent contractors or agents of such Party or its Affiliates, and all Patent Rights therein. Incyte shall own any and all Inventions and other Know-How that: (x) are made, conceived or otherwise discovered solely by employees, independent contractors or agents of Incyte or its Affiliates under or in the performance of this Agreement that do not constitute a Retrocyte Display Improvement (“ Incyte Program Inventions ”) or (y) subject to the next sentence, are made, conceived or otherwise discovered by employees, independent contractors or agents of either Party or their respective Affiliates under or in the performance of this Agreement that relate solely to any compound, Antibody, active ingredient or product that is owned or controlled by Incyte or any of its Affiliates (for clarity, other than a Licensed Antibody or Product) (the Inventions and Know-How in clause (y), and any Patent Rights therein, the “ Incyte Other Inventions ”). Agenus, on behalf of itself and its Affiliates, agrees to assign and hereby does assign to Incyte all right, title and interest in and to any Incyte Other Inventions knowingly made, conceived or otherwise discovered by employees, independent contractors or agents of Agenus or its Affiliates under or in the performance of this Agreement. Agenus shall own any and all Inventions and other Know-How that (i) are made, conceived or otherwise discovered solely by employees, independent contractors or agents of Agenus or its Affiliates under or in the performance of this Agreement that do not constitute a Retrocyte Display Improvement or an Incyte Other Invention or (ii) subject to the next sentence, are made, conceived or otherwise discovered by employees, independent contractors or agents of either Party or their respective Affiliates under or in the performance of this Agreement that constitute a Retrocyte Display Improvement. Incyte, on behalf of itself and its Affiliates, agrees to assign and hereby does assign to Agenus all right, title and interest in and to any Retrocyte Display Improvements knowingly made, conceived or otherwise discovered by employees, independent contractors or agents of Incyte or its Affiliates under or in the performance of this Agreement. The Parties shall jointly own any and all Inventions and other Know-How that are made, conceived, authored or otherwise discovered by employees, independent contractors or agents of both Agenus or its Affiliates and Incyte or its Affiliates that (i) do not constitute a Retrocyte Display Improvement or an Incyte Other Invention and (ii) would be deemed to be jointly conceived, invented or authored, or otherwise jointly owned, by the Parties under the laws of the United States or applicable foreign jurisdiction (“ Joint Inventions ”). Each Party shall own an equal, undivided interest in each Joint Invention and all Patent Rights therein (“ Joint Patent Rights ”). Agenus’ interest in the Joint Patent Rights are included in the Agenus Patent Rights and are licensed exclusively to Incyte pursuant to, and subject to the limitations set forth in, Section 2.1. In the event that a jurisdiction requires consent of co-owners for one co-owner to grant license rights under or otherwise exploit a Joint Invention, each Party hereby grants, subject to the terms of the exclusive licenses granted hereunder, to the other Party a sublicenseable right and license to exploit such Joint Invention without a requirement of accounting other than as set forth in this Agreement .

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

(b) Inventorship. The determination of inventorship shall be made in accordance with U.S. patent Laws. The Parties shall attempt in good faith to resolve any disputes regarding ownership of Inventions, and all Patent Rights and any other Intellectual Property Rights therein. In the event the Parties are unable to resolve such dispute within thirty (30) days after receipt of notice of the dispute, such dispute will be resolved by independent patent counsel not engaged or regularly employed in the past two (2) years by either Party and reasonably acceptable to both Parties. The decision of such independent patent counsel will be binding on the Parties. Expenses of such patent counsel will be shared equally by the Parties.

(c) Assignments . Each Party shall require its Affiliates, and all of its or its Affiliates’ employees, and shall use reasonable efforts to have each of its Permitted Subcontractors and agents, to assign all of its or their right, title and interest in or to any Inventions to such Party or its Affiliate, and such Party shall, and shall require its Affiliates to, assign all (or, with respect to Joint Inventions and Joint Patent Rights, the relevant portion) of its or their right, title and interest in or to any Inventions to the other Party, as is necessary to vest all (or, with respect to Joint Inventions and Joint Patent Rights, a joint) right, title and interest in such Inventions as set forth in Sections 2.1 and 6.1(a). Each Party shall, and shall cause its Affiliates and all of its or its Affiliates’ employees, and shall use reasonable efforts to have each of its Permitted Subcontractors and agents, to cooperate and take all additional actions and to execute such agreements, instruments and documents as may be reasonably required to perfect such Party’s right title and interest in and to Inventions and any Patent Rights therein.

(d) Cooperation . Each Party hereby agrees: (a) to use reasonable efforts to make its employees, agents and consultants, reasonably available to the other Party (or to the other Party’s authorized attorneys, agents or representatives), to the extent reasonably necessary to enable such Party to undertake Prosecution of Patent Rights as contemplated by this Agreement; (b) to cooperate, if necessary and appropriate, with the other Party in gaining Patent Term Extensions wherever applicable to Patent Rights that are subject to this Agreement, in accordance with Section 6.6; and (c) to endeavor in good faith to coordinate its efforts with the other Party to minimize or avoid interference with the Prosecution of the other Party’s Patent Rights that are subject to this Agreement. For the avoidance of doubt, each Party agrees that it shall use reasonable efforts to cause its employees, agents and consultants to provide any and all information required for the other Party to comply with its relevant duties of disclosure as required by applicable Law in the United States or any other jurisdiction.

(e) Joint Research Agreement . The Parties acknowledge and agree that this Agreement is a “joint research agreement” as defined in the America Invents Act, 35 U.S.C. §§100(h) and 102(c). Notwithstanding anything to the contrary in this Article VI, the Parties will use reasonable efforts to cooperate and coordinate their activities with respect to any submissions, filings or other activities in support thereof.

6.2 Prosecution of Patent Rights .

(a) Subject to Sections 6.2(c) and 6.2(d), (i) Agenus shall have the sole right to Prosecute all Agenus Platform Patent Rights and the first right to Prosecute all Agenus Patent

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

Rights, and (ii) Incyte shall have the first right to Prosecute all Incyte Program Patent Rights and Joint Patent Rights and the sole right to Prosecute all Incyte IP, including Patent Rights resulting from Incyte Other Inventions, that is not an Incyte Program Patent Right or Joint Patent Right.

(b) With respect to the Agenus Patent Rights, Incyte Program Patent Rights and Joint Patent Rights, the Party responsible for Prosecution shall consult with and keep the other Party fully informed of important issues relating to the Prosecution of such Patent Rights, and shall furnish to the other Party copies of documents relevant to such Prosecution in sufficient time prior to the filing of such document to allow for review and comment by the other Party and, to the extent possible in the reasonable exercise of its discretion, the Party responsible for Prosecution shall incorporate all of such comments.

(c) If Agenus elects not to Prosecute any Agenus Patent Rights (whether worldwide or with respect to any particular country), including electing not to file a patent application with respect thereto or to allow any such Agenus Patent Rights to lapse or become abandoned or unenforceable, then Agenus shall promptly notify Incyte in writing (which such notice shall be at least sixty (60) days prior to the lapse or abandonment of any such Agenus Patent Rights). Thereafter, Incyte may, but is not required to, at its sole expense and in its sole discretion, Prosecute such Agenus Patent Rights through counsel of its choosing. In the event that Incyte undertakes such Prosecution, Agenus shall provide Incyte all reasonable assistance and cooperation in relation thereto, including as specified in Section 6.1(d) above and including providing any necessary powers of attorney and executing any other required documents or instruments.

(d) If Incyte elects not to Prosecute any Incyte Program Patent Rights or Joint Patent Rights (whether worldwide or with respect to any particular country), including electing not to file a patent application with respect thereto or to allow any such Incyte Program Patent Rights or Joint Patent Rights to lapse or become abandoned or unenforceable, then Incyte shall promptly notify Agenus in writing (which such notice shall be at least sixty (60) days prior to the lapse or abandonment of any such Joint Patent Rights). Thereafter, Agenus may, but is not required to, at its sole expense and in its sole discretion, Prosecute such Incyte Program Patent Rights or Joint Patent Rights through counsel of its choosing. In the event that Agenus undertakes such Prosecution, Incyte shall provide Agenus all reasonable assistance and cooperation in relation thereto, including as specified in Section 6.1(d) above and including providing any necessary powers of attorney and executing any other required documents or instruments.

6.3 Third Party Infringement .

(a) Notice . Each Party shall promptly report in writing to the other Party during the Term any (i) known or suspected infringement of an Agenus Patent Right, Incyte Program Patent Right or Joint Patent Right (“ Licensed IP Infringement ”) Covering a Licensed Antibody or a Product for use in the Field anywhere in the Territory, including any certification regarding any Agenus Patent Right, Incyte Program Patent Right or Joint Patent Right Covering such Product that such Party receives pursuant to 21 U.S.C. §§355(b)(2)(A)(iv), 21 U.S.C.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

§§355(j)(2)(A)(vii)(IV) or such similar laws as may exist in jurisdictions other than the United States (a “ Paragraph IV Notice ”) or pursuant to 42 U.S.C. §262(l) or such similar laws as may exist in jurisdictions other than the United States (a “ Biosimilar Notice ”) (which Paragraph IV Notice or Biosimilar Notice shall be provided to the other Party within five (5) Business Days after receipt thereof), or (ii) known or suspected unauthorized use or misappropriation of Agenus Know-How or Incyte Know-How in the Field of which such Party becomes aware. Each Party shall provide the other Party with all available evidence supporting such infringement, suspected infringement, unauthorized use or misappropriation or suspected unauthorized use or misappropriation.

(b) Infringement Action .

(i) Agenus Patent Rights .

(A) Agenus shall have the initial right, but not the obligation, to initiate a suit or take other appropriate action that it believes is reasonably required to protect the Agenus Know-How and Agenus Patent Rights, excluding the Joint Know-How and Joint Patent Rights.

(B) To the extent that any Licensed IP Infringement pertains to Agenus Patent Rights Covering a Product in the Territory:

(1) Agenus shall give Incyte advance notice of its intent to file or not file any such suit or take or not take any such action and the reasons therefor.

(2) If Agenus does not file such suit or take such action within the shorter of (y) [**] after Agenus becomes aware of such Licensed IP Infringement (or [**] after Agenus receives the relevant Paragraph IV Notice) or, with respect to a Biosimilar Notice, such longer period of time in accordance with 42 U.S.C. §262(l)(6)), or (z) such shorter period of time to avoid loss of material enforcement rights or remedies, then, subject to Section 6.5, Incyte shall have the right, but not the obligation, to initiate a suit or take other appropriate action to protect the Agenus Patent Rights against such Licensed IP Infringement.

(3) If the relevant Product to which such Licensed IP Infringement pertains is a Profit-Share Product, all costs and expenses incurred by either Party with respect to any enforcement action pursuant to this subsection (B) shall be a Patent and Trademark Cost; otherwise all costs and expenses incurred by either Party with respect to any enforcement action pursuant to this subsection (B) shall be borne by the Party conducting the enforcement action.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

(ii) Incyte Program Patent Rights and Joint Patent Rights .

(A) Incyte shall have the initial right, but not the obligation, to initiate a suit or take other appropriate action that it believes is reasonably required to protect the Incyte Program Know-How and Incyte Program Patent Rights, including the Joint Know-How and Joint Patent Rights.

(B) To the extent that any Licensed IP Infringement pertains to Incyte Program Patent Rights or Joint Patent Rights Covering a Product in the Territory:

(1) Incyte shall give Agenus advance notice of its intent to file or not file any such suit or take or not take any such action and the reasons therefor.

(2) If Incyte does not file such suit or take such action within the shorter of (y) [**] after Incyte becomes aware of such Licensed IP Infringement (or [**] after Incyte receives the relevant Paragraph IV Notice) or, with respect to a Biosimilar Notice, such longer period of time in accordance with 42 U.S.C. §262(l)(6)), or (z) such shorter period of time to avoid loss of material enforcement rights or remedies, then, subject to Section 6.5, Agenus shall have the right, but not the obligation, to initiate a suit or take other appropriate action to protect such Incyte Program Patent Rights or Joint Patent Rights against such Licensed IP Infringement.

(c) Conduct of Action . The Party initiating suit shall have the sole and exclusive right to select counsel for any suit initiated by it under Section 6.3(b). If required under applicable Law in order for such Party to initiate and/or maintain such suit, the other Party shall join as a party to the suit. If requested by the Party initiating suit, the other Party shall provide reasonable assistance to the Party initiating suit in connection therewith. The other Party shall have the right to participate and be represented in any suit described in Section 6.3(b) by its own counsel at its own expense. The Party initiating suit as provided in Section 6.3(b) shall (i) keep the other Party promptly informed, (ii) from time to time consult with the other Party regarding the status of any such suit or action, (iii) provide the other Party with copies of all material documents ( e.g ., complaints, answers, counterclaims, material motions, orders of the court, memoranda of law and legal briefs, interrogatory responses, depositions, material pre-trial

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

filings, expert reports, affidavits filed in court, transcripts of hearings and trial testimony, trial exhibits and notices of appeal) filed in, or otherwise relating to, such suit or action, and (iv) cannot, without such other Party’s consent, settle such suit in any manner which would (A) have an adverse effect on such other Party’s Patent Rights or such other Party’s Program Rights hereunder or (B) be an admission of liability on behalf of such other Party ( provided , however , that the Party initiating such suit may settle such suit without such consent if such settlement involves only the receipt of money from, or the payment of money to, such Third Party and the Party initiating such suit makes all such payments to such Third Party).

(d) Recoveries . To the extent that any such suit or action pertains to any Product, any recovery obtained as a result of any proceeding described in Section 6.3(b) or from any counterclaim or similar claim asserted in a proceeding described in Section 6.4, by settlement or otherwise, shall be applied in the following order of priority:

(i) first, the Parties shall be reimbursed for all Out-of-Pocket Costs incurred by them in connection with such proceeding, which reimbursement (A) if the relevant Product to which the relevant Licensed IP Infringement pertains is a Profit-Share Product or Co-Developed Product, shall be made in proportion to their respective obligations to fund Patent and Trademark Costs for such Product, and (B) otherwise shall be made to reimburse each Party in full or, if such recovery is not sufficient, pro rata in proportion to such Out-of-Pocket Costs borne by each; and

(ii) second any remainder shall be paid to Incyte, and shall be considered Net Sales of such Product in the relevant country, subject to (A) if the relevant Product to which the relevant Licensed IP Infringement pertains is a Profit-Share Product, the calculation of Profit-or-Loss pursuant to Section 7.3 with respect to such Profit-Share Product, or (B) if the relevant Product to which the relevant Licensed IP Infringement pertains is a Royalty Bearing Product, the payment of the relevant royalty to Agenus pursuant to Section 7.6.

6.4 Claimed Infringement . In the event that a Third Party at any time provides written notice of a claim to, or brings an action, suit or proceeding against, a Party, or an Affiliate or permitted sublicensee, claiming infringement of such Third Party’s Patent Rights or unauthorized use or misappropriation of such Third Party’s Know-How, based upon an assertion or claim arising out of the research, Development, Manufacture, Commercialization or other use of a Product in the Field by such Party (a “ Third Party Infringement Claim ”), such Party shall promptly notify the other Party of the claim or the commencement of such action, suit or proceeding, enclosing a copy of the claim and/or all papers served. Subject to Section 6.5, the Party or its Affiliate or permitted sublicensee against which such Third Party Infringement Claim is brought shall have the sole right, but not the obligation, to defend such Third Party Infringement Claim. In any event, the Parties shall reasonably assist one another and cooperate in any such litigation. All FTE Costs and Out-of-Pocket Costs incurred by the Parties in connection with the defense of a Third Party Infringement Claim, and any Losses payable by either Party as a result thereof, (a) shall be Patent and Trademark Costs hereunder if the relevant Product to which such Third Party Infringement Claim pertains is a Profit-Share Product, and (B)

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

otherwise shall be borne by the Party that is primarily responsible for the activity that is the subject of the Third Party Infringement Claim.

6.5 Patent Invalidity Claim . If a Third Party at any time asserts a claim that any Agenus Patent Right, Incyte Program Patent Right or Joint Patent Right Covering a Product is invalid or otherwise unenforceable (an “ Invalidity Claim ”), whether as a defense in an infringement action brought by Agenus or Incyte pursuant to Section 6.3(b), in a declaratory judgment action or in a Third Party Infringement Claim brought against Agenus or Incyte, the Party Controlling such Patent Right (or Incyte with respect to any Joint Patent Right) shall have the first right, but not the obligation, to defend such Invalidity Claim and the other Party shall cooperate with the Party Controlling such Patent Right in preparing and formulating a response to such Invalidity Claim. If Agenus does not defend an Invalidity Claim brought against an Agenus Patent Right or Incyte does not defend an Invalidity Claim brought against an Incyte Program Patent Right or Joint Patent Right, the other Party may defend such Invalidity Claim and the coordination provisions of Section 6.3(b) shall apply to such Invalidity Claim, mutatis mutandis as they apply to Licensed IP Infringement suits. Neither Party shall, without the consent of the other Party, settle or compromise any Invalidity Claim in any manner which would (a) have an adverse effect on such other Party’s Patent Rights or such other Party’s Program Rights hereunder or (b) be an admission of liability on behalf of such other Party ( provided , however , that the Party initiating such suit may settle such suit without such consent if such settlement involves only the receipt of money from, or the payment of money to, such Third Party and the Party initiating such suit makes all such payments to such Third Party). To the extent such Invalidity Claim is raised as a defense in an infringement action brought by Agenus or Incyte pursuant to Section 6.3(b), the expense provisions of Section 6.3 shall apply and counsel to the Party controlling the infringement action shall act as the ministerial liaison with the court. To the extent such Invalidity Claim is raised in a Third Party Infringement Claim brought against a Party, the expense provisions of Section 6.4 shall apply with respect thereto and the Party against whom the Invalidity Claim is brought shall act as the ministerial liaison with the court.

6.6 Patent Term Extensions . Incyte shall have the sole authority to obtain Patent Term Extensions for Patent Rights Covering a Product; provided , however , that Incyte shall reasonably consider any input from Agenus with respect to the extension of any Agenus Patent Rights. Agenus shall, as applicable, file all documentation and take all other actions to obtain such Patent Term Extensions.

6.7 Patent Marking. Incyte shall comply with all applicable patent marking statutes in any country in which Products Covered by Agenus Patent Rights or Joint Patent Rights are sold.

ARTICLE VII: FINANCIAL PROVISIONS

7.1 License Fee . In consideration for the rights, licenses and sublicenses granted to Incyte by Agenus under Section 2.1 with respect to the four (4) Projects included in the Program as of the Effective Date, Incyte shall make to Agenus a nonrefundable, non-creditable payment

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

of ten million Dollars ($10,000,000) within ten (10) days after the Effective Date. The foregoing license fee shall be deemed to be allocated among each of the four (4) Projects included in the Program in the manner set forth in Schedule 7.1 .

7.2 Project Access Fee . In consideration for access to Discovery Projects during the Discovery Period, Incyte shall make to Agenus a non-refundable, non-creditable payment of fifteen million Dollars ($15,000,000) within ten (10) days after the Effective Date.

7.3 Sharing of Profit-or-Loss .

(a) Subject to Sections 4.1(c) and 5.1(b), Profit-or-Loss shall be allocated fifty percent (50%) to each of Incyte and Agenus, such that Incyte and Agenus shall each share fifty percent (50%) of Profit-or-Loss with respect to each Profit-Share Product until the Development and Commercialization of such Profit-Share Product is permanently discontinued.

(b) From and after the Effective Date, the Parties shall conduct a quarterly reconciliation of Profit-or-Loss as follows, on a Profit-Share Product-by-Profit-Share Product basis:

(i) Within [**] after the end of each Calendar Quarter, each Party shall submit to the other Party a preliminary written report setting forth the following information, estimated where necessary:

(A) actual revenues and expenses included in Profit-or-Loss for such Product for the first two (2) months of such Calendar Quarter, including, as applicable:

(1) all sales in units and in Net Sales value of such Profit-Share Product in the Territory made by Incyte and Incyte Related Parties during such two (2) month period, together with an accounting of the itemized deductions from gross invoice price to Net Sales;

(2) all Profit-Share Product Proceeds for such Profit-Share Product received from Third Parties in the Territory during such two (2) month period; and

(3) the relevant Allowable Expenses incurred by each Party or its Affiliates with respect to such Profit-Share Product during such two (2) month period; and

(B) good faith estimate of revenues and expenses included in Profit-or-Loss for such Product for the last month of such Calendar Quarter, for financial reporting purposes.

