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Document and Entity Information - USD ($) $ in Billions	12 Months Ended
Document and Entity Information - USD ($) $ in Billions	Dec. 31, 2018	Feb. 07, 2019	Jun. 30, 2018
Document and Entity Information
Entity Registrant Name	INCYTE CORP
Entity Central Index Key	0000879169
Document Type	10-K
Document Period End Date	Dec. 31, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 11.9
Entity Common Stock, Shares Outstanding		214,048,325
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	FY

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 1,163,980	$ 899,509
Marketable securities—available-for-sale	274,343	270,136
Accounts receivable	307,598	266,299
Inventory	6,967	6,482
Prepaid expenses and other current assets	79,366	62,428
Total current assets	1,832,254	1,504,854
Restricted cash and investments	1,006	925
Long term investments	99,199	134,356
Inventory	3,438	7,966
Property and equipment, net	319,751	259,763
Other intangible assets, net	215,364	236,901
Goodwill	155,593	155,593
Other assets, net	19,157	2,224
Total assets	2,645,762	2,302,582
Current liabilities:
Accounts payable	103,827	67,671
Accrued compensation	60,176	74,550
Interest payable	29	33
Accrued and other current liabilities	229,401	198,901
Convertible senior notes		7,393
Acquisition-related contingent consideration	31,844	26,848
Total current liabilities	425,277	375,396
Convertible senior notes	17,434	16,608
Acquisition-related contingent consideration	255,157	260,152
Other liabilities	21,927	19,797
Total liabilities	719,795	671,953
Stockholders' equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized; none issued or outstanding as of December 31, 2018 and December 31, 2017
Common stock, $0.001 par value; 400,000,000 shares authorized; 213,274,660 and 211,262,906 shares issued and outstanding as of December 31, 2018 and December 31, 2017, respectively	213	211
Additional paid-in capital	3,813,678	3,627,433
Accumulated other comprehensive loss	(10,165)	(7,010)
Accumulated deficit	(1,877,759)	(1,990,005)
Total stockholders' equity	1,925,967	1,630,629
Total liabilities and stockholders' equity	$ 2,645,762	$ 2,302,582

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2018	Dec. 31, 2017
CONSOLIDATED BALANCE SHEETS
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	400,000,000	400,000,000
Common stock, shares issued	213,274,660	211,262,906
Common stock, shares outstanding	213,274,660	211,262,906

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Revenues:
Total revenues	$ 1,881,883	$ 1,536,216	$ 1,105,719
Costs and expenses:
Cost of product revenues (including definite-lived intangible amortization)	94,123	79,479	58,187
Research and development	1,197,957	1,326,134	581,861
Selling, general and administrative	434,407	366,286	303,251
Change in fair value of acquisition-related contingent consideration	26,173	7,704	17,422
Total costs and expenses	1,752,660	1,779,603	960,721
Income (loss) from operations	129,223	(243,387)	144,998
Other income (expense), net	31,760	17,153	4,412
Interest expense	(1,543)	(6,900)	(38,745)
Unrealized loss on long term investments	(44,093)	(24,275)	(3,261)
Expense related to senior note conversions		(54,881)
Income (loss) before provision for income taxes	115,347	(312,290)	107,404
Provision for income taxes	5,854	852	3,182
Net income (loss)	$ 109,493	$ (313,142)	$ 104,222
Net income (loss) per share:
Basic	$ 0.52	$ (1.53)	$ 0.55
Diluted	$ 0.51	$ (1.53)	$ 0.54
Shares used in computing net income (loss) per share:
Basic	212,383,000	204,580,000	187,873,000
Diluted	215,635,000	204,580,000	194,125,000
Product revenues, net
Revenues:
Total revenues	$ 1,466,900	$ 1,200,312	$ 882,404
Product royalty revenues
Revenues:
Total revenues	234,780	160,791	110,711
Milestone and contract revenues
Revenues:
Total revenues	180,000	175,000	112,512
Other revenues
Revenues:
Total revenues	$ 203	$ 113	$ 92