(ii) Within [**] after the end of each Calendar Quarter, each Party shall submit to the other Party a final written report setting forth, as applicable:

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(A) all sales in units and in Net Sales value of such Profit-Share Product in the Territory made by Incyte and Incyte Related Parties during such Calendar Quarter, together with an accounting of the itemized deductions from gross invoice price to Net Sales;

(B) all Profit-Share Product Proceeds for such Profit-Share Product received from Third Parties in the Territory during such Calendar Quarter, and

(C) the relevant Allowable Expenses incurred by such Party or its Affiliates with respect to such Profit-Share Product during such Calendar Quarter.

(c) Within [**] after the receipt of the report pursuant to subparagraph (b) above, Incyte shall submit to Agenus a written reconciliation report setting forth in reasonable detail the calculation of Profit-or-Loss, the amount of any taxes required to be withheld and the calculation of the net amount owed by Incyte to Agenus, or by Agenus to Incyte, as the case may be, in order to ensure the sharing of Profit-or-Loss set forth in this Section 7.3 and the proper allocation of withholding taxes pursuant to Section 7.9. The net amount payable with respect to Profit-or-Loss, after appropriate adjustment for any withholding taxes, shall be paid by Incyte or by Agenus (or the appropriate Affiliate), as the case may be, within [**] following receipt of invoice for such amount.

(d) In addition to providing the information set forth in subsection (b) above, each Party and its Affiliates, as the case may be, shall provide reasonable supporting documentation of Allowable Expenses included in the calculation of Profit-or-Loss in a manner determined by the JSC.

7.4 Reimbursement of Development Costs . Subject to Sections 4.1(c), Incyte shall reimburse Agenus for all Development Costs incurred by Agenus and its Affiliates (a) with respect to each Royalty-Bearing Product in accordance with the relevant Development Plan and (b) constituting Patent and Trademark Costs pertaining to Bullpen Targets as provided in Section 1.103, in each case within [**] following receipt by Incyte of an invoice therefor, but only to the extent that such invoiced amount, together with all other Development Costs reimbursed by Incyte for Development activities conducted by Agenus and its Affiliates during such Calendar Year, does not exceed [**] of the total Development Costs budgeted in the Development Plan for the relevant Royalty-Bearing Product (except to the extent such excess is approved pursuant to Section 4.1(c) hereof).

7.5 Milestone Payments . Incyte shall make the following non-refundable, non-creditable milestone payments to Agenus upon the achievement of each of the following milestones by Incyte or an Incyte Related Party:

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(a) Profit-Share Products .

(i) The milestone payments and events for the Profit-Share Products are:

Milestone Event		Payment
[]**		[]**
[]**		[]**

(ii) On a Profit-Share Product-by-Profit-Share Product basis [**] .

(iii) For clarity, none of the milestone payments set forth in this Section 7.5(a) shall be an Allowable Expense hereunder.

(b) Royalty-Bearing Products.

(i) The milestone payments and events for the Royalty-Bearing Products are:

Milestone Event		Payment
[]**		[]**
[]**		[]**
[]**		[]**
[]**		[]**
[]**		[]**
[]**		[]**
[]**		[]**
[]**		[]**

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

(ii) [**] :

[**]	[**]
[]**	[]**
[]**	[]**

(iii) More than one of the [**] milestone payments set forth [**] may be earned concurrently based on [**] . By way of example and not limitation, [**] , then Incyte shall pay Agenus the milestone payments set forth in both Sections 7.5(b)(i) [**] and 7.5(b)(i) [**] (total [**] ).

(iv) With respect to any Royalty-Bearing Product which had been a Profit-Share Product prior to Agenus’ exercise of its rights pursuant to Section 4.6, only those Milestone Events which are triggered by such Royalty-Bearing Product after the [**] period (or [**] period in the event of a Change in Control, as applicable) described in Section 4.6 shall be payable pursuant to this Section 7.5(b).

(c) Milestone Payments . Incyte shall notify Agenus of the achievement of each of the foregoing milestones within [**] after each such achievement. Any milestone payments shall be reflected on an invoice provided to Incyte by Agenus, and any such invoices shall be due and payable by Incyte within [**] after the date the invoice is received.

7.6 Royalties .

(a) Royalty Rates .

(i) Royalty-Bearing Products . Except with respect to Co-Developed Products, Combination Products, Option Products and Converted Products, Incyte shall pay to Agenus royalties on Net Sales of each Royalty-Bearing Product, on a Royalty-Bearing Product-by-Royalty-Bearing Product basis, in each Calendar Year as follows:

Annual Net Sales of the Relevant Royalty-Bearing Product		Royalty Rate
The portion less than or equal to []**		6%
The portion greater than [] and less than or equal to []		[]**
The portion greater than [] and less than or equal to []		[]**
The portion greater than []**		12%

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

(ii) Combination Products . With respect to Combination Products (other than Co-Developed Products), Incyte shall pay to Agenus royalties on Net Sales of each Combination Product, on a Combination Product-by-Combination Product basis, in each Calendar Year as follows:

Annual Net Sales of the Relevant Combination Product		Royalty Rate
The portion less than or equal to []**		[]**
The portion greater than [] and less than or equal to []		[]**
The portion greater than [] and less than or equal to []		[]**
The portion greater than []**		[]**

(iii) Co-Developed Products . With respect to Co-Developed Products, Incyte shall pay to Agenus royalties on Net Sales of each such Co-Developed Product, on a Co-Developed Product-by-Co-Developed Product basis, in each Calendar Year as follows:

Annual Net Sales of the Relevant Co-Developed Product		Royalty Rate
The portion less than or equal to []**		[]**
The portion greater than [] and less than or equal to []		[]**
The portion greater than []**		[]**

(iv) Option Products . Incyte shall pay to Agenus royalties on Net Sales of each Option Product, on an Option Product-by-Option Product basis, in each Calendar Year as follows:

Annual Net Sales of the Relevant Option Product		Royalty Rate
The portion less than or equal to []**		[]**
The portion greater than [] and less than or equal to []		[]**
The portion greater than [] and less than or equal to []		[]**
The portion greater than []**		[]**

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

(v) Converted Products . With respect to Converted Products, Incyte shall pay to Agenus royalties on Net Sales of each such Converted Product, on a Converted Product-by-Converted Product basis, at the rates set forth in Section 7.6(a)(iii) until such time as is provided in Section 4.6, and thereafter at the rates set forth in Section 7.6(a)(i).

(b) Royalty Term .

(i) Royalties payable under this Section 7.6 shall be paid by Incyte on a Royalty-Bearing Product-by-Royalty-Bearing Product and country-by-country basis from the date of First Commercial Sale of such Royalty-Bearing Product in the relevant country for a period which is the longest of: (A) the date on which all Agenus Patent Rights, Incyte Program Patent Rights and Joint Patent Rights containing a Valid Claim Covering the Manufacture, Commercialization or other use of such Royalty-Bearing Product in the country of sale have expired; (B) the expiration of Regulatory Exclusivity for such Royalty-Bearing Product in such country; and (C) [**] following the date of First Commercial Sale of such Royalty-Bearing Product in such country (each such term with respect to a Royalty-Bearing Product and a country, a “ Royalty Term ”).

(ii) Notwithstanding anything to the contrary herein, in the event that, with respect to a Royalty-Bearing Product in a country, (A) the Royalty Term for such Royalty-Bearing Product in such country continues solely due to Section 7.6(b)(i)(C), or (B) Generic Competition exists with respect to such Royalty-Bearing Product in the Field in such country in a Calendar Quarter, then the royalty rates in such country for such Royalty-Bearing Product will thereafter be reduced to [**] of the applicable rate in Section 7.6(a).

(c) Stacking . Agenus shall be responsible for payment of all amounts due to Third Parties under the LICR Agreement and any other agreement with a Third Party in effect as of the Effective Date to which Agenus or any of its Affiliates is a party or by which any of them is bound. If Incyte (i) determines in good faith that, in order to avoid infringement of any Patent Right not licensed hereunder, it is reasonably necessary to obtain a license after the Effective Date from a Third Party under Patent Rights Controlled by the Third Party Covering the composition or method of use of a Licensed Antibody in order to Commercialize a Product in the Field in a country in the Territory and to pay a royalty under such license (including in connection with the settlement of a patent infringement claim); or (ii) shall be subject to a final court or other binding order or ruling requiring any payments, including the payment of a royalty to a Third Party patent holder in respect of the Development, Manufacture or Commercialization of a Product in the Field in a country in the Territory, then (A) in the case of Profit-Share Products, the royalties or other consideration payable to such Third Party shall be Patent and Trademark Costs after the First Commercial Sale in any country in the Territory of the applicable Product, and (B) in the case of Royalty-Bearing Products, the amount of Incyte’s royalty payments under Section 7.6(a) (subject to Section 7.6(b)) with respect to Net Sales for such Royalty-Bearing Product in such country in any Calendar Quarter shall be reduced by [**] of the royalties actually paid by Incyte to such Third Party that are reasonably and appropriately

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

allocable to such Royalty-Bearing Product in the Field in the Territory during such Calendar Quarter; provided, however , that in no event shall the aggregate deductions under this Section 7.6(c) reduce any royalty payment made to Agenus in respect of Net Sales of such Royalty-Bearing Product pursuant to Section 7.6(a) (but subject to Section 7.6(b)) in any Calendar Quarter to an amount that represents less than the greater of (x) [**] of the royalty otherwise payable in such Calendar Quarter or (y) [**] of Net Sales of the applicable Royalty-Bearing Product during such Calendar Quarter (with any such deductions not applied in any Calendar Quarter due to the foregoing limit to be carried forward to future Calendar Quarters).

(d) Licenses . Upon the expiration of the Royalty Term with respect to a Royalty-Bearing Product in a country, the licenses granted by Agenus to Incyte pursuant to Section 2.1 shall be deemed to be non-exclusive, fully paid-up, irrevocable and perpetual with respect to such Royalty-Bearing Product in such country.

(e) No Multiple Royalties . Only one royalty shall be due with respect to each sale of a Royalty-Bearing Product.

7.7 Royalty Reports; Payments . Incyte shall deliver to Agenus, within [**] after the end of each Calendar Quarter, a royalty report for such Calendar Quarter, together with the required payments pursuant to Section 7.6. Such reports shall indicate, on a country-by-country basis, gross sales and all deductions taken from gross sales to reach Net Sales, the Net Sales and the calculation of royalties from Net Sales with respect thereto, each determined in accordance with this Agreement, with respect to sales of Royalty-Bearing Products. All payments due to Agenus pursuant to this Agreement shall be made in U.S. Dollars by wire transfer in immediately available funds to an account designated in advance by Agenus.

7.8 Audits . For a period of [**] next following each Calendar Year, each Party shall keep, and shall cause its Affiliates to keep, full, true and accurate books and records containing all particulars relevant to the calculation of Development Costs, Profit-or-Loss, and Net Sales (including, with respect to Net Sales, the relevant statements obtained from its permitted sublicensees) in sufficient detail to enable the other Party to verify the amounts payable by or to it under this Agreement. Each Party shall have the right, not more than once during any Calendar Year and at its own expense, to have the books and records of the other Party and its Affiliates, as applicable, audited by an independent certified public accounting firm that is one of the six (6) largest, by revenue, accounting firms in the United States and is mutually acceptable to both Parties. Audits under this Section 7.8 shall be conducted at the principal place of business of the financial personnel with responsibility for preparing and maintaining such records, during normal business hours, upon at least [**] prior written notice, and for the sole purpose of verifying amounts payable by or to such Party under this Agreement. All information and data reviewed in any audit conducted under this Section 7.8 shall be used only for the purpose of verifying amounts payable by or to a Party under this Agreement and shall be treated as Confidential Information of the audited Party subject to the terms of this Agreement. The auditing Party shall cause its accounting firm to enter into a reasonably acceptable confidentiality agreement with the audited Party and its Affiliates, as applicable. The accounting firm shall disclose to the auditing Party only whether the calculation of Development Costs, Profit-or-Loss

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

or royalties are correct or incorrect and the specific details concerning any discrepancies. If the audit demonstrates that the payments owed under this Agreement have been understated, the audited Party shall pay the balance to the auditing Party, which shall be paid together with interest in accordance with Section 7.11. Further, if the amount of the understatement is greater than [**] of the amount owed to the auditing Party with respect to the audited period, then the audited Party shall reimburse the auditing Party for the reasonable out-of-pocket cost of the audit. If the audit demonstrates that the payments owed under this Agreement have been overstated, the audited Party shall be entitled to credit such amount against payments due to the auditing Party All payments owed by or to a Party under this Section 7.8 shall be made within [**] after the results of the audit are delivered to the Parties.

7.9 Tax Matters . The royalties, milestones, profit-share payments and other amounts payable by a Party (the “ Payor ”) to the other Party (the “ Payee ”) pursuant to this Agreement (each a “ Payment ”) shall be made without deduction or withholding for taxes except to the extent that any such deduction or withholding is required by Law in effect at the time of the Payment. In the event that the Payor is required by applicable Law to deduct, withhold and pay over (collectively, “ Withhold ”) any tax (a “ Withholding Tax ”) from or in respect of such Payment, the Payor shall (a) notify the Payee of such requirement promptly upon first becoming aware thereof, (b) Withhold the full amount of such Withholding Tax to the relevant taxing authority as and when due and (c) pay the net after-Withholding Tax amount of such Payment to the Payee, together with documentation confirming the amount and fact of the associated Withholding. The amount of Withholding Tax required to be Withheld in respect of a Payment shall be (i) determined in the good-faith discretion of the Payor, with due regard to any valid documentation previously provided to the Payor by or for the benefit of the Payee, in form and substance reasonably satisfactory to the Payor, that supports a reduced rate of Withholding Tax in respect of the Payment, and (ii) treated for all purposes of this Agreement as having been duly and timely paid by the Payor to or for the benefit of the Payee. The Parties agree to cooperate in good faith to permit a Payee to recover any excess Withhold Tax previously Withheld. On the date of execution of this Agreement, each Party will deliver to the other an accurate and complete Internal Revenue Service Form W-9.

7.10 Currency Exchange . All payments to be made by a Party to the other Party shall be made in Dollars. In the case of sales of Products outside the United States, royalty and profit-share payments shall be converted to Dollars using the average of the daily foreign exchange rates as published by The Wall Street Journal, Eastern Edition for the Calendar Quarter in which such payments occurred.

7.11 Late Payments . Without limiting any other rights or remedies available to a Party hereunder, if the paying Party does not pay any amount due on or before the due date, the paying Party shall pay to such Party interest on any such amounts from and after the date such payments are due under this Agreement at a rate per annum equal to the then current “prime rate” in effect published in The Wall Street Journal , Eastern Edition , plus [**] or the maximum applicable legal rate, if less, calculated on the total number of days payment is delinquent; provided that with respect to any disputed payments, no interest payment shall be due until such dispute is resolved and the interest which shall be payable thereon shall be based on the finally-

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

resolved amount of such payment, calculated from the original date on which the disputed payment was due through the date on which payment is actually made.

7.12 General Payment Provisions . Notwithstanding anything to the contrary in this Agreement, (a) there shall be no double-counting of expenses or revenue within, between or among the definition of Profit-or-Loss, Development Costs and any components thereof, and (b) Profit-or-Loss, Development Costs and any components thereof shall be determined from the books and records of the applicable Party and its Affiliates maintained in accordance with Accounting Standards.

ARTICLE VIII: TERM AND TERMINATION

8.1 Agreement Term . The term of this Agreement shall commence on the Effective Date and shall continue for so long (a) as any Product is being Developed or Commercialized or (b) the Discovery Period or any Option Period remains in effect, unless terminated early in accordance with Section 8.2 (the “ Term ”); provided, however , that Article XIII shall be effective as of the Execution Date. Notwithstanding the above, if there are any ongoing disputes at the end of the Term as set forth above, this Agreement shall remain in full force and effect until all such disputes are resolved.

8.2 Termination .

(a) Termination for Convenience . At any time after the first (1 st ) anniversary of the Effective Date, Incyte may elect to terminate this Agreement in its entirety, or as to one or more Projects, by providing twelve (12) months’ prior written notice to Agenus; provided that at any time after such notice by Incyte, Agenus may accelerate the effective date of such termination by providing thirty (30) days’ prior written notice to Incyte of such accelerated effective date.

(b) Termination for Material Breach . If either Party (the “ Non-Breaching Party ”) believes that the other Party (the “ Breaching Party ”) is in material breach of this Agreement, then the Non-Breaching Party may deliver notice of such breach to the Breaching Party. If the Breaching Party fails to cure such breach, or to initiate such steps as would be considered reasonable to effectively cure such breach (and thereafter diligently pursues such cure), within [**] after receipt of such notice of breach (or [**] in the case of non-payment of any amounts due hereunder), the Non-Breaching Party may terminate this Agreement upon written notice to the Breaching Party. Notwithstanding the foregoing, if a Party disputes the termination, then Section 8.2(f) shall apply.

(c) Termination if Incyte Challenges Agenus IP . Except in connection with any infringement action brought by Agenus or any of its licensors, Affiliates or sublicensees against Incyte or any Incyte Related Party, if Incyte or any Incyte Related Party, directly or indirectly, (i) initiates or requests an interference, opposition or similar proceeding with respect to any Agenus Patent Right; (ii) makes, files or maintains any claim, demand, lawsuit, or cause of action to challenge the validity or enforceability of any Agenus Patent Right; or (iii) opposes

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

any extension of, or the grant of a supplementary protection certificate with respect to, any Agenus Patent Right, Agenus shall have the right to terminate this Agreement upon [**] prior written notice to Incyte, if Incyte or the Incyte Related Party, as applicable, has not withdrawn such action before the end of such notice period.

(d) Termination for Abandoned Development or Commercialization . If Incyte has Abandoned Development or Abandoned Commercialization, as applicable, Agenus may elect to terminate this Agreement as to the relevant Project (as provided in Section 4.3 or 5.3) by providing Incyte written notice of such termination, such termination to be effective immediately upon written notice to Incyte. Notwithstanding the foregoing, if Incyte disputes the termination, then Section 8.2(f) shall apply.

(e) Termination for Competing Program Following Change in Control .

(i) In the event that Incyte undergoes a Change in Control, and the acquirer of Incyte, or any Person which, immediately prior to such Change in Control, is an Affiliate of such acquirer, is engaged in the research, development, manufacture or commercialization in the Field in the Territory of a compound or Antibody that Interacts with a Profit-Share Target(s) or a Target of a Co-Developed Product, or a therapeutic preparation containing such a compound or Antibody, as of the date of such Change in Control, then Agenus may elect to terminate this Agreement as to the applicable Profit Share Product or Co-Developed Product only, immediately upon written notice to Incyte.

(ii) In the event that Agenus undergoes a Change in Control, and the acquirer of Agenus, or any Person which, immediately prior to such Change in Control, is an Affiliate of such acquirer, is engaged in the research, development, manufacture or commercialization in the Field in the Territory of a compound or Antibody that Interacts with a Profit-Share Target(s) or a Target of a Co-Developed Product, or a therapeutic preparation containing such a compound or Antibody, as of the date of such Change in Control, then Incyte may elect to terminate this Agreement as to the applicable Profit-Share Product or Co-Developed Product only, immediately upon written notice to Agenus.

(f) Termination Disputes . If a Party gives notice of termination under Section 8.2(b), if the Parties dispute whether Incyte has Abandoned Development or Abandoned Commercialization in accordance with Section 4.3 or 5.3, as applicable, or Agenus gives notice of termination under Section 8.2(c), 8.2(d) or 8.2(e)(i), or Incyte gives notice of termination under Section 8.2(e)(ii), and the other Party disputes whether such notice was proper, then the issue of whether or not the relevant Party breached this Agreement, Incyte has Abandoned Development or Abandoned Commercialization, or notice was properly given pursuant to Section 8.2(c), 8.2(d) or 8.2(e) shall be resolved in accordance with Section 12.2, and the Agreement shall remain in full force and effect until such dispute is resolved. All cure periods shall be tolled during such dispute resolution process. If, as a result of such dispute resolution process it is determined that the notice of termination was proper, then the Breaching Party, or Incyte, as applicable, shall be entitled to the remainder of the relevant cure period and such

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

termination shall only be effective if the relevant breach, Abandoned Development, Abandoned Commercialization is not cured or otherwise addressed in accordance with this Agreement during such period. On the other hand, if, as a result of the dispute resolution process, it is determined that the notice of termination was improper, then no termination shall have occurred or shall occur as a result of such notice and this Agreement shall remain in full force and effect.

8.3 Effects Of Termination .

(a) Upon termination of this Agreement, with respect to a particular Project or in its entirety, by Incyte pursuant to Section 8.2(a) or by Agenus pursuant to Sections 8.2(b), 8.2(c), 8.2(d) or 8.2(e)(i), the following provisions shall apply solely with respect to each Terminated Project, where “ Terminated Project ” means each terminated Project (or, if this Agreement is terminated in its entirety, each Project) and “ Terminated Product ” means a Product or Licensed Antibody arising from the relevant Terminated Project; provided, however , that any reference to “Terminated Product” shall exclude, and no rights are granted to Agenus with respect to, any compound, Antibody or active ingredient that is owned or controlled by Incyte or any of its Affiliates or a Third Party (which is not, for clarity, a Licensed Antibody or Product (other than a Combination Product)):

(i) all licenses granted by Agenus to Incyte under Section 2.1 shall terminate and Incyte shall not have any rights to use or exercise any rights under the Agenus IP;

(ii) Incyte hereby grants to Agenus, from and after such termination, an exclusive, worldwide, royalty-bearing (per Section 8.3(a)(xi) below) license, with the right to grant sublicenses, (A) under the Incyte IP as of the date of such termination, solely to the extent that such licenses are necessary to Develop, Manufacture or Commercialize the Terminated Products in the Field in the Territory, and (B) the license granted to Agenus under the Incyte Program Patent Rights and the Incyte Program Know-How pursuant to Section 2.2(b) shall survive;

(iii) the provisions of Article VI (other than Section 6.1) shall be terminated; provided that, as between the Parties, the rights and obligations of the Parties to Prosecute and enforce the Incyte Program Patent Rights and Joint Patent Rights that solely Cover the Terminated Product(s) shall be reversed, and, as necessary for Agenus to then exercise its first right to prosecute and enforce such Incyte Program Patent Rights and Joint Patent Rights, Incyte shall transition Prosecution and enforcement responsibilities to Agenus with respect to such Incyte Program Patent Rights and Joint Patent Rights, including execution of such documents as may be necessary to effect such transition;

(iv) Incyte shall promptly transfer and assign to Agenus all of Incyte’s and its Affiliates’ rights, title and interests in and to any trademark(s) (but not any Incyte house marks or any trademark containing the word “Incyte” owned by Incyte and used

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

for the Products in the Field in the Territory) owned by Incyte and used for the Terminated Products in the Field in the Territory;

(v) Incyte shall provide to Agenus a fair and accurate summary report of the status of the Development and Commercialization of the Terminated Products in the Field in each country in the Territory through the effective date of termination within [**] after such termination;

(vi) to the extent permitted by applicable Law, Incyte shall transfer to Agenus, solely for the Development, Manufacture and Commercialization of the Terminated Products in the Field in the Territory, Incyte’s entire right, title, and interest in and to all preclinical and clinical data, and all other supporting data, including pharmacology, toxicology, chemistry and biology data, and documented technical and other information or materials to the extent related to the Development, Manufacture and Commercialization of the Terminated Products in the Field in the Territory; provided that Incyte may retain a single copy of such items for its records or such additional copies as required by applicable Law;

(vii) to the extent permitted by applicable Law, Incyte shall transfer to Agenus all Regulatory Documentation, Regulatory Approvals (including reimbursement and pricing approvals), the Global Safety Database, records of all Regulatory Interactions, in each case to the extent related to the Terminated Products in the Field in the Territory, that Incyte Controls as of the effective date of such termination. If Incyte is restricted under applicable Law from transferring ownership of any of the foregoing items to Agenus, Incyte shall grant, and hereby does grant, to Agenus (or its designee) a right of reference or use to such item. Incyte shall take all permitted actions reasonably necessary to effect such transfer or grant of right of reference or use to Agenus;

(viii) to the extent reasonably requested by Agenus, Incyte shall transfer to Agenus any license agreements or other contracts between Incyte and any Third Party that are specific to the Terminated Products in the Field in the Territory (including, as applicable, Clinical Trial and Manufacturing agreements), to the extent such agreements are in effect as of the effective date of termination and such assignment or transfer is permitted at no cost or expense to Incyte, and to facilitate introductions of Agenus to the applicable Permitted Subcontractors, licensors, Manufacturing vendors, Clinical Trial sites, Clinical Trial investigators and the like;

(ix) Agenus shall have the right to purchase from Incyte all of the inventory of the Terminated Products in the Field in the Territory held by Incyte as of the effective date of termination at a price equal to Incyte’s Manufacturing Cost, determined in accordance with Accounting Standards, but only if the following conditions are met as of the date of supply: (i) any such Products meet the applicable release specifications; and (ii) the continued use of such Products does not cause objectively valid safety concerns for which Agenus is not willing to indemnify Incyte (unless, pursuant to this Agreement or any manufacturing or supply (or similar) agreement between or among the

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

Parties or their Affiliates, Incyte (or its Affiliate) was obligated to indemnify Agenus or its Affiliates with respect to the Manufacture of the relevant units of such Product). Agenus shall notify Incyte within [**] after the effective date of termination whether Agenus elects to exercise such right;

(x) to the extent permitted by applicable Law, Incyte shall transfer to Agenus all promotional materials, customer data, competitive intelligence data, market research and other materials, information or data to the extent related to the Commercialization of the Terminated Products in the Field in the Territory that are Controlled by Incyte as of the effective date of such termination, to the extent necessary or reasonably useful for the Commercialization of such Products;

(xi) Agenus shall pay to Incyte, on a Terminated Product-by-Terminated Product basis, royalties on Net Sales of each Terminated Product by or under the authority of Agenus, its Affiliates or licensees or sublicensees as specified in the following chart in accordance with the same schedule and other terms and conditions as Incyte would have otherwise been obligated to pay royalties to Agenus for Royalty-Bearing Products under Article VII, mutatis mutandis :

Stage of Development of the Relevant Terminated Product as of the Effective Date of Termination		Royalty Rate
[]**		[]**
[]**		[]**
[]**		[]**
[]**		[]**
[]**		[]**

(xii) for clarity, Sections 8.3(c), (d), (e) and (f) shall apply.

In the event of the termination of this Agreement with respect to a particular Project by Incyte under Section 8.2(a) or by Agenus under Section 8.2(d) or 8.2(e), this Agreement shall continue in full force and effect with respect to the Projects unaffected by such partial termination, and the provisions of this Section 8.3 shall apply solely with respect to the Project(s), and Product(s) arising out of the Project(s) that are affected by such partial termination.

(b) Upon termination of this Agreement by Incyte in accordance with Section 8.2(b) or Section 8.2(e)(ii):

(i) the licenses granted by Incyte to Agenus pursuant to Section 2.2 shall, at Incyte’s discretion, terminate or survive;

(ii) the license granted by Agenus to Incyte pursuant to Section 2.1 shall remain in effect;

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

(iii) the rights and obligations of the Parties pursuant to Sections 6.2 and 6.3 shall remain in effect;

(iv) Incyte’s obligations to pay to Agenus royalties due under Section 7.6 and milestones due under Section 7.5 shall survive; provided, however , solely in the case of a termination of this Agreement by Incyte in accordance with Section 8.2(b), Incyte shall have the right, exercisable by delivery of written notice to Agenus, to set off against and reduce the amount of any royalties due to Agenus under Section 7.6 by the amount of any and all unindemnified Losses that are actually incurred by Incyte arising directly out of the material breach of this Agreement that resulted in such termination, with any dispute over the amount of such Losses to be resolved in accordance with Section 12.2 hereof;

(v) at Incyte’s discretion, any Profit-Share Product or any Co-Developed Product shall become a Royalty-Bearing Product on the terms set forth in Section 4.4(d), without application of any of the notice periods contained therein, and Agenus shall have no further obligation to fund any portion of Allowable Expenses incurred thereafter for such Profit-Share Product or Development Costs incurred thereafter for such Co-Developed Product;

(vi) to the extent reasonably requested by Incyte, Agenus shall transfer to Incyte any license agreements or other contracts between Agenus and any Third Party that are specific to Products in the Field in the Territory (including, as applicable, Manufacturing agreements, but excluding the LICR Agreement), to the extent such agreements are in effect as of the effective date of termination and such assignment or transfer is permitted at no cost or expense to Agenus, and to facilitate introductions of Incyte to the applicable Permitted Subcontractors, licensors, Manufacturing vendors, and the like;

(vii) Incyte shall have the right to purchase from Agenus all of the inventory of the Products in the Field in the Territory held by Agenus as of the effective date of termination at a price equal to Agenus’ Manufacturing Cost, determined in accordance with Accounting Standards, but only if the following conditions are met as of the date of supply: (A) any such Products meet the applicable release specifications; and (B) the continued use of such Products does not cause objectively valid safety concerns for which Incyte is not willing to indemnify Agenus (unless, pursuant to this Agreement or any manufacturing or supply (or similar) agreement between or among the Parties or their Affiliates, Agenus (or its Affiliate) was obligated to indemnify Incyte or its Affiliates with respect to the Manufacture of the relevant units of such Product). Incyte shall notify Agenus within six (6) months after the effective date of termination whether Incyte elects to exercise such right; and

(viii) for clarity, Sections 8.3(c), (d), (e) and (f) shall apply.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

(c) During the [**] period following termination of this Agreement with respect to a Terminated Project, neither (i) the Breaching Party and, subject to Section 12.3(b)(ii), its Affiliates, in the case of termination pursuant to Section 8.2(b), nor (ii) Incyte and, subject to Section 12.3(b)(ii), its Affiliates, in the case of termination by Incyte under Section 8.2(a) or by Agenus under Sections 8.2(c), 8.2(d) or 8.2(e)(i), nor (iii) Agenus and subject to Section 12.3(b)(ii), its Affiliates, in the case of termination by Incyte pursuant to Section 8.2(e)(ii), shall independently, or with a Third Party, Develop (but each may research), Manufacture or Commercialize in the Field in the Territory any Antibody that Interacts with the Named Target or Bullpen Target to which such Terminated Project is directed, or any product containing such an Antibody.

(d) Termination of this Agreement shall be in addition to, and shall not prejudice, the Parties’ remedies at law or in equity, including the Parties’ ability to receive legal damages and/or equitable relief with respect to any breach of this Agreement, regardless of whether or not such breach was the reason for the termination.

(e) Expiration or termination of this Agreement for any reason shall not release either Party from any obligation or liability which, on the effective date of such expiration or termination, has already accrued to the other Party or which is attributable to a period prior to such expiration or termination.

(f) Articles I, VIII, IX, XI, XII and Sections 2.5, 6.1, 7.7, 7.8, 7.9, 7.10, 7.11 and 7.12 shall survive termination or expiration of this Agreement.

ARTICLE IX: INDEMNIFICATION; LIMITATION OF LIABILITY

9.1 By Incyte .

(a) Subject to Section 9.1(b), Incyte agrees, at Incyte’s cost and expense, to defend, indemnify and hold harmless Agenus and its Affiliates, and their respective directors, officers, employees and agents (the “ Agenus Indemnified Parties ”) from and against any losses, costs, damages, fees or expenses (“ Losses ”) arising out of any Third Party claim to the extent relating to (i) any breach by Incyte of any of its representations, warranties or obligations pursuant to this Agreement; (ii) the negligence or willful misconduct of Incyte; and (iii) except as otherwise provided in Section 9.3, the Development, Manufacture, Commercialization, use, sale or other disposition by Incyte or Incyte Related Parties of any Licensed Antibody or Product.

(b) In the event of any such claim against any of the Agenus Indemnified Parties by any Third Party, Agenus shall promptly notify Incyte in writing of the claim. Subject to Section 9.1(c), Incyte shall have the right, exercisable by notice to Agenus within [**] after receipt of notice from Agenus of the claim, to assume direction and control of the defense, litigation, settlement, appeal or other disposition of the claim (including the right to settle the claim solely for monetary consideration) with counsel selected by Incyte and reasonably acceptable to Agenus. The Agenus Indemnified Parties shall cooperate with Incyte and may, at

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

their option and expense, be separately represented in any such action or proceeding. Incyte shall not be liable for any litigation costs or expenses incurred by the Agenus Indemnified Parties without Incyte’s prior written authorization. In addition, Incyte shall not be responsible for the indemnification or defense of any Agenus Indemnified Party to the extent arising from any negligent or intentional acts by any Agenus Indemnified Party or the breach by Agenus of any representation, obligation or warranty under this Agreement, or any claims compromised or settled without its prior written consent. Notwithstanding the foregoing, Incyte shall not settle a Third Party claim without the prior written consent of Agenus, if such settlement would impose any monetary obligation on Agenus or require Agenus to submit to an injunction.

(c) Notwithstanding anything to the contrary above, in the event of any such claim against the Agenus Indemnified Parties by a governmental or criminal action seeking an injunction against Agenus, Agenus shall have the right to control the defense, litigation, settlement, appeal or other disposition of the claim at Incyte’s expense.

9.2 By Agenus .

(a) Subject to Section 9.2(b), Agenus agrees, at Agenus’ cost and expense, to defend, indemnify and hold harmless Incyte and its Affiliates and their respective directors, officers, employees and agents (the “ Incyte Indemnified Parties ”) from and against any Losses arising out of any Third Party claim to the extent relating to (i) any breach by Agenus of any of its representations, warranties or obligations pursuant to this Agreement, (ii) a claim that the entry into this Agreement or the grant of licenses to Incyte hereunder violates any oral or written contractual obligation to which Agenus is a party or by which it is bound, (iii) the negligence or willful misconduct of Agenus, or (iv) except as otherwise provided in Section 9.3, the Development, Manufacture, Commercialization, use, sale or other disposition by Agenus or its Affiliates of any Licensed Antibody or Product.

(b) In the event of any such claim against any of the Incyte Indemnified Parties by any Third Party, Incyte shall promptly notify Agenus in writing of the claim. Subject to Section 9.2(c), Agenus shall have the right, exercisable by notice to Incyte within [**] after receipt of notice from Incyte of the claim, to assume direction and control of the defense, litigation, settlement, appeal or other disposition of the claim (including the right to settle the claim solely for monetary consideration) with counsel selected by Agenus and reasonably acceptable to Incyte. The Incyte Indemnified Parties shall cooperate with Agenus and may, at their option and expense, be separately represented in any such action or proceeding. Agenus shall not be liable for any litigation costs or expenses incurred by the Incyte Indemnified Parties without Agenus’ prior written authorization. In addition, Agenus shall not be responsible for the indemnification or defense of any Incyte Indemnified Party to the extent arising from any negligent or intentional acts by any Incyte Indemnified Party, or the breach by Incyte of any representation, obligation or warranty under this Agreement, or any claims compromised or settled without its prior written consent. Notwithstanding the foregoing, Agenus shall not settle a Third Party claim without the prior written consent of Incyte, if such settlement would impose any monetary obligation on Incyte or require Incyte to submit to an injunction.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

(c) Notwithstanding anything to the contrary above, in the event of any such claim against the Incyte Indemnified Parties by a governmental or criminal action seeking an injunction against Incyte, Incyte shall have the right to control the defense, litigation, settlement, appeal or other disposition of the claim at Agenus’ expense.

9.3 Shared Claims . Any Losses arising out of any Third Party claim involving any actual or alleged death or bodily injury arising out of or resulting from the Development, Manufacture or Commercialization of any Profit-Share Product in the Field in the Territory, to the extent that such Losses exceed the amount (if any) covered by the applicable Party’s product liability insurance (“ Excess Product Liability Costs ”), shall be shared equally by the Parties as a Product Liability Cost for purposes of calculating Profit-or-Loss, except to the extent such Losses arise out of any Third Party claim based on (a) a Party’s breach of any of its representations, obligations or warranties under to this Agreement, or (b) the negligence or intentional act of a Party, its Affiliates, or their respective permitted sublicensees, or any of the respective officers, directors, employees and agents of each of the foregoing entities, in the performance of obligations or exercise of rights under this Agreement.

9.4 Limitation of Liability . EXCEPT WITH RESPECT TO A BREACH OF ARTICLE XI, OR A PARTY’S LIABILITY PURSUANT TO ARTICLE IX, NEITHER PARTY SHALL BE LIABLE FOR SPECIAL, INCIDENTAL, CONSEQUENTIAL, EXEMPLARY, PUNITIVE, MULTIPLE OR OTHER INDIRECT OR REMOTE DAMAGES, OR, EXCEPT WITH RESPECT TO A BREACH OF SECTION 2.7 OR 8.3(c), FOR LOSS OF PROFITS, LOSS OF DATA OR LOSS OF USE DAMAGES, ARISING IN ANY WAY OUT OF THIS AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER, WHETHER BASED UPON WARRANTY, CONTRACT, TORT, STRICT LIABILITY OR OTHERWISE, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR LOSS.

9.5 Joint and Several Liability. Agenus US and 4-AB shall be jointly and severally liable for all obligations of Agenus, or either Agenus US or 4-AB, under this Agreement.

ARTICLE X: REPRESENTATIONS, WARRANTIES AND COVENANTS

10.1 Representation Of Authority; Consents . Agenus and Incyte each represents and warrants, and covenants, as applicable, to the other Party that:

(a) as of the Execution Date, it has full right, power and authority to enter into this Agreement;

(b) as of the Execution Date and, subject to receipt of HSR Clearance, as of the Effective Date, this Agreement has been duly executed by such Party and constitutes a legal, valid and binding obligation of such Party, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and other Laws relating to or affecting creditors’ rights generally and by general equitable principles and public policy constraints (including those pertaining to limitations

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

and/or exclusions of liability, competition Laws, penalties and jurisdictional issues including conflicts of Laws);

(c) except for HSR Clearance, as of the Execution Date, and except as otherwise contemplated in this Agreement, all necessary consents, approvals and authorizations of all government authorities and other persons required to be obtained by such Party in connection with the execution, delivery and performance of this Agreement have been and shall be obtained; and

(d) neither it nor any of its Affiliates has been debarred or is subject to debarment, and such Party covenants that neither it nor any of its Affiliates will use in any capacity, in connection with the Development, Manufacture or Commercialization of the Licensed Antibodies or Products in the Field, any Person who has been debarred pursuant to Section 306 of the United States Federal Food, Drug, and Cosmetic Act, or who is the subject of a conviction described in such section. Each Party shall inform the other Party in writing immediately upon learning that it or any Person who is performing services hereunder is debarred or is the subject of a conviction described in Section 306 of the United States Federal Food, Drug, and Cosmetic Act, or upon learning that any action is pending or threatened relating to the debarment or conviction of such Party or any of its Affiliates, or any Person used in any capacity by such Party or any of its Affiliates in connection with the Development, Manufacture or Commercialization of the Licensed Antibodies or Products in the Field.

10.2 No Conflict . Each Party represents and warrants to the other Party that, except as otherwise disclosed to the other Party in writing, the execution and delivery of this Agreement and the performance of such Party’s obligations hereunder (a) do not conflict with or violate such Party’s corporate organizational documents or any requirement of applicable Laws and (b) do not and shall not conflict with, violate or breach or constitute a default or require any consent under, any material oral or written contractual obligation of such Party including, in the case of Agenus, under the LICR Agreement. Each Party agrees that it shall not during the term of this Agreement grant any right, license, consent or privilege to any Third Party or otherwise undertake any action, either directly or indirectly, that would conflict with the rights granted to the other Party or interfere with any obligations of such Party set forth in this Agreement.