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Net income (loss)	$ 109,493	$ (313,142)	$ 104,222
Other comprehensive loss
Foreign currency translation	91	(39)	(9)
Unrealized gain on marketable securities, net of tax	203	1,615	504
Reclassification adjustment for realized loss on marketable securities			178
Defined benefit pension obligations, net of tax	(696)	(5,700)	(2,750)
Other comprehensive loss	(402)	(4,124)	(2,077)
Comprehensive income (loss)	$ 109,091	$ (317,266)	$ 102,145

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock Convertible Senior Notes 1.25 Percent Due 2020	Common Stock Convertible Senior Notes 0.375 Percent Due 2018	Common Stock	Additional Paid-in Capital Convertible Senior Notes 1.25 Percent Due 2020	Additional Paid-in Capital Convertible Senior Notes 0.375 Percent Due 2018	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit	Convertible Senior Notes 1.25 Percent Due 2020	Convertible Senior Notes 0.375 Percent Due 2018	Total
Balances at Dec. 31, 2015			$ 187			$ 1,950,764	$ (809)	$ (1,778,987)			$ 171,155
Increase (Decrease) in Stockholders' Equity
Issuance of shares of Common Stock upon exercise of stock options and settlement of employee restricted stock units and shares of Common Stock under the ESPP			2			49,661					49,663
Issuance of shares of Common Stock upon conversion of Convertible Senior Notes				$ 4	$ 5				$ 4	$ 5
Issuance of shares of Common Stock for services rendered						294					294
Stock compensation						96,201					96,201
Other comprehensive loss							(2,077)				(2,077)
Net income (loss)								104,222			104,222
Balances at Dec. 31, 2016			189			2,096,929	(2,886)	(1,674,765)			419,467
Increase (Decrease) in Stockholders' Equity
Issuance of shares of Common Stock upon exercise of stock options and settlement of employee restricted stock units and shares of Common Stock under the ESPP			3			66,732					66,735
Issuance of shares of Common Stock upon conversion of Convertible Senior Notes	$ 7	$ 7		$ 330,004	351,037				$ 330,011	351,044
Issuance of shares of Common Stock for services rendered						294					294
Issuance of shares of Common Stock			5			649,382					649,387
Stock compensation						133,055					133,055
Other comprehensive loss							(4,124)				(4,124)
Adoption of ASU No. 2016-01 (Note 1)								(2,098)			(2,098)
Net income (loss)								(313,142)			(313,142)
Balances at Dec. 31, 2017			211			3,627,433	(7,010)	(1,990,005)			1,630,629
Increase (Decrease) in Stockholders' Equity
Issuance of shares of Common Stock upon exercise of stock options and settlement of employee restricted stock units and shares of Common Stock under the ESPP			2			29,940					29,942
Issuance of shares of Common Stock upon conversion of Convertible Senior Notes					$ 7,695					$ 7,695
Issuance of shares of Common Stock for services rendered						344					344
Stock compensation						148,266					148,266
Other comprehensive loss							(402)				(402)
Adoption of ASU No. 2016-01 (Note 1)							(2,753)	2,753
Net income (loss)								109,493			109,493
Balances at Dec. 31, 2018			$ 213			$ 3,813,678	$ (10,165)	$ (1,877,759)			$ 1,925,967

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - shares	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Issuance of shares of Common Stock upon exercise of stock options and restricted stock units	1,624,376	3,012,937	2,068,226
Issuance of shares of Common Stock under the ESPP	233,712	157,277	126,648
Issuance of shares of Common Stock for services rendered	4,905	2,532	3,438
Issuance of shares of Common Stock		4,945,000
Convertible Senior Notes 1.25 Percent Due 2020
Issuance of shares of Common Stock upon conversion of convertible senior notes		7,095,350	77
Convertible Senior Notes 0.375 Percent Due 2018
Issuance of shares of Common Stock upon conversion of convertible senior notes	148,761	7,201,058	114