10.3 Additional Agenus Representations and Warranties . Agenus represents and warrants that, as of the Execution Date, except as previously disclosed to Incyte in writing, and covenants, as applicable, that:

(a) Exhibit A sets forth a true and complete list of the Agenus Patent Rights;

(b) Agenus is entitled to grant the rights, licenses and sublicenses granted to Incyte pursuant to Section 2.1 (including pursuant to the LICR Agreement) and no Third Party other than LICR and MSKCC retains rights under the LICR Agreement that would preclude Incyte from exercising the rights and licenses granted in this Agreement. Except for the LICR Agreement, there are no agreements or arrangements to which Agenus or any of its Affiliates is a

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

party relating to Licensed Antibodies or Agenus IP or Agenus Platform IP that would limit the rights granted to Incyte under this Agreement;

(c) Agenus and its Affiliates have and have enforced, and after the Effective Date or during the Term shall have, a policy of requiring all of their respective employees, officers, contractors and consultants to execute agreements requiring assignment to Agenus or its Affiliate, as applicable, of all inventions made during the course of and as a result of their association with Agenus or such Affiliate and requiring each such employee, officer, contractor and consultant to maintain as confidential all Confidential Information it receives during their performance of their obligations for Agenus or its Affiliate;

(d) to Agenus’ knowledge, no Third Party (i) is infringing any Agenus Patent Rights or Agenus Platform Patent Rights Covering the Retrocyte Display Technology or has misappropriated any Agenus Know-How or Agenus Platform Know-How or (ii) has challenged the ownership, scope, duration, validity, enforceability, priority or right to use any Agenus Patent Rights or Agenus Platform Patent Rights Covering the Retrocyte Display Technology (including through the institution or written threat of institution of interference, post-grant review, inter partes review, reexamination, protest, opposition, nullity or similar invalidity proceedings before the U.S. Patent and Trademark Office or any analogous foreign entity) or any Agenus Know-How or Agenus Platform Know-How;

(e) neither Agenus nor its Affiliates has granted, and after the Execution Date and during the Term, neither Agenus nor its Affiliates will grant, any right, option, license or interest in or to any of the Agenus Patent Rights or Agenus Know-How that is in conflict with the rights or licenses granted to Incyte under this Agreement;

(f) other than pursuant to the LICR Agreement (an accurate and complete copy of which has been provided to Incyte), (i) none of the Agenus IP, the Agenus Platform Patent Rights Covering the Retrocyte Display Technology, or the Agenus Platform Know-How has been licensed or sublicensed from any Third Party, and (ii) there are no royalties or other payments that would be due to Third Parties on account of Development or Commercialization of Licensed Antibodies or Products hereunder as a result of any agreement entered into by Agenus or any of its Affiliates on or before the Execution Date;

(g) Agenus is not in default with respect to a material obligation under, and neither LICR nor MSKCC has claimed that Agenus nor, to the knowledge of Agenus, has grounds upon which to claim, that Agenus is in default with respect to a material obligation under, the LICR Agreement, except for defaults that would not have a material adverse effect on Incyte’s Program Rights hereunder;

(h) all fees due to date that are required to maintain the Agenus Patent Rights and the Agenus Platform Patent Rights Covering the Retrocyte Display Technology have been paid in full and, to Agenus’ knowledge, all issued claims of the Agenus Patent Rights and the Agenus Platform Patent Rights Covering the Retrocyte Display Technology are valid and enforceable;

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

(i) neither Agenus nor any of its Affiliates owns or is licensed under any Patent Rights or Know-How necessary to Develop, Manufacture or Commercialize any Product that are not included in the licenses granted hereunder to Incyte;

(j) neither Agenus nor any of its Affiliates has received any written communications of pending or threatened claims against it relating to infringement of any Intellectual Property Rights of any Third Party by means of the practice or use of the Agenus IP, the Agenus Platform Patent Rights Covering the Retrocyte Display Technology or the Agenus Platform Know-How, nor have any of them received any written communications alleging that Agenus or any of its Affiliates has violated, through the development, manufacture, use, import, offering for sale or sale of products containing Agenus IP, Agenus Platform Patent Rights Covering the Retrocyte Display Technology or Agenus Platform Know-How, or the Development, Manufacture or Commercialization of any Licensed Antibody or Product, any Intellectual Property Rights of any Third Party, nor to its knowledge, is there any reasonable basis for any such claim or allegation; and

(k) there is no legal claim, judgment or settlement against or owed by Agenus or its Affiliates, or any order, writ, injunction or decree of any Governmental Authority against Agenus or any of its Affiliates, in each case relating to any Product, the Agenus IP or the Agenus Platform Patent Rights Covering the Retrocyte Display Technology, or the Agenus Platform Know-How, or the transactions contemplated by this Agreement.

10.4 Disclaimer of Warranty . Nothing in this Agreement shall be construed as a representation made or warranty given by Agenus that Incyte will be successful in obtaining any Patent Rights, that any patents will issue based on pending applications or that any such pending applications or patents issued thereon will be valid. Nothing in this Agreement shall be construed as a representation made or warranty given by either Party that it will be successful in Developing or Commercializing any Licensed Antibody or Product. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, ALL PATENT RIGHTS AND KNOW-HOW LICENSED PURSUANT TO THIS AGREEMENT SHALL BE PROVIDED ON AN “AS IS” BASIS. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, EACH PARTY EXPRESSLY DISCLAIMS, WAIVES, RELEASES AND RENOUNCES ANY WARRANTY, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT.

10.5 Standstill .

(a) Incyte agrees that, during the Initial Discovery Period, unless specifically invited in writing to do so by Agenus US, Incyte and each of its Affiliates will not in any manner, directly or indirectly:

(i) effect, or seek, offer or propose to effect (whether publicly or otherwise) or cause or participate in, (A) any acquisition of (1) any Voting Stock of Agenus US or any securities that at such time are convertible or exchangeable into or exercisable for any Voting Stock of Agenus US (collectively, “ Voting Securities ”);

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

(2) any direct or indirect rights or options to acquire any Voting Securities; or (3) any assets or securities of Agenus US or any of its subsidiaries; (B) any merger, consolidation, tender or exchange offer, or other business combination involving Agenus US or an Affiliate thereof; (C) any restructuring, recapitalization, liquidation, dissolution or similar transaction with respect to Agenus US or an Affiliate thereof; (D) any “solicitation” of “proxies” (as such terms are defined or used in Regulation 14A under the Exchange Act) or consents with respect to any Voting Securities, any “election contest” (as such term is defined or used in Rule 14a-11 of the Exchange Act) with respect to Agenus US, or any demand for a copy of Agenus US’s stock ledger, list of its stockholders, or other books and records; or (E) any action inconsistent with the terms of this Section 10.5;

(ii) form, join, participate in or encourage the formation of any “group” (within the meaning of Section 13(d)(3) of the Exchange Act) with respect to any Voting Securities;

(iii) otherwise act, alone or in concert with others (including by providing financing for another party), to seek or offer to control or influence, in any manner, the management, Board of Directors or policies of Agenus US;

(iv) take any action that might force Agenus US to make a public announcement regarding any of the types of matters set forth in Section 10.5(a)(i);

(v) make (publicly or to Agenus US, or its directors, officers, employees, agents or security holders, directly or indirectly) any request or proposal to amend, waive or terminate any provision of this Section 10.5 or any inquiry or statement relating thereto; or

(vi) instigate, encourage or assist any Third Party to do any of the foregoing.

(b) Notwithstanding the foregoing provisions of this Section 10.5, the restrictions set forth in this Section 10.5 shall terminate and be of no further force and effect if: (i) Agenus US publicly engages in a process designed for Agenus US to solicit offers relating to transactions which, if consummated, would result in a Change in Control of Agenus US; (ii) Agenus US enters into a definitive agreement with respect to, or publicly announces that it plans to enter into, a transaction involving all or a controlling portion of Agenus US’s Voting Securities or all or substantially all of Agenus US’s assets (whether by merger, consolidation, business combination, tender or exchange offer, recapitalization, restructuring, sale, equity issuance or otherwise; or (iii) a person of 13D Group not including Incyte commences or publicly announces its intent to commence a tender or exchange offer for a controlling portion of Agenus US’s Voting Securities .

(c) Notwithstanding anything in the Section 10.5 to the contrary, Incyte and its Affiliates may acquire, through that certain Stock Purchase Agreement of even date herewith

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

between Agenus US and Parent (the “ Stock Purchase Agreement ”) or through open market purchases, an aggregate amount of Voting Securities that would represent less than fifteen percent (15%) of the voting power represented by Agenus’ Voting Stock, solely for the purposes of investment in the ordinary course of business (so long as any decision to make such acquisition is in compliance with United States securities laws). Nothing in this Section 10.5 shall restrict passive investments by any employee benefit plan of Incyte or its Affiliates so long as such investments are directed by independent trustees, administrators or employees who do not have Confidential Information of Agenus.

(d) This Section 10.5 shall not apply to any of the activities with respect to Licensed Antibodies or Products contemplated by this Agreement.

10.6 Additional Covenants Regarding the LICR Agreement . Agenus agrees that during the Term:

(a) Agenus shall use Commercially Reasonable Efforts to fulfill its obligations under the LICR Agreement to the extent that failure to do so would materially adversely affect Incyte or its rights hereunder;

(b) Agenus shall not enter into any subsequent agreement with any other party to the LICR Agreement that modifies or amends the LICR Agreement in any way that would materially adversely affect Incyte’s rights or interest under this Agreement without Incyte’s prior written consent, which shall not be unreasonably withheld, delayed or conditioned, and shall provide Incyte with a copy of any modification to or amendment of the LICR Agreement, regardless of whether Incyte’s consent was required with respect thereto;

(c) Agenus shall not terminate the LICR Agreement in whole or in part without Incyte’s prior written consent if such termination would materially adversely affect Incyte’s rights hereunder;

(d) Agenus shall promptly furnish Incyte with copies of all communications received by Agenus from any other party to the LICR Agreement, as well as all material reports and other communications that Agenus furnishes to LICR or MSKCC under the LICR Agreement, in each case to the extent any such communications, or reports could reasonably affect the rights or obligations of Incyte under this Agreement. Agenus shall give Incyte, upon its request, a reasonable opportunity to review and comment upon such reports or communications before they are transmitted to any such other party and Agenus shall consider in good faith any reasonable comments timely provided by Incyte; and

(e) Agenus shall, within five (5) Business Days after Agenus’ receipt thereof, furnish Incyte with copies of all notices received by Agenus relating to any alleged breach or default by Agenus under the LICR Agreement that could materially adversely affect Incyte and, if Agenus determines that it cannot or chooses not to cure or otherwise resolve any such alleged breach or default, Agenus shall so notify Incyte within five (5) Business Days of such determination.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

ARTICLE XI: CONFIDENTIALITY

11.1 Confidential Information .

(a) In connection with the performance of their respective obligations under this Agreement, each Party (the “ Disclosing Party ”) may, itself or through or its Affiliates, disclose certain Confidential Information to the other Party (the “ Recipient ”) or its Affiliates. During the Term and for a period of [**] thereafter, the Recipient shall maintain all Confidential Information of the Disclosing Party in strict confidence and shall not use such Confidential Information for any purpose, except that the Recipient may disclose or permit the disclosure of any such Confidential Information to its Affiliates and permitted sublicensees, or its or their respective directors, officers, employees, consultants, advisors and agents, and its Permitted Subcontractors, who in each case are obligated to maintain the confidential nature of such Confidential Information on terms no less stringent than those of this Article XI. In addition, the Recipient may use or disclose Confidential Information of the Disclosing Party (i) in exercising the Recipient’s rights and licenses granted hereunder (including exercising these rights to discuss with Third Party sublicensing opportunities) or to fulfill its obligations and/or duties hereunder; provided that such disclosure is made to a Person who is obligated to confidentiality and non-use obligations no less rigorous than those of this Section 11.1 and (ii) subject to Section 11.1(c), in prosecuting or defending litigation, complying with applicable Law and/or submitting information to tax or other Governmental Authorities. Confidential Information of the Disclosing Party includes all “Confidential Information” (as defined in the Prior Confidentiality Agreement which remains Confidential Information on the Effective Date of this Agreement) disclosed by the Disclosing Party or its Affiliate to the Recipient or its Affiliate pursuant to the Prior Confidentiality Agreement.

(b) The obligations of confidentiality and non-use set forth above shall not apply to the extent that the Recipient can demonstrate that the relevant Confidential Information of the Disclosing Party: (i) was publicly known prior to the time of its disclosure under this Agreement other than through a breach by the Disclosing Party or its Affiliate of the Prior Confidentiality Agreement; (ii) became publicly known after the time of its disclosure under this Agreement other than through acts or omissions of the Recipient, its Affiliates, potential sublicensees or permitted sublicensees in violation of this Agreement; (iii) is or was disclosed to the Recipient or any of its Affiliates at any time, whether prior to or after the time of its disclosure under this Agreement or the Prior Confidentiality Agreement, by a Third Party having no fiduciary relationship with the Disclosing Party or any of its Affiliates and having no obligation of confidentiality with respect to such Confidential Information; (iv) is independently developed by the Recipient or any of its Affiliates without access to such Confidential Information as evidenced by written records; or (v) was known by Recipient or any of its Affiliates at the time of receipt from Disclosing Party or any of its Affiliates as documented by Recipient’s or any of its Affiliate’s records.

(c) In addition, the Recipient or any of its Affiliates may disclose Confidential Information of the Disclosing Party to the extent necessary to comply with applicable Laws or a court or administrative order; provided that the Recipient provides to the Disclosing Party prior

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

written notice of such disclosure, to the extent reasonably possible, and that the Recipient takes all reasonable and lawful actions to obtain confidential treatment for such disclosure and, to the extent possible, to minimize the extent of such disclosure.

(d) Notwithstanding the obligations in Section 11.1(a) and 11.1(c), a Party may disclose (and, in connection therewith, use) Confidential Information of the other Party, if such disclosure:

(i) is made to Governmental Authorities or other Regulatory Authorities in order to obtain Patent Rights or to gain or maintain approval (A) to conduct Clinical Trials with respect to products as provided hereunder or (B) to market products as provided hereunder, but such disclosure may be only to the extent reasonably necessary to obtain such Patent Rights or authorizations;

(ii) is made to its Affiliates, permitted sublicensees, agents, consultants, or other Third Parties (including service providers) for the Development, Manufacture or Commercialization of Licensed Antibodies and Products as provided hereunder, or in connection with an assignment of this Agreement, a licensing transaction related to products under this Agreement, a loan, financing or investment, or an acquisition, merger, consolidation or similar transaction (or for such Persons to determine their interest in performing such activities or entering into such transactions), in each case on the condition that any Third Parties to whom such disclosures are made agree to be bound by confidentiality and non-use obligations no less rigorous than those contained in this Agreement; or

(iii) consists entirely of Confidential Information previously approved by the Disclosing Party for disclosure by the Recipient.

(e) Each Recipient shall be responsible for any breach of the obligations of this Section 11.1 by any Person to whom such Recipient or its Affiliate disclosed the Disclosing Party’s Confidential Information.

11.2 Publicity; Attribution; Terms of this Agreement; Non-Use of Names .

(a) The Parties shall issue a press release, in the form attached as Exhibit B , within one (1) Business Day after the Execution Date, to announce the execution of this Agreement and describe the material financial and operational terms of this Agreement. Except as required by judicial order or applicable Law, or as set forth below, neither Party shall make any public announcement concerning this Agreement without the prior written consent of the other Party, which consent shall not be unreasonably withheld or delayed. The Party preparing any such public announcement shall provide the other Party with a draft thereof at least [**] prior to the date on which such Party would like to make the public announcement. Neither Party shall use the name, trademark, trade name or logo of the other Party, its employees, or of LICR, in any publicity or news release relating to this Agreement or its subject matter, without the prior express written permission of the other Party or, as applicable, LICR.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

(b) Notwithstanding the terms of this Article XI, either Party shall be permitted to disclose the existence and terms of this Agreement to the extent required, based on the advice of such Party’s legal counsel, to comply with applicable Laws, including the rules and regulations promulgated by the U.S. Securities and Exchange Commission (“ SEC ”) or any other Governmental Authority. Notwithstanding the foregoing, before disclosing this Agreement or any of the terms hereof pursuant to this Section 11.2(b), the Parties will consult with one another on the terms of this Agreement for which confidential treatment will be sought in making any such disclosure. If a Party wishes to disclose this Agreement or any of the terms hereof in accordance with this Section 11.2(b), such Party agrees, at its own expense, to seek confidential treatment of the portions of this Agreement or such terms as may be reasonably requested by the other Party; provided that the disclosing Party shall always be entitled to comply with legal requirements, including the requirements of the SEC.

(c) Either Party may also disclose the existence and terms of this Agreement in confidence to its attorneys and advisors, and to potential acquirors (and their respective professional advisors), in connection with a potential merger, acquisition or reorganization and to existing and potential investors or lenders of such Party, as a part of their due diligence investigations, or to existing and potential sublicensees or to permitted sublicensees and assignees, or to any other Person described in Section 11.1(d)(ii), in each case under an agreement to keep the terms of this Agreement confidential under terms of confidentiality and non-use substantially no less rigorous than the terms contained in this Agreement and to use such information solely for the purpose permitted pursuant to this Section 11.2(c) or Section 11.1(d)(ii).

(d) For purposes of clarity, either Party may issue a press release or public announcement or make such other disclosure if the content of such press release, public announcement or disclosure has previously been made public other than through a breach of this Agreement by the issuing Party or its Affiliates.

11.3 Publications . Each Party and its Affiliates shall have the right to make disclosures pertaining to a Licensed Antibody or Product to Third Parties in Publications, consistent with the Publication plan approved by the JSC and with the prior approval of the JSC, in accordance with the following procedure: The publishing Party shall provide the non-publishing Party with an advance copy of the proposed Publication, and the other Party shall then have [**] prior to submission of any Publication in which to recommend any changes it reasonably believes are necessary to preserve any Patent Rights or Know-How belonging in whole or in part to the non-publishing Party. If the non-publishing Party informs the publishing Party that such Publication, in the non-publishing Party’s reasonable judgment, could be expected to have a material adverse effect on any patentable invention owned by or licensed, in whole or in part, to the non-publishing Party (other than pursuant to a license granted under this Agreement), or on any Know-How which is Confidential Information of the non-publishing Party, the publishing Party shall delay or prevent such Publication as follows: (i) with respect to a patentable invention, such Publication shall be delayed sufficiently long (not to exceed sixty (60) days) to permit the timely preparation and filing of a patent application; and (ii) with respect to Know-How which is Confidential Information of such non-publishing Party, such Know-How

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

shall be deleted from the Publication. Notwithstanding the foregoing, a Party shall be permitted to disclose information on sites such as clinicaltrials.gov in accordance with its normal business practices.

11.4 Return of Confidential Information . Subject to Sections 8.3(a) or 8.3(b), upon the expiration or termination of this Agreement, upon request, the Receiving Party shall return to the Disclosing Party or destroy all Confidential Information received by the Receiving Party or any of its Affiliates from the Disclosing Party or any of its Affiliates (and all copies and reproductions thereof). In addition, the Receiving Party and its Affiliates shall destroy: (a) any notes, reports or other documents. prepared by the Receiving Party which contain Confidential Information of the Disclosing Party; and (b) any Confidential Information of the Disclosing Party (and all copies and reproductions thereof) which is in electronic form or cannot otherwise be returned to the Disclosing Party. Nothing in this Section 11.4 shall require the alteration, modification, deletion or destruction of archival tapes or other electronic back-up media made in the ordinary course of business; provided that the Receiving Party and its Affiliates shall continue to be bound by its obligations of confidentiality and other obligations under this Article XI with respect to any of the Disclosing Party’s Confidential Information contained in such archival tapes or other electronic back-up media. Any requested destruction of the Disclosing Party’s Confidential Information shall be certified in writing to the Disclosing Party by an authorized officer of the Receiving Party supervising such destruction. Notwithstanding the foregoing, (i) the Receiving Party and its Affiliates may retain one copy of the Disclosing Party’s Confidential Information solely for the purpose of determining the Receiving Party’s continuing obligations under this Article XI and (ii) the Receiving Party and its Affiliates may retain the Disclosing Party’s Confidential Information and its own notes, reports and other documents to the extent reasonably required (x) to exercise the rights and licenses of the Receiving Party expressly surviving expiration or termination of this Agreement; (y) to perform the obligations of the Receiving Party expressly surviving expiration or termination of this Agreement; or (z) for regulatory or archival purposes. Notwithstanding the return or destruction of the Disclosing Party’s Confidential Information, the Receiving Party shall continue to be bound by its obligations of confidentiality and other obligations under this Article XI.

ARTICLE XII: MISCELLANEOUS

12.1 Governing Law . This Agreement (and any claims or disputes arising out of or related thereto or to the transactions contemplated thereby or to the inducement of any Party to enter therein, whether for breach of contract, tortious conduct, or otherwise and whether predicated on common law, statute or otherwise) shall in all respects be governed by and construed in accordance with the laws of the State of New York, USA, including all matters of construction, validity and performance, in each case without reference to any conflict of law rules that might lead to the application of the laws of any other jurisdiction.

12.2 Dispute Resolution . Matters before the JSC, Project Management Teams and Subcommittees shall be governed by the process specified in Section 3.5. Any controversy, claim or dispute arising out of or relating to this Agreement that is not subject to Section 3.5, shall be settled, if possible, through good faith negotiations between the Parties. If the Parties

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

are unable to settle such dispute within [**] , such dispute, controversy or claim arising out of or relating to this Agreement, or the breach, termination or invalidity thereof, shall be resolved as follows:

(a) The Executive Officers of both Parties shall meet to attempt to resolve such dispute. Such resolution, if any, of a referred issue shall be final and binding on the Parties. All negotiations pursuant to this Section 12.2(a) are confidential and shall be treated as compromise and settlement negotiations for purposes of applicable rules of evidence.

(b) If the Executive Officers cannot resolve such dispute within [**] after either Party requests such a meeting in writing and such dispute does not relate to a scientific or budgetary matter over which the JSC has responsibility or a matter described in Section 3.5(c), then,

(i) if the dispute relates to (A) whether a milestone event has been achieved, (B) whether Incyte has Abandoned Development or Abandoned Commercialization of a Product or Project, or (C) inventorship of a Patent Right, then the matter will be submitted to an expert for resolution in accordance with the procedures set forth in Schedule 12.2 ; and

(ii) in all other cases, either Party may seek resolution of such dispute in a court of competent jurisdiction.

(c) Notwithstanding anything to the contrary in this Section, if either Party in its sole judgment believes that any such breach of this Agreement could cause it irreparable harm, such Party (i) will be entitled to seek equitable relief in order to avoid such irreparable harm, and (ii) will not be required to follow the procedures set forth in Section 12.2(a)-(b) with respect to seeking such relief.

12.3 Assignment .

(a) Neither Party may assign its rights and obligations under this Agreement without the prior written consent of the other Party, except that either Party may make such assignment without the prior written consent of the other Party to an Affiliate (so long as such Party shall remain jointly and severally liable with such Affiliate with respect to all obligations so assigned) or as set forth in Section 12.3(b)(i). Any request for consent to assignment shall not be unreasonably withheld or delayed. Any purported assignment in contravention of this Section 12.3 shall, at the option of the non-assigning Party, be null and void and of no effect. No assignment shall release either Party from responsibility for the performance of any accrued obligation of such Party hereunder. This Agreement shall be binding upon and enforceable against the successor to or any permitted assignee from either of the Parties.

(b) Each Party agrees that, notwithstanding any provisions of this Agreement to the contrary:

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

(i) Either Party may assign this Agreement, along with the rights and licenses granted to it hereunder and the obligations to which it is subject hereunder, to a Third Party in connection with a Change in Control, subject to Sections 2.7(f), 8.2(e) and 12.3(b)(ii).

(ii) In the event that this Agreement is assigned by a Party in connection with a Change in Control or a Party otherwise undergoes a Change in Control, (A) the other Party shall not be entitled to any rights or access to Intellectual Property Rights of the assignee or acquirer of such Party, and (B) the assignee or acquirer (1) shall not be entitled to rights or access to Intellectual Property Rights of the other Party, and (2) shall not be bound by the provisions of Section 2.7(c), 2.7(d) or 8.3(c).

12.4 Entire Agreement; Amendments . This Agreement and the Exhibits referred to in this Agreement constitute the entire agreement between the Parties with respect to the subject matter hereof, and supersede all previous arrangements with respect to the subject matter hereof, whether written or oral, including the Prior Confidentiality Agreement. Any amendment or modification to this Agreement shall be made in writing signed by both Parties.

12.5 Notices . All communications, notices, instructions and consents provided for herein or in connection herewith shall be made in writing and be sent to the address below and will be (a) given in person, (b) sent by registered or certified mail, return receipt requested, postage prepaid, or (c) sent by a reputable international overnight courier service. Any such communication, notice, instruction or consent will be deemed to have been delivered: (i) on receipt if given in person; (ii) three (3) Business Days after it is sent by registered or certified airmail, return receipt requested, postage prepaid within the same country as the recipient’s address or five (5) Business Days after it is sent by registered or certified airmail, return receipt requested, postage prepaid from another country; or (iii) one (1) Business Day after it is sent via a reputable international overnight courier service.

Notices to Agenus shall be addressed to:

Agenus Inc.

3 Forbes Road

Lexington, Massachusetts 02421-7305, USA

Attention: General Counsel

with a copy to:

Choate, Hall & Stewart LLP

Two International Place

Boston, Massachusetts 02110, USA

Attention: Gerald E. Quirk, Esq.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

Notices to 4-AB shall be addressed to:

4-Antibody AG

Hochbergerstrasse 60C

CH-4057 Basel, Switzerland

Attention: Robert Burns, Managing Director

with a copy to:

Agenus Inc.

3 Forbes Road

Lexington, Massachusetts 02421-7305, USA

Attention: General Counsel

Notices to Incyte shall be addressed to:

Incyte Europe Sarl

c/o Incyte Corporation

1801 Augustine Cut-Off

Wilmington, Delaware 19803, USA

Attention: General Counsel

with a copy to:

WilmerHale

60 State Street

Boston, Massachusetts 02109, USA

Attention: Steven D. Singer, Esq.

provided , however , that if either Party will have designated a different address by notice to the other Party in accordance with this Section 12.5, then to the last address so designated.

12.6 Force Majeure . No failure or omission by either Party in the performance of any obligation of this Agreement shall be deemed a breach of this Agreement or create any liability if the same shall arise from a Force Majeure Event; provided that the Party affected by such cause promptly notifies the other Party and uses diligent efforts to cure such failure or omission as soon as is practicable after the occurrence of one or more of the above mentioned causes.

12.7 Compliance With Laws . Each Party shall perform its obligations under this Agreement in compliance with all applicable Laws.

12.8 Use Of Names, Logos Or Symbols . Subject to Sections 5.1(d) and Article XI, no Party shall use the name, trademarks, trade names physical likeness, employee names or owner symbol of the other Party for any purpose, including private or public securities placements, without the prior written consent of the affected Party. Nothing contained in this

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

Agreement, except Section 5.1(d) and Article XI, shall be construed as granting either Party any rights or license to use any of the other Party’s trademarks, trade names or the names of any employees thereof, without separate, express written permission of the owner of such trademark, trade name or name.

12.9 Independent Contractors . It is understood and agreed that the relationship between the Parties is that of independent contractors and that nothing in this Agreement shall be construed to create a joint venture or any relationship of employment, agency or partnership between the Parties to this Agreement. Neither Party is authorized to make any representations, commitments or statements of any kind on behalf of the other Party or to take any action that would bind the other Party. Furthermore, none of the transactions contemplated by this Agreement shall be construed as a partnership for any tax purposes.

12.10 No Implied Waivers; Rights Cumulative . No failure on the part of Agenus or Incyte to exercise, and no delay by either Party in exercising, any right, power, remedy or privilege under this Agreement, or provided by statute or at law or in equity or otherwise, shall impair, prejudice or constitute a waiver of any such right, power, remedy or privilege by such Party or be construed as a waiver of any breach of this Agreement or as an acquiescence therein by such Party, nor shall any single or partial exercise of any such right, power, remedy or privilege by a Party preclude any other or further exercise thereof or the exercise of any other right, power, remedy or privilege.

12.11 Severability . If, under applicable Laws, any provision of this Agreement is invalid or unenforceable, or otherwise directly or indirectly affects the validity of any other material provision(s) of this Agreement (such invalid or unenforceable provision, a “ Severed Clause ”), this Agreement shall endure except for the Severed Clause. The Parties shall consult one another and use good faith efforts to agree upon a valid and enforceable provision that is a reasonable substitute for the Severed Clause in view of the intent of this Agreement.

12.12 Execution In Counterparts . This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Signatures provided by facsimile transmission or in Adobe™ Portable Document Format (.pdf) sent by electronic mail shall be deemed to be original signatures.

12.13 No Third Party Beneficiaries . No Person other than Incyte and Agenus (and their respective successors and permitted assignees) shall be deemed an intended beneficiary hereunder or have any right to enforce any obligation of this Agreement.

12.14 Performance by Affiliates . Either Party may use one or more of its Affiliates to perform its obligations and duties hereunder and Affiliates of a Party are expressly granted certain rights herein; provided that each such Affiliate shall be bound by the corresponding obligations of such Party and the Parties shall remain liable hereunder for the prompt payment and performance of all their respective obligations hereunder.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

12.15 Exhibits . In the event of inconsistencies between this Agreement and any Exhibit hereto, the terms of this Agreement shall control.

12.16 Parent Guarantee . Parent hereby irrevocably and unconditionally guarantees all obligations and liabilities of Incyte arising under this Agreement, including the full and timely performance thereof. This guarantee is of payment and performance and not of collection. No release or extinguishment of Incyte’s obligations or liabilities (other than in accordance with the terms of this Agreement), whether by decree in any bankruptcy or similar proceeding or otherwise, shall affect the continuing validity and enforceability of this guarantee.

12.17 Construction . In construing this Agreement, unless expressly specified otherwise:

(a) references to Articles, Sections and Exhibits are to articles and sections of, and exhibits to, this Agreement;

(b) except where the context otherwise requires, use of either gender includes any other gender, and use of the singular includes the plural and vice versa;

(d) any list or examples following the word “including” shall be interpreted without limitation to the generality of the preceding words;

(e) except where the context otherwise requires, the word “or” is used in the inclusive sense;

(f) the terms “hereof”, “hereto”, “hereby”, “herein” and “hereunder” and words of similar import when used in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement;

(g) the term “extent” in the phrase “to the extent” means the degree to which a subject or other thing extends, and such phrase does not mean simply “if”;

(h) except where the context otherwise requires, “will” means “shall”;

(i) references to an agreement or instrument mean such agreement or instrument as from time to time amended, modified or supplemented (subject to any restrictions on such amendments, supplements or modifications set forth herein);

(j) references to a Person are also to its successors, heirs and permitted assigns;

(k) except if Business Days are specified, “day” or “days” refers to calendar days;

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

(l) if a period of time is specified and dates from a given day or Business Day, or the day or Business Day of an act or event, it is to be calculated exclusive of that day or Business Day;

(m) “monthly” means on a calendar month basis;

(n) “quarter” or “quarterly” means on a Calendar Quarter basis;

(o) “annual” or “annually” means on a Calendar Year basis;

(p) “year” means a three hundred sixty-five (365) day period unless Calendar Year is specified;

(q) references to a Law include any amendment or modification to such Law and any rules or regulations issued thereunder, whether such amendment or modification is made, or issuance of such rules or regulations occurs, before or, only with respect to events or developments occurring or actions taken or conditions existing after the date of such amendment, modification or issuance, after the Execution Date, but only to the extent such amendment or modification, to the extent it occurs after the date hereof, does not have a retroactive effect;

(r) all references to “Dollars” or “$” herein shall mean U.S. Dollars;

(s) when referring to notices to, review by, consultation with, or the prior written consent or agreement of Agenus, such notice, review, consultation, consent or agreement shall only be required as to Agenus US;

(t) any reference to Agenus shall mean either or both Agenus US or 4-AB, as the context may require;

(u) a capitalized term not defined herein but reflecting a different part of speech than a capitalized term which is defined herein shall be interpreted in a correlative manner ;

(v) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein); and

(w) each Party represents that it has been represented by legal counsel in connection with this Agreement and acknowledges that it has participated in the drafting hereof. In interpreting and applying the terms and provisions of this Agreement, the Parties agree that no presumption will apply against the Party which drafted such terms and provisions.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

ARTICLE XIII: HSR

13.1 HSR Filings . Both Parties shall promptly file (and, in any event, within seven (7) Business Days after the Execution Date) the HSR Filings with the FTC and the DOJ pursuant to the HSR Act.

13.2 Cooperation .

(a) The Parties shall use Commercially Reasonable Efforts to promptly obtain HSR Clearance for the consummation of this Agreement and the Stock Purchase Agreement and the transactions contemplated hereby and thereby and shall keep each other apprised of the status of any communications with, and any inquiries or requests for additional information from, the FTC and the DOJ and shall comply promptly with any such inquiry or request; provided, however , that neither Party shall be required to consent to the divestiture or other disposition of any assets (including the assets of any Affiliate of either Party) or to consent to any other structural or conduct remedy, and each Party and its Affiliates shall have no obligation to contest or settle, administratively or in court, any ruling, order or other action of the FTC or DOJ or any Third Party respecting the transactions contemplated by this Agreement or the Stock Purchase Agreement.

(b) The Parties shall instruct their respective counsel to cooperate with each other and use Commercially Reasonable Efforts to facilitate and expedite the identification and resolution of any such issues and, consequently, the expiration of the applicable HSR Act waiting period. Each Party’s counsel will undertake (i) to keep each other appropriately informed of communications from and to personnel of the reviewing antitrust authority, and (ii) to confer with each other regarding appropriate contacts with and responses to personnel of the FTC or DOJ. Incyte shall be responsible for any filing fees in connection with the HSR Filings.

13.3 Termination Due to Passage of Time . Notwithstanding any other provisions of this Agreement to the contrary, either Party may terminate this Agreement effective upon notice to the other Party if the HSR Clearance Date shall not have occurred on or before the date that is [**] after the Parties make their respective HSR Filings pursuant to Section 13.1. If this Agreement is so terminated pursuant to this Section 13.3, then this Agreement shall terminate in its entirety and, for clarity, the Prior Confidentiality Agreement shall remain in full force and effect notwithstanding any termination of this Agreement pursuant to this Section 13.3.

[ signature page follows ]

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Execution Date.

	INCYTE EUROPE SARL


	By:	/s/ Laurent Chardonnet
		Laurent Chardonnet
		Managing Officer
		Signed in Geneva, Switzerland on 9 January 2015


	INCYTE CORPORATION
	(solely with respect to Section 12.16)


	By:	/s/ Herve Hoppenot
		Herve Hoppenot
		President and Chief Executive Officer


	AGENUS INC.


	By:	/s/ Garo H. Armen, Ph.D.
		Garo H. Armen, Ph.D.
		Chairman and Chief Executive Officer


	4-ANTIBODY AG


	By:	/s/ Robert F. Burns, Ph.D.
		Robert F. Burns, Ph.D.
		Managing Director


	By:	/s/ Marc A. van Dijk, Ph.D.
		Marc A. van Dijk, Ph.D.
		Site Head — Basel and Chief Technology Officer

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

EXHIBIT A

AGENUS PATENT RIGHTS

[**]

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

EXHIBIT B

INITIAL PRESS RELEASE

[see attached]

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

FOR IMMEDIATE RELEASE

Incyte and Agenus Announce Global Alliance to Develop
Novel Immuno-Oncology Antibodies

· Alliance to initially focus on four checkpoint modulator programs directed at GITR, OX40, TIM-3 and LAG-3

· Incyte to have access to Agenus’ proprietary Retrocyte Display TM platform for the discovery of additional therapeutic antibodies

· Agenus to receive $60 million comprised of a $25 million technology and program access fee under the. collaboration plus $35 million equity investment in Agenus at $4.51/share

· Agenus eligible to receive up to $350 million in development, regulatory and commercial milestones across the four lead programs

WILMINGTON, DE and LEXINGTON, MA - January 9, 2015 - Incyte Corporation (Nasdaq: INCY) and Agenus Inc. (Nasdaq: AGEN) today announced a global license, development and commercialization agreement focused on novel immuno-therapeutics using Agenus’ proprietary Retrocyte Display TM antibody discovery platform.

The alliance will initially focus on the development of checkpoint modulator antibodies directed against GITR, OX40, LAG-3 and TIM-3. Agenus and Incyte will share all costs and profits for the GITR and OX40 antibody programs on a 50:50 basis, with Agenus eligible for potential milestones; TIM-3 and LAG-3 are royalty-bearing programs to be funded by Incyte, with Agenus eligible for potential milestones and royalties. The first clinical trials are expected to be initiated in 2016.

“This alliance with Agenus adds therapeutic antibody capabilities to our proven small molecule discovery expertise, significantly expands the landscape of potential immuno-oncology targets available to us, and strengthens our ability to identify and advance novel therapeutic combinations,” said Hervé Hoppenot, President and CEO of Incyte.

“Incyte’s track record of success in oncology development and commercialization, together with our therapeutic antibody expertise and the commonality of our objectives, speak to the compelling strategic rationale for this alliance,” said Garo H. Armen, Ph.D., Chairman and CEO of Agenus. “Our Retrocyte Display TM technology has produced high quality antibody candidates and offers significant advantages over competing technologies. With Incyte, we believe we have an ideal partner to help define the evolving treatment paradigm of cancer immunotherapies.”

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

Under the terms of the agreements between the parties, Incyte will make upfront payments to Agenus totaling $25 million and invest $35 million by purchasing approximately 7.76 million newly issued shares of Agenus common stock at a price of $4.51 per share. In addition to the initial four target programs in the alliance, the parties have an option to jointly nominate and pursue additional targets within the framework of the multi-year collaboration. Terms also include:

· For each royalty-bearing product, Agenus will be eligible to receive up to $155 million in future contingent development, regulatory and commercialization milestones.

· Also for royalty-bearing products, Agenus will be eligible to receive tiered royalties on global net sales ranging from mid-single to low-double digit rates, and has reserved the right to elect to co-fund 30% of development costs for increased royalties.

· For products from any additional programs that the parties elect to bring into the collaboration, Agenus may opt to designate them as profit-share products.

· For each profit-share product, Agenus will be eligible to receive up to $20 million in future contingent development milestones.

Retrocyte Display TM is a proprietary retroviral technology that enables a highly diverse library (>1x10 9 ) of human IgG molecules to be displayed on the surface of B-lineage cells. This innovative cell-displayed expression platform permits the rapid generation of fully human and humanized therapeutic antibodies with high affinity and target specificity.

The closing of the transaction is conditioned on the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.

About Incyte

Incyte Corporation is a Wilmington, Delaware-based biopharmaceutical company focused on the discovery, development and commercialization of proprietary small molecule drugs, primarily for oncology. For additional information on Incyte, please visit the Company’s website at www.incyte.com

About Agenus

Agenus is an immuno-oncology company developing a portfolio of checkpoint modulators (CPMs), heat shock protein peptide-based vaccines and adjuvants. Agenus’ checkpoint modulator programs target GITR, OX40, CTLA-4, LAG-3, TIM-3 and PD-1. The company’s proprietary discovery engine Retrocyte Display TM is used to generate fully human and humanized therapeutic antibody drug candidates. The Retrocyte Display TM platform uses a high-throughput approach incorporating IgG format human antibody libraries expressed in mammalian B-lineage cells. Agenus’ heat shock protein-based vaccines for cancer and infectious disease have completed Phase 2 studies in glioblastoma multiforme, and in the treatment of herpes simplex viral infection. The company’s QS-21 Stimulon ® adjuvant platform is extensively partnered with GlaxoSmithKline and Janssen Sciences Ireland UC and includes several vaccine candidates in Phase 2, as well as shingles and malaria vaccines which have successfully completed Phase 3 clinical trials. For more information, please visit www.agenusbio.com, or connect with the company on Facebook, LinkedIn, Twitter and Google+.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

Incyte Forward-Looking Statements

Except for the historical information set forth herein, the matters set forth in this press release, including without limitation statements with respect to the initial focus of the alliance, the potential benefits of the alliance and the expectation that the first clinical trials under the alliance will be initiated in 2016, contain predictions and estimates and are forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on Incyte’s current expectations and subject to risks and uncertainties that may cause actual results to differ materially, including the high degree of risk associated with drug development, results of further research and development, unanticipated delays, other market or economic factors and technological advances, regulatory approval of the transaction and other risks detailed from time to time in Incyte’s filings with the Securities and Exchange Commission, including its Quarterly Report on Form 10-Q for the quarter ended September 30, 2014. Incyte disclaims any intent or obligation to update these forward-looking statements.

Agenus Forward-Looking Statements

This press release contains forward-looking statements that are made pursuant to the safe harbor provisions of the federal securities laws, including statements regarding the initial focus of the alliance between Agenus and Incyte, the potential benefits of the alliance and the expectation that the first clinical trials under the alliance will be initiated in 2016. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks and uncertainties include, among others, regulatory approval of the transaction, unanticipated delays and other market or economic factors, as well as the factors described under the Risk Factors section of our most recently filed Quarterly Report on Form 10-Q with the Securities and Exchange Commission. Agenus cautions investors not to place considerable reliance on the forward-looking statements contained in this release. These statements speak only as of the date of this press release, and Agenus undertakes no obligation to update or revise the statements, other than to the extent required by law. All forward-looking statements are expressly qualified in their entirety by this cautionary statement.

Incyte Contact:

Pamela M. Murphy

Vice President, Investor Relations & Corporate Communications

302/498 6944

Agenus Contact:

Media:

Brad Miles / BMC Communications

646/513-3125

bmiles@bmccommunications.com

Investors:

Andrea Rabney / Argot Partners

212/600-1902

andrea@argotpartners.com

# # #

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

SCHEDULE 1.56

[**]

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

SCHEDULE 4.1

PRELIMINARY ACTION PLAN

[see attached]

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

[**]

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

SCHEDULE 7.1

ALLOCATION OF LICENSE FEE

[**]

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

SCHEDULE 12.2

EXPERT DECISION

1. Selection of Expert and Submission of Positions . The Parties shall select and agree upon a mutually acceptable independent Third Party expert who is neutral, disinterested and impartial, and has experience relevant to the evaluation of biotechnology industry collaboration agreements (the “ Expert ”). If the Parties are unable to mutually agree upon an Expert within [**] following the initiation of these expert decision procedures, then upon request by either Party, the Expert shall be an arbitrator appointed by Judicial and Mediation Services (“ JAMS ”). Once the Expert has been selected, each Party shall within [**] following selection of the Expert provide the Expert and the other Party with a written report setting forth its position with respect to the substance of the dispute and may submit a revised or updated report and position to the Expert within [**] of receiving the other Party’s report. If so requested by the Expert, each Party shall make oral submissions to the Expert based on such Party’s written report, and each Party shall have the right to be present during any such oral submissions.

2. JAMS Supervision . In the event the Expert is a JAMS arbitrator selected by JAMS as provided in this Schedule 12.2 , the matter shall be conducted as a binding arbitration in accordance with JAMS procedures, as modified by this Schedule 12.2 (including that the arbitrator shall adopt as his or her decision the position of one Party or the other, as described below). In such event, the arbitrator may retain a Third Party expert with experience relevant to the evaluation of biotechnology industry collaboration agreements to assist in rendering such decision, and the expenses of any such expert shall be shared by the Parties as costs of the arbitration as provided in this Schedule 12.2 .

3. Determination by the Expert . The Expert shall, no later than [**] after the last submission of the written reports and, if any, oral submissions, select one of the Party’s positions as his or her final decision, and shall not have the authority to modify either Party’s position or render any substantive decision other than to so select the position of either Party as set forth in their respective written report (as initially submitted, or as revised in accordance with this Schedule 12.2 , as applicable). The Parties agree that the decision of the Expert shall be the sole, exclusive and binding remedy between them regarding any such dispute referred to the Expert pursuant to Section 12.2 of this Agreement, and the Expert’s decision shall become the decision of the Parties or, if applicable, the JSC on the matter.

4. Location; Costs . Unless otherwise mutually agreed upon by the Parties, the in-person portion (if any) of such proceedings shall be conducted in New York, New York. The Parties agree that they shall share equally the costs and fees of the Expert in connection with any proceeding under this Schedule 12.2 , including the cost of the arbitration filing and hearing fees, the cost of any independent expert retained by the arbitrator and the cost of the arbitrator and administrative fees of JAMS, if applicable. Each Party shall bear its own costs and attorneys’ and witnesses’ fees and associated costs and expenses incurred in connection with any proceeding under this Schedule 12.2 .

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

Exhibit 10.2

STOCK PURCHASE AGREEMENT

This Stock Purchase Agreement (this “ Agreement ”) is dated as of January 9, 2015, between Agenus Inc., a Delaware corporation (the “ Company ”), and Incyte Corporation, a Delaware corporation (the “ Purchaser ”).

WHEREAS, the Company, the Company’s wholly-owned subsidiary, 4-Antibody AG, a joint stock company formed under the laws of Switzerland, Purchaser and Inctye Europe SARL, a Swiss limited liability company (a société à responsabilité limitée), entered into that certain License, Development and Commercialization Agreement dated as of the date hereof (the “ Collaboration Agreement ”); and

WHEREAS, in connection with the execution of the Collaboration Agreement, the Company desires to sell to Purchaser, and Purchaser desires to purchase from the Company, shares of Common Stock of the Company in the amount and upon the terms and conditions set forth in this Agreement.

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and Purchaser agree as follows:

ARTICLE I.
DEFINITIONS

1.1 Definitions . In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings set forth in this Section 1.1:

“ Affiliate ” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 405 under the Securities Act.

“ Board of Directors ” means the board of directors of the Company.

“ Business Day ” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

“ Closing ” means the closing of the purchase and sale of the Shares pursuant to Section 2.1.

“ Closing Date ” means the Trading Day on which all conditions precedent to (i) Purchaser’s obligation to pay the Purchase Price and (ii) the Company’s obligation to deliver the Shares, in each case, have been satisfied or waived, but it no event later than the third Trading Day following the HSR Clearance Date.

“ Collaboration Agreement ” has the meaning ascribed to such term in the preamble.

“ Commission ” means the United States Securities and Exchange Commission.

“ Common Stock ” means the common stock of the Company, par value $0.01 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.

“ Common Stock Equivalents ” means any securities of the Company which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

“ Company Counsel ” means Choate, Hall & Stewart LLP, with offices located at Two International Place, Boston, MA 02110.

“ Disclosure Schedules ” means the schedules attached to this Agreement, as they may be updated pursuant to Section 2.3(a).

“ DOJ ” means the United States Department of Justice.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“ FCPA ” means the Foreign Corrupt Practices Act of 1977, as amended.

“ FTC ” means the United States Federal Trade Commission.

“ GAAP ” has the meaning ascribed to such term in Section 3.1(g).

“ HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (15 U.S.C. §18a), and the rules and regulations promulgated thereunder.

“ HSR Clearance ” means the earlier of (a) notification to the Parties from the FTC or DOJ of early termination of the applicable waiting period under the HSR Act with respect to the HSR Filings, or (b) expiration of the applicable waiting period under the HSR Act with respect to the HSR Filings; provided, however, that if the FTC or DOJ shall commence any investigation by means of a second request or otherwise, HSR Clearance means the termination of such investigation, without action to prevent the Parties from implementing the transactions contemplated by this Agreement with respect to the United States.

“ HSR Clearance Date ” means the earlier of (a) the date on which the FTC or DOJ shall notify the Parties of early termination of the waiting period under the HSR Act with respect to the HSR Filings, or (b) the date on which the applicable waiting period under the HSR Act with respect to the HSR Filings expires; provided, however, that if the FTC or DOJ shall commence any investigation by means of a second request or otherwise, HSR Clearance Date means the date on which any investigation opened by the FTC or

DOJ shall have been terminated, without action to prevent the Parties from implementing the transactions contemplated by this Agreement with respect to the United States.

“ HSR Filings ” means the filings by the Parties with the FTC and the DOJ of their respective premerger notification and report forms with respect to the matters set forth in this Agreement and the Collaboration Agreement, together with all required documentary attachments thereto.

“ IFRS ” has the meaning ascribed to such term in Section 3.1(g).

“ Intellectual Property ” means patents, patent applications, trademarks, trademark applications, service marks, trade names, trade dress, trade secrets, inventions and discoveries and invention disclosures whether or not patented, copyrights in both published and unpublished works, including without limitation all compilations, data bases and computer programs, materials and other documentation, licenses, internet domain names and other intellectual property rights and similar rights.

“ Liens ” means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

“ Lock-Up Period ” has the meaning assigned to such term in Section 5.1(a).

“ Material Adverse Effect ” means any (i) material adverse effect on the legality, validity or enforceability of this Agreement, (ii) material adverse effect on the results of operations, assets, business or condition (financial or otherwise) of the Company, taken as a whole, or (iii) material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under this Agreement.

“ Nasdaq ” means the NASDAQ Capital Market (or any successor thereto).

“ Party ” means any party to this Agreement.

“ Person ” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“ Purchase Price ” has the meaning ascribed to such term in Section 2.1.

“ Registration Statement ” means the registration statement on Form S-3 (or any successor form related to secondary offerings) required to be filed hereunder as contemplated by Article 4, including the prospectus, amendments and supplements to such registration statement or prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in such registration statement.

“ Rule 144 ” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any

similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

“ SEC Reports ” has the meaning ascribed to such term in Section 3.1(g).

“ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“ Shares ” has the meaning ascribed to such term in Section 2.1.

“ Subsidiary ” means the Company’s wholly-owned subsidiaries, as set forth on Schedule 1.1 .

“ Trading Day ” means a day on which Nasdaq is open for trading.

“ Transfer Agent ” means American Stock Transfer & Trust Company, LLC, the current transfer agent of the Company, with a mailing address of 6201 15 th Avenue, Brooklyn, NY 11219 and a facsimile number of (718) 236-4588, and any successor transfer agent of the Company.

“ WilmerHale ” means Wilmer Cutler Pickering Hale and Dorr LLP, with offices located at 60 State Street, Boston, MA 02109.

ARTICLE II.
PURCHASE AND SALE

2.1 Purchase and Sale of Shares; Closing . Subject to the terms and conditions of this Agreement, the Company agrees to sell to Purchaser at the Closing, and Purchaser agrees to purchase from the Company at the Closing, that certain number of whole shares of Common Stock (the “ Shares ”) equal in value to, or as close as possible without exceeding, $35,000,000 (the “ Purchase Price ”), each share valued at a price per share equal to the product of (i) 1.2 and (ii) the simple average of the daily closing Volume Weighted Average Price (VWAP) over the 20 Trading Days preceding the date of this Agreement on the Nasdaq Stock Market as defined by Bloomberg. Upon satisfaction or waiver of the covenants and conditions set forth in Sections 2.3 and 2.4, the Closing shall occur at the offices of WilmerHale or such other location as the parties shall mutually agree.

2.2 Condition Precedent . The obligation of the Company and Purchaser to enter into this Agreement is subject to the Company and Purchaser having executed and delivered the Collaboration Agreement on or prior to the date hereof.

2.3 Deliveries at Closing . At the Closing, subject to the terms and conditions of this Agreement:

(a) the Company shall deliver to Purchaser updated Disclosure Schedules that update the Disclosure Schedules delivered as of the date hereof for any matter or fact that arises at any time after the date hereof and prior to the Closing Date that, if such matter or fact had been in existence or had occurred at or before the date hereof, would have made

a representation or warranty of the Company in Section 3.1 untrue had it not been set forth or described in the Disclosure Schedules delivered on the date hereof;

(b) the Company shall deliver to Purchaser a copy of the irrevocable instructions to the Transfer Agent instructing the Transfer Agent to deliver the Shares to Purchaser on an expedited basis via The Depository Trust Company’s Deposit and Withdrawal at Custodian system;

(c) Company Counsel shall deliver to Purchaser a legal opinion, substantially in the form of Exhibit A attached hereto; and

(d) Purchaser shall pay to the Company, by wire transfer of immediately available funds to an account or accounts designated by the Company, the Purchase Price.

2.4 Closing Conditions .

(a) The obligation of the Company to sell the Shares to Purchaser at the Closing is subject to the following conditions being met or waived in writing by the Company:

(i) the representations and warranties of Purchaser contained in Section 3.2 shall be true and correct as of the date hereof and as of the Closing Date;

(ii) Purchaser shall have performed and complied with all covenants, agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by Purchaser on or before the Closing;

(iii) the Collaboration Agreement shall continue to be in full force and effect;

(iv) Purchaser shall have delivered the Purchase Price; and

(v) HSR Clearance shall have been obtained.

(b) The obligation of Purchaser to purchase the Shares at the Closing is subject to the following conditions being met or waived in writing by the Purchaser:

(i) the representations and warranties of the Company contained in Section 3.1 that are qualified as to materiality shall be true and correct as of the date hereof and as of the Closing Date, and those that are not so qualified shall be true and correct as of the date hereof and true and correct in all material respects as of the Closing Date (unless a representation or warranty speaks as of the date hereof or another specific date, in which case such representation or warranty shall be true and correct as of the date hereof or such other specific date);

(ii) the Company shall have performed and complied with all covenants, agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by the Company on or before the Closing;

(iii) the Company shall deliver to Purchaser a certificate executed by an authorized officer of the Company confirming the conditions set forth in Sections 2.4(b)(i) and (ii) have been duly satisfied;

(iv) the Collaboration Agreement shall continue to be in full force and effect;

(v) the Company shall have delivered the items set forth in Section 2.3(a)-(b) of this Agreement;

(vi) Company Counsel shall have delivered the item set forth in Section 2.3(c) of this Agreement;

(vii) there shall be no Material Adverse Effect with respect to the Company existing as of the Closing;

(viii) from the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or Nasdaq; and

(ix) HSR Clearance shall have been obtained.

2.5 Effect of Waiver of Condition to Closing . In the event that, as of the Closing, Purchaser expressly waives in writing the condition regarding a Material Adverse Effect set forth in Section 2.4 of this Agreement, Purchaser shall be deemed to have waived any right of recourse against the Company for, and agreed not to sue the Company in respect of, any and all events or inaccuracies in any representations or warranties of the Company (a) that, as of the Closing, have caused or would reasonably be expected to cause such Material Adverse Effect and (b) of which Purchaser had notice in writing from the Company at least two (2) business days prior to the Closing.

ARTICLE III.
REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the Company . Except as set forth in the Disclosure Schedules, the Company hereby represents and warrants to Purchaser as of the date hereof (unless specifically made as of another date, in which case as of such other date) as follows:

(a) Capitalization . The capitalization of the Company as of September 30, 2014 is as set forth on Schedule 3.1(a) . The Company has not issued any capital stock since its most recently filed periodic report under the Exchange Act, other than pursuant to the exercise of stock options under the Company’s stock option plans, the issuance of shares of Common Stock to employees pursuant to the Company’s employee stock

purchase plans, the issuance of shares of Common Stock pursuant to the Company’s at-the-market sales agreement and pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act. No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by this Agreement. Except as disclosed on Schedule 3.1(a) and as a result of the purchase and sale of the Shares, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents. The issuance and sale of the Shares will not obligate the Company to issue shares of Common Stock or other securities to any Person and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. All of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval or authorization of any stockholder, the Board of Directors or others is required for the issuance and sale of the Shares. There are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.

(b) Litigation . There are no actions, suits, proceedings or, to the knowledge of the Company, any investigations, pending or currently threatened against the Company that questions the validity of this Agreement or the issuance of the Shares contemplated hereby or would, if there were an unfavorable decision, have or could reasonably be expected to result in a Material Adverse Effect on the Company. As of the date hereof, there is no other material action, suit, or proceeding pending or, to the knowledge of the Company, currently threatened in writing against the Company. As of the date hereof, there are no material outstanding consents, orders, decrees or judgments of any governmental entity naming the Company. Neither the Company, nor, to the knowledge of the Company, any director or officer thereof, is or has been the subject of any action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company under the Exchange Act or the Securities Act.

(c) Organization and Good Standing . The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own, lease and operate its properties and carry on its business as now conducted. The Company is duly qualified

and is in good standing as a foreign corporation in each jurisdiction in which the properties owned, leased or operated, or the business conducted, by it requires such qualification except where the failure to be so qualified or in good standing, individually or in the aggregate, would not have a Material Adverse Effect.

(d) Authorization . All corporate actions on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement and for the issuance of the Shares have been taken. The Company has the requisite corporate power to enter into this Agreement and to carry out and perform its obligations hereunder. This Agreement has been duly authorized, executed and delivered by the Company and, upon due execution and delivery by Purchaser, will be a valid and binding agreement of the Company, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally or by equitable principles.

(e) Subsidiaries . All of the issued and outstanding shares of capital stock of each Subsidiary are, where applicable, validly issued, fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities. Other than the Subsidiaries and as otherwise set forth on Schedule 3.1(e) , the Company does not currently own or control, directly or indirectly, any interest in any other corporation, partnership, trust, joint venture, limited liability company, association, or other business entity. Except as disclosed in the SEC Reports, the Company is not a participant in any material joint venture, partnership or similar arrangement.

(f) No Conflict With Other Instruments . Neither the execution, delivery nor performance of this Agreement, nor the issuance of the Shares contemplated hereby will result in (i) any violation of, be in conflict with, cause any acceleration or any increased payments under, or constitute a default under, with or without the passage of time or the giving of notice: (a) any provision of the Company’s certificate of incorporation or bylaws; (b) any provision of any judgment, decree or order to which the Company is a party or by which it is bound; (c) any law, rule or regulation applicable to the Company; or (d) any note, mortgage, material contract, material agreement, license, waiver, exemption, order or permit; or (ii) the creation or imposition of any lien, encumbrance, claim, security interest or restriction whatsoever upon any of the material properties or assets of the Company or an acceleration of indebtedness pursuant to any obligation, agreement or condition contained in any material bond, debenture, note or any other evidence of indebtedness or any material indenture, mortgage, deed of trust or any other agreement or instrument to which the Company is a party or by which it is bound or to which any of the material property or assets of the Company is subject.

(g) Disclosure Documents . For the two years preceding the date hereof, the Company has filed, on a timely basis or has received a valid extension as of such time of filing and has thereafter made such filings prior to the expiration of any such extension, all reports, schedules, forms, statements and other documents required to be filed by the Company with the Commission under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to

herein as the “ SEC Reports ”), and the Company has paid all fees and assessments due and payable in connection with the SEC Reports. As of their respective dates, the SEC Reports complied in all material respects with all statutes and applicable rules and regulations of the Commission, including the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles (“ GAAP ”) or, to the extent applicable, the International Financial Reporting Standards (“ IFRS ”), applied on a consistent basis during the periods involved, except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP or IFRS, as applicable, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

(h) Absence of Certain Events and Changes . Except as otherwise disclosed in the SEC Reports, since the date of the Company’s Quarterly Report on Form 10-Q for the quarter ended on September 30, 2014: (i) the Company has conducted its business in the ordinary course consistent with past practice, (ii) there has not been any event, change or development which, individually or in the aggregate, has had or could reasonably be expected to have a Material Adverse Effect, (iii) the Company has not incurred any material liabilities (contingent or otherwise) other than expenses incurred in the ordinary course of business consistent with past practice, (iv) the Company has not altered its method of accounting in any material respect, and (v) the Company has not declared or made any dividend or distribution of cash or other property to its shareholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock.

(i) Intellectual Property . Except as otherwise disclosed by the Company in writing to the Purchaser on or before the date hereof, the Company owns, or has the right pursuant to a valid, written license agreement to use and exploit, all Intellectual Property used in or necessary for the conduct of the business of the Company and that is material to the business of the Company as conducted as of the Closing (the “ Company Intellectual Property ”). To the knowledge of the Company, (i) all issued patents and registered trademarks that are Company Intellectual Property and that are owned by the Company are valid and enforceable and are currently in compliance with formal legal requirements (including without limitation, as applicable, payment of filing, examination and maintenance fees, proofs of working or use, timely post registration filing of affidavits of use and incontestability and renewal applications), and (ii) there is no existing infringement or misappropriation by another Person of any of the Company Intellectual Property. Except as disclosed in the SEC Reports, since January 1, 2012, no

claims have been asserted by a third party in writing (a) alleging that the conduct of the business of the Company has infringed or misappropriated any Intellectual Property rights of such third party, or (b) challenging or questioning the validity or effectiveness of any Intellectual Property right of the Company, and, to the Company’s knowledge, there is no valid basis for any such claim. No loss or early expiration of any of the Company’s material Intellectual Property is pending, or, to the Company’s knowledge, threatened. The Company has taken reasonable steps in accordance with standard industry practices to protect its rights in the Company Intellectual Property and at all times has maintained the confidentiality of all information used in connection with the business that constitutes or constituted a trade secret of the Company.

(j) Compliance . The Company has all material permits, licenses, franchises, authorizations, orders and approvals of (collectively, “ Permits ”), and has made all filings, applications and registrations with, governmental entities that are required in order to permit the Company to own or lease its properties and assets and to carry on its business as presently conducted. Neither the sale of the Shares hereunder nor the performance of the Company’s other obligations under this Agreement will result in the suspension, revocation, impairment, forfeiture or nonrenewal of any Permit applicable to the Company, its businesses or operations or any of its assets or properties. The Company has complied and is in compliance in all material respects with all Permits, statutes, laws, regulations, rules, judgments, orders and decrees of all governmental entities applicable to it that relate to its business, including but not limited to compliance with the FCPA and any applicable similar laws in foreign jurisdictions in which the Company is currently, or has previously, conducted its business. The Company has not received any notice alleging noncompliance, and, to the knowledge of the Company, the Company is not under investigation with respect to, or threatened to be charged with, any material violation of any applicable statutes, laws, regulations, rules, judgments, orders or decrees of any governmental entities. The Company has not received any notice of proceedings relating to the revocation or modification of any Permit. No Permit is subject to termination as a result of the execution of this Agreement or consummation of the transactions contemplated hereby. Except as disclosed in the SEC Reports, since January 1, 2012, the Company has not entered into or been subject to any judgment, consent decree, compliance order or administrative order with respect to any aspect of the business, affairs, properties or assets of the Company or received any formal or informal complaint or claim from any regulatory agency with respect to any aspect of the business, affairs, properties or assets of the Company.

(k) Valid Issuance of Shares . The Shares are duly authorized and, when issued and paid for in accordance with this Agreement, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company, and, based in part on the representations of Purchaser in Section 3.2 of this Agreement, will be issued in compliance with all applicable federal and state securities laws. Neither the Company nor any person acting on behalf of the Company has offered or sold any of the Shares by any form of general solicitation or general advertising. The Company has offered the Shares for sale only to the Purchaser.

(l) Governmental Consents . No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority on the part of the Company is required in connection with the consummation of the transactions contemplated by this Agreement, except for (i) notices required or permitted to be filed with certain state and federal securities commissions, which notices will be filed on a timely basis, and (ii) the HSR Filings.

(m) No Brokers . No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based on arrangements made by the Company.

(n) No Undisclosed Liabilities . The Company does not have any liabilities (contingent or otherwise), except for (i) liabilities reflected or reserved against in financial statements of the Company (or otherwise disclosed in the accompanying footnotes) included in the SEC Reports filed with the Commission prior to the date of this Agreement, (ii) liabilities incurred in the ordinary course of business or otherwise disclosed in SEC Reports subsequent to the period covered by the Company’s Quarterly Report on Form 10-Q for the quarter ended on September 30, 2014 and (iii) liabilities that have not been and would not reasonably be expected to be material.

(o) Internal Controls . The Company has implemented and maintains a system of internal control over financial reporting (as required by Rule 13a-15(a) under the Exchange Act) that is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes, and, to the knowledge of the Company, such system of internal control over financial reporting is effective. For purposes of this Section 3.1(o), “knowledge of the Company” means the actual knowledge of the Chief Executive Officer and the Vice President, Finance of the Company. The Company has implemented and maintains disclosure controls and procedures (as required by Rule 13a-15(a) of the Exchange Act) that are designed to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the timeframes specified by the Commission’s rules and forms (and such disclosure controls and procedures are effective), and has disclosed, based on its most recent evaluation of its system of internal control over financial reporting prior to the date of this Agreement, to the Company’s outside auditors and the audit committee of the Company Board (i) any significant deficiencies and material weaknesses known to it in the design or operation of its internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that would reasonably be expected to adversely affect the Company’s ability to record, process, summarize and report financial information and (ii) any fraud known to it, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

(p) Company Not An “Investment Company .” The Company has been advised of the rules and requirements under the Investment Company Act of 1940, as amended (the “ Investment Company Act ”). The Company is not, and immediately after receipt of payment for the Shares will not be, an “investment company” or an entity

“controlled” by an “investment company” within the meaning of the Investment Company Act.

(q) Solvency . The Company has not: (i) made a general assignment for the benefit of creditors; (ii) filed any voluntary petition in bankruptcy or suffered the filing of any involuntary petition by its creditors; (iii) suffered the appointment of a receiver to take possession of all, or substantially all, of its assets; (iv) suffered the attachment or other judicial seizure of all, or substantially all, of its assets; (v) admitted in writing its inability to pay its debts as they come due; or (vi) made an offer of settlement, extension or composition to its creditors generally.

(r) No Integrated Offering . Neither the Company, nor any of its Affiliates, nor any person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Shares to be integrated with prior offerings by the Company for purposes of the Securities Act or any applicable shareholder approval provisions, including, without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the securities of the Company are listed or designated.

(s) Whistleblowers . To the knowledge of the Company, as of the date hereof, no employee of the Company or its subsidiaries has provided since January 1, 2012 or is providing information to any law enforcement agency regarding the violation of any applicable Law of the type described in Section 806 of the Sarbanes-Oxley Act by the Company or its Subsidiaries. Neither the Company nor its Subsidiaries have discharged, demoted or suspended an employee of the Company or its Subsidiaries in the terms and conditions of employment because of any lawful act of such employee described in Section 806 of the Sarbanes-Oxley Act

3.2 Representations and Warranties of Purchaser . Purchaser hereby represents and warrants to the Company as of the date hereof (unless specifically made as of another date, in which case as of such other date) as follows:

(a) Legal Power . Purchaser has the requisite corporate power to enter into this Agreement and to carry out and perform its obligations hereunder.

(b) Due Execution . This Agreement has been duly authorized, executed and delivered by Purchaser, and, upon due execution and delivery by the Company, will constitute a valid and legally binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally or by equitable principles.

(c) Investment Representations . In connection with the offer, purchase and sale of the Shares, Purchaser makes the following representations:

(i) Purchaser is acquiring the Shares for its own account for the purpose of investment and not with a view to or for sale in connection with any distribution

thereof, and has no present intention to effect, or any present or contemplated plan, agreement, undertaking, arrangement, obligation, indebtedness, or commitment providing for, any distribution of the Shares.

(ii) Purchaser has carefully reviewed the representations concerning the Company contained in this Agreement and has made detailed inquiry concerning the Company, its business and its personnel.

(iii) Purchaser understands that the Shares have not been registered under the Securities Act or any applicable state securities laws and, consequently, Purchaser may have to bear the risk of owning the Shares for an indefinite period of time because the Shares may not be transferred unless (x) the resale of the Shares is registered pursuant to an effective registration statement under the Securities Act in accordance with the terms and conditions set forth in Section 4.1 hereof; (y) Purchaser has delivered to the Company an opinion of counsel (in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that the Shares to be sold or transferred may be sold or transferred pursuant to an exemption from such registration; or (z) the Shares are sold or transferred pursuant to Rule 144.

(iv) Purchaser has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Shares to be purchased hereunder.

(v) Purchaser is an “accredited investor” as defined in Rule 501(a) of the rules and regulations promulgated under the Securities Act.

(d) Certain Fees . No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based on arrangements made by Purchaser.

(e) Legends . In connection with the issuance and sale of the Shares, Purchaser understands that each of the Shares, whether certificated or in book-entry form, will be endorsed with the following legend:

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.”

The Company acknowledges and agrees that the representations contained in Section 3.2 shall not modify, amend or affect Purchaser’s right to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties contained in the

Collaboration Agreement or any other document or instrument executed and/or delivered in connection with this Agreement or the Collaboration Agreement or the consummation of the transactions contemplated hereby.

ARTICLE IV.
REGISTRATION RIGHTS

4.1 Registration of the Shares . The Company shall file with the Commission, on or before the date that is 90 days prior to the first anniversary of the Closing Date, a Registration Statement covering the resale of the Shares to the public by Purchaser. The Company shall use commercially reasonable efforts to cause the Registration Statement covering the Shares to be declared effective by the Commission by the first anniversary of the Closing Date. The Company shall cause such Registration Statement to remain effective under the Securities Act until all Shares covered by such Registration Statement have been sold or may be sold without volume restrictions pursuant to Rule 144. The Company shall promptly notify Purchaser of the effectiveness of such Registration Statement after the Company confirms effectiveness with the Commission. The Company hereby covenants and agrees to use reasonable commercial efforts to maintain its eligibility to make filings with the Commission on Form S-3 until one or more registrations statements covering the resale of all of the Shares shall have been filed with, and declared effective by, the Commission pursuant to the terms and conditions of this Agreement.

4.2 Registration Covenant . Purchaser covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of the Shares pursuant to a Registration Statement. The Company shall comply in all material respects with all applicable rules and regulations of the Commission applicable to the filing of a Registration Statement.

4.3 Registration Procedures .

(a) In connection with the filing by the Company of a Registration Statement covering the Shares, the Company shall furnish to Purchaser (i) a copy of the prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act and (ii) such other documents as Purchaser may reasonably request, in order to facilitate the public sale or other disposition of the Shares.

(b) The Company shall use commercially reasonable efforts to register or qualify the Shares covered by a Registration Statement under the securities laws of each state of the United States as Purchaser shall reasonably request; provided, however, that the Company shall not be required in connection with this subsection (b) to qualify as a foreign corporation or execute a general consent to service of process in any jurisdiction.

(c) If the Company has delivered preliminary or final prospectuses to Purchaser and after having done so the prospectus is amended or supplemented to comply with the requirements of the Securities Act, the Company shall promptly notify Purchaser and, if requested by the Company, Purchaser shall immediately cease making offers or sales of the Shares covered by a Registration Statement and return all prospectuses to the Company. The Company shall promptly provide Purchaser with revised or supplemented

prospectuses and, following receipt of the revised or supplemented prospectuses, Purchaser shall be free to resume making offers and sales of the Shares under such Registration Statement.

(d) The Company shall be entitled to include in a Registration Statement the shares of Common Stock held by other shareholders of the Company, provided such other shares of Common Stock are excluded first from such Registration Statement in order to comply with any applicable laws or request from any governmental entity or Nasdaq, or in the case of an underwritten offering, in order to comply with a cutback request of any underwriter.

(e) The Company shall pay all expenses incurred in connection with the preparation and filing of such Registration Statement pursuant to this Article 4, including all registration and filing fees and printer, legal and accounting fees related thereto but excluding (i) any brokerage fees, selling commissions or underwriting discounts incurred by Purchaser in connection with sales under any Registration Statement covering the Shares and (ii) the fees and expenses of counsel retained by Purchaser.

(f) The Company shall use commercially reasonable efforts to avoid the issuance of any order suspending the effectiveness of a Registration Statement, or any suspension of the qualifications (or exemption from qualification) of any of the Shares covered by a Registration Statement for sale in any jurisdiction. The Company shall advise Purchaser promptly after it shall receive notice of any stop order or issuance of any order by the Commission delaying or suspending the effectiveness of a Registration Statement covering the Shares or of the initiation of any proceeding for that purpose, and it will promptly use commercially reasonable efforts to prevent the issuance of any stop order or to obtain its withdrawal at the earliest possible moment if such stop order should be issued.

4.4 Registration Confidentiality. Purchaser agrees to treat as confidential (unless otherwise publicly disclosed by the Company or a third party not to the knowledge of Purchaser in breach of an agreement of confidentiality with the Company) any written notice from the Company regarding the Company’s plans to file a Registration Statement and shall not disclose such information to any other person, or use such information, except as is necessary to exercise its rights under this Agreement.

4.5 Indemnification.

(a) The Company agrees to indemnify and hold harmless Purchaser and each other person, if any, who controls Purchaser within the meaning of the Securities Act or Exchange Act from and against any losses, claims, damages or liabilities to which Purchaser or controlling person may become subject (under the Securities Act, the Exchange Act, state securities or “Blue Sky” laws or otherwise) insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of, or are based upon any untrue statement of a material fact contained in any Registration Statement covering the Shares or in any preliminary prospectus or final prospectus contained in such Registration Statement, or any amendment or supplement to such

Registration Statement, or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and the Company will reimburse Purchaser or controlling person for any reasonable legal or other expenses reasonably incurred in investigating, defending or preparing to defend any such action, proceeding or claim, or preparing to defend any such action, proceeding or claim; provided, however, that the Company shall not be liable in any such case to the extent that such loss, claim, damage or liability arises out of, or is based upon, an untrue statement made in such Registration Statement, preliminary prospectus or prospectus, or any amendment or supplement in reliance upon and in conformity with written information furnished to the Company by or on behalf of Purchaser or controlling person specifically for use in the preparation thereof or any statement or omission in any prospectus that is corrected in any subsequent prospectus that was delivered to Purchaser prior to the pertinent sale or sales by Purchaser.

(b) Purchaser agrees to indemnify and hold harmless the Company and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act, each officer of the Company who signs the Registration Statement and each director of the Company, from and against any losses, claims, damages or liabilities to which the Company or any officer, director or controlling person may become subject (under the Securities Act, the Exchange Act, state securities or “Blue Sky” laws or otherwise), insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of, or are based upon any untrue statement of a material fact contained in any Registration Statement covering the Shares or in any preliminary prospectus, final prospectus contained in such Registration Statement, or any amendment or supplement to such Registration Statement or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, if such untrue statement or omission was made in reliance upon and in conformity with written information furnished by or on behalf of Purchaser specifically for use in preparation of the Registration Statement, prospectus, amendment or supplement and Purchaser will reimburse the Company, or such officer, director or controlling person, as the case may be, for any legal or other expenses reasonably incurred in investigating, defending or preparing to defend any such action, proceeding or claim; provided, however, that Purchaser’s obligation to indemnify the Company shall be limited to the Purchase Price.

(c) Promptly after receipt by any indemnified person of a notice of a claim or the beginning of any action in respect of which indemnity is to be sought against an indemnifying person pursuant to this Section 4.5, such indemnified person shall notify the indemnifying person in writing of such claim or of the commencement of such action, but the omission to so notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party under this Section 4.5 (except to the extent that such omission materially and adversely affects the indemnifying party’s ability to defend such action). Subject to the provisions hereinafter stated, in case any such action shall be brought against an indemnified person, the indemnifying person shall be entitled to participate therein, and, to the extent that it shall elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, shall be entitled to assume the defense thereof, with counsel reasonably satisfactory

to such indemnified person. After notice from the indemnifying person to such indemnified person of its election to assume the defense thereof, such indemnifying person shall not be liable to such indemnified person for any legal expenses subsequently incurred by such indemnified person in connection with the defense thereof; provided, however, that if there exists or shall exist a conflict of interest that would make it inappropriate, in the opinion of counsel to the indemnified person, for the same counsel to represent both the indemnified person and such indemnifying person or any Affiliate or associate thereof, the indemnified person shall be entitled to retain its own counsel at the expense of such indemnifying person; provided, however, that no indemnifying person shall be responsible for the fees and expenses of more than one separate counsel (together with appropriate local counsel) for all indemnified parties. In no event shall any indemnifying person be liable in respect of any amounts paid in settlement of any action unless the indemnifying person shall have approved the terms of such settlement; provided, however, that such consent shall not be unreasonably withheld. No indemnifying person shall, without the prior written consent of the indemnified person, effect any settlement of any pending or threatened proceeding in respect of which any indemnified person is or could have been a party and indemnification could have been sought hereunder by such indemnified person, unless such settlement includes an unconditional release of such indemnified person from all liability on claims that are the subject matter of such proceeding.

(d) If the indemnification provided for in this Section 4.5 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions or proceedings in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the Company on the one hand and Purchaser on the other hand, in connection with the statements or omissions or other matters which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, in the case of an untrue statement, whether the untrue statement relates to information supplied by the Company on the one hand or Purchaser on the other hand and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement. The Company and Purchaser agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to above in this subsection (d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (d), Purchaser shall not be required to contribute any amount in excess of the amount by which the net amount received by Purchaser from the sale of the Shares to which such loss relates exceeds the amount of any damages which Purchaser has otherwise been required to pay by reason of such untrue statement. No person guilty of fraudulent misrepresentation (within the

meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

(e) The rights and obligations of the Company and Purchaser under this Section 4.5 shall survive the termination of this Agreement.

ARTICLE V.
COVENANTS AND ADDITIONAL AGREEMENTS

5.1 Stock Ownership Governance.

(a) Lock-Up Period . Excluding any transfers of Shares between Purchaser and any of its Affiliates, during the twelve (12) month period beginning on the Closing Date and ending on the first anniversary thereof (the “ Lock-Up Period ”), Purchaser shall not, and shall not cause any other holder of the Shares to, without the prior written consent of the Company, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any Shares or enter into a transaction which would have the same effect.

(b) Market Stand-Off Agreement . During the Lock-Up Period, Purchaser agrees that in connection with any registration of the Company’s securities that, upon the request of the Company or the underwriters managing any underwritten offering of the Company’s securities, Purchaser will not sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any Shares without the prior written consent of the Company or such underwriters, as the case may be, for such period of time within the Lock-Up Period from the effective date of such registration as the Company or the underwriters may specify.

(c) Remedies . Without prejudice to the rights and remedies otherwise available to the parties, the Company shall be entitled to equitable relief by way of injunction if Purchaser or any other holder of the Shares breaches or threatens to breach any of the provisions of this Section 5.1.

5.2 Non-Public Information . Except as contemplated by the Collaboration Agreement, the Company covenants and agrees that neither it, nor any other Person acting on its behalf will provide Purchaser or its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto Purchaser shall have entered into a written agreement with the Company regarding the confidentiality and use of such information. The Company understands and confirms that Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.

5.3 Use of Proceeds . The Company shall use the net proceeds from the sale of the Shares hereunder for working capital purposes and shall not use such proceeds: (a) for the redemption of any Common Stock or Common Stock Equivalents, (b) for the settlement of any outstanding litigation or (c) in violation of FCPA or regulations of the Office of Foreign Assets Control of the U.S. Treasury Department.

5.4 Listing of Common Stock, No Integrated Offerings. The Company shall take no action designed to, or which to the knowledge of the Company is likely to have the effect of,

terminating the registration of the Common Stock under the Exchange Act. The Company hereby agrees to use commercially reasonable efforts to maintain the listing of the Common Stock, including the Shares, on Nasdaq. The Company further agrees, if the Company applies to have the Common Stock traded on any other trading market, it will include in such application all of the Shares, and will take such other action as is necessary to cause all of the Shares to be listed on such other trading market as promptly as possible. The Company will take all action reasonably necessary to continue the listing and trading of its Common Stock, including the Shares, on Nasdaq and will comply in all material respects with the Company’s reporting, filing and other obligations under the bylaws or rules of Nasdaq. The Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act or delisting the Common Stock from the Nasdaq National Market nor has the Company received in the past twelve (12) months any notification that the Commission or the NASD is contemplating terminating such registration or listing. The Company currently meets the continuing eligibility requirements for listing on Nasdaq. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Shares, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Shares, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company. The Company agrees to file with the Commission in a timely manner all reports and other filings required of the Company under the Securities Act and the Exchange Act. The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Shares in a manner that would require the registration under the Securities Act of the sale of the Shares to the Purchaser or that would be integrated with the offer or sale of the Shares for purposes of the rules and regulations of Nasdaq.

5.5 Notification under the HSR Act . Both Parties shall promptly file (and, in any event, within seven (7) Business Days after the date hereof) the HSR Filings with the FTC and the DOJ pursuant to the HSR Act. The Parties shall use their commercially reasonable efforts to promptly obtain HSR Clearance for the consummation of this Agreement and the Collaboration Agreement and the transactions contemplated hereby and thereby and shall keep each other apprised of the status of any communications with, and any inquiries or requests for additional information from, the FTC and the DOJ and shall comply promptly with any such inquiry or request; provided, however, that neither Party shall be required to consent to the divestiture or other disposition of any assets (including the assets of any Affiliate of either Party) or to consent to any other structural or conduct remedy, and each Party and its Affiliates shall have no obligation to contest or settle, administratively or in court, any ruling, order or other action of the FTC or DOJ or any Third Party respecting the transactions contemplated by this Agreement or the Collaboration Agreement. The Parties shall instruct their respective counsel to cooperate with each other and use their commercially reasonable efforts to facilitate and expedite the identification and resolution of any such issues and, consequently, the expiration of the applicable HSR Act waiting period. Each Party’s counsel will undertake (i) to keep each other appropriately informed of communications from and to personnel of the reviewing antitrust authority, and (ii) to confer with each other regarding appropriate contacts with and responses to personnel of the FTC or DOJ. Purchaser shall be responsible for any filing fees in connection with the HSR Filings.

ARTICLE VI.
MISCELLANEOUS

6.1 Termination . This Agreement may be terminated at any time prior to Closing:

(a) by mutual written consent of Purchaser and the Company;

(b) by Purchaser or the Company:

(i) if there shall be any statute, law, regulation or rule that makes consummating the transactions contemplated hereby to be illegal or if any government or any court of competent jurisdiction, administrative agency or commission or other governmental authority or agency, federal, state, local or foreign shall have issued a judgment, order, decree or ruling, or shall have taken such other action restraining, enjoining or otherwise prohibiting the issuance of the Shares contemplated hereby and such judgment, order, decree or ruling shall have become final and non-appealable;

(ii) if the HSR Clearance Date shall not have occurred on or before the date that is ninety (90) days after the Parties make their respective HSR Filings pursuant to Section 5.5; or

(iii) if the Collaboration Agreement shall have terminated.

(i) if the Company shall have (A) failed to perform any of its material obligations contained herein, or (B) breached any of its material representations or warranties contained herein, provided that Purchaser gives the Company written notice of such failure to perform or breach and the Company does not cure such failure to perform or breach within thirty (30) days after its receipt of such written notice;

(ii) if any of the conditions set forth in Section 2.4(b) shall become impossible to fulfill (other than as a result of any breach by Purchaser of the terms of this Agreement) and shall not have been waived in accordance with the terms of this Agreement; or

(iii) if the Common Stock shall no longer be listed for trading on Nasdaq or another national securities exchange or automated quotation system.

(d) by the Company:

(i) if Purchaser shall have (A) failed to perform any of its material obligations contained herein, or (B) breached any of its material representations or warranties contained herein, provided that the Company gives Purchaser written notice of such failure to perform or breach and Purchaser does not cure such failure to perform or breach within thirty (30) days after its receipt of such written notice; or

(ii) if any of the conditions set forth in Section 2.4(a) shall become impossible to fulfill (other than as a result of any breach by the Company of the terms of this Agreement) and shall not have been waived in accordance with the terms of this Agreement.

(e) If this Agreement is terminated and the transactions contemplated hereby are not consummated as described above, this Agreement shall become void and of no further force and effect, provided, however, that (i) none of the parties hereto shall have any liability in respect of a termination of this Agreement pursuant to Section 6.1(a) or 6.1(b)(i) or 6.1(b)(ii), and (ii) nothing shall relieve any of the parties from liability for actual damages resulting from a termination of this Agreement pursuant to Section 6.1(c) or 6.1(d); and provided, further, that none of the parties hereto shall have any liability for speculative, indirect, unforeseeable or consequential damages or lost profits resulting from any legal action relating to any termination of this Agreement.

6.2 Publicity . The Parties shall issue a press release, in the form attached as Exhibit B , within one (1) Business Day after the date hereof, to announce the execution of this Agreement and describe the material financial and operational terms of this Agreement. Except as required by judicial order or applicable Law, or as set forth below, neither Party shall make any public announcement concerning this Agreement without the prior written consent of the other Party, which consent shall not be unreasonably withheld or delayed. The Party preparing any such public announcement shall provide the other Party with a draft thereof at least three (3) Business Days prior to the date on which such Party would like to make the public announcement. Neither Party shall use the name, trademark, trade name or logo of the other Party or its employees, in any publicity or news release relating to this Agreement or its subject matter, without the prior express written permission of the other Party. Notwithstanding the terms of this Section 6.2, either Party shall be permitted to disclose the existence and terms of this Agreement to the extent required, based on the advice of such Party’s legal counsel, to comply with applicable Laws, including the rules and regulations promulgated by the Commission or any other governmental authority. Notwithstanding the foregoing, before disclosing this Agreement or any of the terms hereof pursuant to this Section 6.2, the Parties will consult with one another on the terms of this Agreement for which confidential treatment will be sought in making any such disclosure. If a Party wishes to disclose this Agreement or any of the terms hereof in accordance with this Section 6.2, such Party agrees, at its own expense, to seek confidential treatment of the portions of this Agreement or such terms as may be reasonably requested by the other Party; provided that the disclosing Party shall always be entitled to comply with legal requirements, including the requirements of the Commission. Either Party may also disclose the existence and terms of this Agreement in confidence to its attorneys and advisors, and to potential acquirors (and their respective professional advisors), in connection with a potential merger, acquisition or reorganization and to existing and potential investors or lenders of such Party, as a part of their due diligence investigations, or to existing and potential sublicensees or to permitted sublicensees and assignees, in each case under an agreement to keep the terms of this Agreement confidential under terms of confidentiality and non-use substantially no less rigorous than the terms contained in this Agreement and to use such information solely for the purpose permitted pursuant to this Section 6.2.

For purposes of clarity, either Party may issue a press release or public announcement or make such other disclosure if the content of such press release, public announcement or disclosure has

previously been made public other than through a breach of this Agreement by the issuing Party or its Affiliates.

6.3 Fees and Expenses . Each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees (including, without limitation, any fees required for same-day processing of any instruction letter delivered by the Company and any exercise notice delivered by Purchaser), stamp taxes and other taxes and duties levied in connection with the delivery of any Shares to Purchaser.

6.4 Entire Agreement . This Agreement, together with the exhibits and schedules hereto, contains the entire understanding of the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into this Agreement.

6.5 Notices . Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth below at or prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth below on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2 nd ) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth below:

If to the Company:

Agenus Inc.

3 Forbes Road

Lexington, Massachusetts 02421-7305, USA

Attention: General Counsel

Facsimile: (781) 674-4200

with a copy to:

Choate, Hall & Stewart LLP

Two International Place

Boston, Massachusetts 02110, USA

Attention: Gerald E. Quirk, Esq.

Facsimile: (617) 248-4000

If to Purchaser:

Incyte Corporation

1801 Augustine Cut-Off

Wilmington, Delaware 19803, USA

Attention: General Counsel

Facsimile: (302) 425-2707

with a copy to:

WilmerHale

60 State Street

Boston, Massachusetts 02109, USA

Attention: Steven D. Singer, Esq.

Facsimile: (617) 526-5000

6.6 Amendments; Waivers . No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed by the Company and Purchaser. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.

6.7 Headings . The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

6.8 Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of Purchaser (other than by merger). Purchaser may assign any or all of its rights under this Agreement to any Person to whom Purchaser assigns or transfers any Shares, provided that such transferee agrees in writing to be bound, with respect to the transferred Shares, by the provisions of this Agreement that apply to “Purchaser.”

6.9 No Third-Party Beneficiaries . This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.5.

6.10 Governing Law . This Agreement shall in all respects be governed by and construed in accordance with the laws of the State of Delaware, USA, including all matters of construction, validity and performance, in each case without reference to any conflict of law rules that might lead to the application of the laws of any other jurisdiction.

6.11 Survival of Representation and Warranties . The representations and warranties contained herein shall survive the Closing and the delivery of the Shares.

6.12 Execution in Counterparts . This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to

each other party, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

6.13 Severability . If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

6.14 Replacement of Securities . If any certificate or instrument evidencing any of the Shares is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Shares.

6.15 Remedies . In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, Purchaser and the Company will be entitled to specific performance under this Agreement. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in this Agreement and hereby agree to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.

6.16 Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.

6.17 Construction . The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise this Agreement and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments hereto. In addition, each and every reference to share prices and shares of Common Stock in this Agreement shall be subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.

6.18 WAIVER OF JURY TRIAL . IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE

GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.

(Signature Pages Follow)

IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

AGENUS INC.


By:	/s/ Garo H. Armen
	Name:		Garo H. Armen
	Title:		Chief Executive Officer


INCYTE CORPORATION


By:		/s/ Hervé Hoppenot
		Name:		Hervé Hoppenot
		Title:		President and Chief Executive Officer

Exhibit A

Form of Opinion of Company Counsel

Exhibit A

, 2015

Incyte Corporation

1801 Augustine Cut-Off

Wilmington, Delaware 19803

Ladies and Gentlemen:

This opinion letter is furnished to you pursuant to Section 2.3(c) of the Stock Purchase Agreement, dated January 9, 2015 (the “ Purchase Agreement ”), between Incyte Corporation, a Delaware corporation (“ you ”), and Agenus Inc., a Delaware corporation (the “ Company ”), in connection with the offer and sale to you of an aggregate of 7,763,968 shares (the “ Shares ”) of Common Stock, $0.01 par value per share (the “ Common Stock ”).

We have acted as counsel to the Company in connection with the offer and sale of the Shares. For purposes of the following opinions, we have examined the Purchase Agreement and have made such examination of law as we have deemed necessary or appropriate. In our examination of documents, we have assumed the authenticity of all documents submitted to us as originals and the conformity to original documents of all documents submitted to us as conformed or copies, the genuineness of all signatures, the legal capacity of all natural persons, and the completeness and accuracy of the corporate records and stock books of the Company provided to us.

Insofar as the opinions hereinafter expressed in this opinion letter relate to factual matters, we have relied, with your permission, upon certificates, statements and representations of officers and other representatives of the Company, certificates of public officials and representations made in the Purchase Agreement. For purposes of this opinion letter, we have assumed that all such statements and representations are also true as of the date hereof.

We direct your attention to the fact that our opinions are limited in scope consistent with the Legal Opinion Principles issued by the Committee on Legal Opinions of the American Bar Association’s Business Law Section as published in 53 Business Lawyer 831 (May, 1998).

Our opinion set forth in paragraph 1 below as to the valid existence and good standing of the Company in the State of Delaware is based solely upon a certificate dated January 6, 2015 from the Secretary of State of the State of Delaware, and such opinion is, accordingly, rendered as of the date of such certificate. Our opinion set forth in paragraph 1 below as to the good standing of the Company and qualification of the Company to conduct business in the Commonwealth of Massachusetts is based solely upon a certificate dated January 5, 2015 from the Secretary of the Commonwealth of the Commonwealth of Massachusetts, and such opinion is, accordingly, rendered as of the date of such certificate. Finally, our opinion set forth in

paragraph 1 that each of the subsidiaries of the Company is a corporation validly existing under the laws of its state of organization is based solely upon a certificate of an officer of the Company.

We express no opinion herein as to the applicability or effect of the laws of any state or jurisdiction other than the laws of the Commonwealth of Massachusetts, the Delaware General Corporation Law and the federal law of the United States of America that, in our experience, are applicable to transactions of the type contemplated in the Purchase Agreement. We express no opinion with respect to the effect of the laws of any other jurisdiction on the transactions contemplated by the Purchase Agreement. We note that the Purchase Agreement provides that it shall be governed by and construed in accordance with the internal laws of the State of Delaware and that we are not rendering any opinion herein with respect to Delaware law (except as otherwise stated above). Therefore, we are rendering our opinions herein as to the Purchase Agreement in the event a court determines that the substantive law of Massachusetts, rather than Delaware, should be applied (as to which application of law we express no opinion). We express no opinion as to the application of or compliance with the securities and Blue Sky laws of any state, the by-laws and rules of the Financial Industry Regulatory Authority, Inc. or the rules of the Nasdaq Capital Market in connection with the transactions contemplated by the Purchase Agreement.

Our opinion that the Purchase Agreement is enforceable against the Company in accordance with its terms is qualified to the extent that enforcement of the rights and remedies created thereby is subject to bankruptcy and similar laws of general applicability affecting the rights and remedies of the contracting parties, and to the extent that the availability of the remedy of specific performance or of injunctive relief is subject to the discretion of the court before which any proceeding therefor may be brought.

Based upon and subject to the foregoing and to the last paragraph of this opinion letter, we are of the opinion that:

1. The Company is a corporation validly existing and in corporate good standing under the laws of the State of Delaware. The Company has all requisite corporate power to own and operate its properties and assets and to carry on its business as now conducted (all as described in the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2013). The Company is duly qualified to transact business and is in good standing in the Commonwealth of Massachusetts. Each of the subsidiaries of the Company is a corporation validly existing under the laws of its state of organization.

2. The Company has all requisite power and authority to (i) execute, deliver and perform the Purchase Agreement, (ii) to issue, sell and deliver the Shares pursuant to the Purchase Agreement, and (iii) to carry out and perform its obligations under, and to consummate the transactions contemplated by, the Purchase Agreement.

3. All action on the part of the Company, its directors and its stockholders necessary for the authorization, execution and delivery by the Company of the Purchase

Agreement and the authorization, issuance, sale and delivery of the Shares pursuant to the Purchase Agreement has been duly taken. The Purchase Agreement has been duly and validly executed and delivered by the Company and constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms.

4. The Shares have been duly authorized and, assuming payment therefor in accordance with the Purchase Agreement, are validly issued, fully paid and nonassessable, are free of preemptive or similar rights, and have been issued in compliance with applicable securities laws, rules and regulations. The rights, privileges and preferences of the Common Stock are as stated in the Company’s Amended and Restated Certificate of Incorporation, as amended to date (the “ Corporate Charter ”).

5. Assuming the accuracy of, all the representations made by you in the Purchase Agreement, the Company has complied with, or is exempt from, all registration requirements of applicable federal securities laws in connection with the issuance and sale of the Shares.

6. The execution, delivery and performance by the Company of, and the compliance by the Company with the terms of, the Purchase Agreement and the issuance, sale and delivery of the Shares pursuant to the Purchase Agreement do not (a) conflict with or result in a violation of any provision of law, rule or regulation or any rule or regulation applicable to the Company or its subsidiaries or of the Corporate Charter or by-laws of the Company, (b) conflict with, result in a breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or result in or permit the termination or modification of, any agreement, instrument, order, writ, judgment or decree known to us to which the Company of its subsidiaries is a party or is subject or (c) result in the creation or imposition of any lien, claim or encumbrance on any of the assets or properties of the Company or its subsidiaries.

7. In connection with the valid execution, delivery and performance by the Company of the Purchase Agreement, or the offer, sale, issuance or delivery of the Shares, no consent, license, permit, waiver, approval or authorization of, or designation, declaration, registration or filing with, any court, governmental or regulatory authority, or self-regulatory organization, is required which has not been made or obtained.

Except as specifically stated herein, we render no opinion on matters relating to the Purchase Agreement or the transactions contemplated thereby. This opinion letter is given and speaks only as of the date hereof and is limited to our knowledge of the facts and the laws, statutes, rules and regulations, and judicial and administrative interpretations thereof, as currently in effect, and assumes no event will take place in the future which will affect the opinions set forth herein. These are all subject to change, possibly with retroactive effect. We assume no obligation to advise you of changes of any kind that may hereafter be brought to our attention,

even if such changes would affect our opinion, or to update or supplement this opinion letter after the date hereof. This opinion letter is furnished to you solely and is solely for your benefit. This opinion letter is not to be made available to or relied upon by any other persons, firms or entities without our prior written consent. This opinion letter may not be copied, used, quoted, disseminated or circulated in whole or in part.

	Very truly yours,


	CHOATE, HALL & STEWART LLP

Exhibit B

Press Release

Exhibit 10.3

AMENDMENT TO EMPLOYMENT AGREEMENT

April 13, 2015

THIS AMENDMENT to the Employment Agreement (the “Agreement”) by and between INCYTE CORPORATION, a Delaware corporation (the “Company”) and HERVÉ HOPPENOT (the “Executive”), dated as of January 11, 2014.

Section 3(e) of the Agreement requires the Company to pay the premiums with respect to a life insurance policy that shall remain in effect for the six-year period beginning on the first day of the Executive’s employment with the Company, and to provide tax gross-ups to the Executive with respect to such premium payments. The Board of Directors of the Company and the Executive have determined to amend the Agreement to eliminate the Company’s obligation to provide such tax gross-ups with respect to premiums paid in 2015 and subsequent years.

Therefore, the Company and the Executive hereby agree to amend Section 3(e) of the Agreement to read as follows, effective as of January 1, 2015:

(e) Death or Disability . If the Executive’s employment is terminated during the Employment Period or the Change in Control Employment Period due to the death or Disability of the Executive, this Agreement shall terminate without further obligations to the Executive other than for (i) Accrued Obligations and the timely payment or provision of Other Benefits; and (ii) the Signing Bonus, to the extent not theretofore paid. In such case, all amounts due and owing to the Executive or the Executive’s estate, as the case may be, pursuant to this Section 3(e) shall be paid to the Executive or the Executive’s estate in a lump sum in cash within 30 days of the receipt by the Company of written notice of the Executive’s death from the executor of the Executive’s estate or the Disability Effective Date. The Company shall pay the premiums with respect to an insurance policy that shall remain in place for the six year period commencing on the first day of the Executive’s employment with the Company and shall pay to the Executive’s estate or the Executive, as the case may be, upon the Executive’s death or Disability, the sum of $15 million. If the Executive directs, the Executive and the Company may cause the said insurance policy to be owned by an irrevocable life insurance trust created by the Executive, and, in such event, the Company shall pay the premiums with respect to such insurance policy to the trustee of such trust, when due.

IN WITNESS WHEREOF, the Executive and the Company, through its duly authorized Officer, have executed this Amendment as of the day and year first above written.

	EXECUTIVE

	/s/ Hervé Hoppenot

	COMPANY

	/s/ Paula J. Swain
	By:	Paula J. Swain
	Its:	Executive Vice President

Exhibit 31.1

CERTIFICATION

I, Hervé Hoppenot, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Incyte Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or cause such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s first fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 30, 2015

	/s/ HERVÉ HOPPENOT

	Hervé Hoppenot
	Chief Executive Officer

Exhibit 31.2

CERTIFICATION

I, David W. Gryska, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Incyte Corporation;

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 30, 2015

	/s/ DAVID W. GRYSKA

	David W. Gryska
	Chief Financial Officer

Exhibit 32.1

STATEMENT PURSUANT TO

18 U.S.C. SECTION 1350

With reference to the Quarterly Report of Incyte Corporation (the “Company”) on Form 10-Q for the quarter ended March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Hervé Hoppenot, Chief Executive Officer of the Company, certify, for the purposes of 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1) the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	/s/ HERVÉ HOPPENOT

	Hervé Hoppenot
	Chief Executive Officer
	April 30, 2015

Exhibit 32.2

STATEMENT PURSUANT TO

18 U.S.C. SECTION 1350

With reference to the Quarterly Report of Incyte Corporation (the “Company”) on Form 10-Q for the quarter ended March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David W. Gryska, Chief Financial Officer of the Company, certify, for the purposes of 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1) the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	/s/ DAVID W. GRYSKA

	David W. Gryska
	Chief Financial Officer
	April 30, 2015