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Cash flows from operating activities:
Net income (loss)	$ 109,493	$ (313,142)	$ 104,222
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	54,969	52,178	58,425
In-process research and development impairment		12,000
Stock-based compensation	148,153	133,055	96,201
Expense related to senior note conversions		54,881
Deferred income taxes	(459)
Other, net	344	290	472
Unrealized loss on long term investments	44,093	24,275	3,261
Change in fair value of acquisition-related contingent consideration	26,173	7,704	17,422
Changes in operating assets and liabilities:
Accounts receivable	(41,299)	(117,541)	(23,947)
Prepaid expenses and other assets	(33,412)	(31,367)	(13,069)
Inventory	4,043	4,851	4,047
Accounts payable	36,156	(7,928)	43,758
Accrued and other liabilities	(12,027)	87,756	26,476
Deferred revenue-collaborative agreements			(12,512)
Net cash provided by (used in) operating activities	336,227	(92,988)	304,756
Cash flows from investing activities:
Acquisition of business, net of cash acquired			(142,856)
Purchase of long term investments	(8,936)	(123,891)
Capital expenditures	(73,483)	(111,021)	(120,277)
Purchases of marketable securities	(159,932)	(260,780)	(57,372)
Sale and maturities of marketable securities	155,928	145,714	88,017
Net cash used in investing activities	(86,423)	(349,978)	(232,488)
Cash flows from financing activities:
Proceeds from issuance of common stock under stock plans	29,942	66,764	49,973
Proceeds from issuance of common stock, net		649,387
Cash paid in connection with senior note conversions		(8,934)
Direct financing arrangements repayments			(445)
Payment of contingent consideration	(15,285)	(17,007)	(4,906)
Net cash provided by financing activities	14,657	690,210	44,622
Effect of exchange rates on cash, cash equivalents, restricted cash and investments	91	(39)	(9)
Net increase in cash, cash equivalents, restricted cash and investments	264,552	247,205	116,881
Cash, cash equivalents, restricted cash and investments at beginning of period	900,434	653,229	536,348
Cash, cash equivalents, restricted cash and investments at end of period	1,164,986	900,434	653,229
Supplemental Schedule of Cash Flow Information
Interest paid	268	314	7,218
Income taxes paid	5,417	6,305	927
Unpaid purchases of property and equipment	7,673	5,643	10,989
Convertible Senior Notes 0.375 Percent Due 2018
Supplemental Schedule of Cash Flow Information
Reclassification to common stock and additional paid in capital in connection with conversions or exchange of convertible senior notes	$ 7,695	351,044	5
Convertible Senior Notes 1.25 Percent Due 2020
Supplemental Schedule of Cash Flow Information
Reclassification to common stock and additional paid in capital in connection with conversions or exchange of convertible senior notes		$ 330,011	$ 4

CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical)	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Convertible Senior Notes 0.375 Percent Due 2018
Interest rate of debt (as a percent)	0.375%	0.375%	0.375%
Convertible Senior Notes 1.25 Percent Due 2020
Interest rate of debt (as a percent)	1.25%	1.25%	1.25%

Organization and Summary of Significant Accounting Policies	12 Months Ended
	Dec. 31, 2018
Organization and Summary of Significant Accounting Policies
Organization and Summary of Significant Accounting Policies	Note 1. Organization and Summary of Significant Accounting Policies Organization and Business. Incyte Corporation (including its subsidiaries, “Incyte,” “we,” “us,” or “our”) is a biopharmaceutical company focused on developing and commercializing proprietary therapeutics. Our portfolio includes compounds in various stages, ranging from preclinical to late stage development, and commercialized products JAKAFI® (ruxolitinib) and ICLUSIG® (ponatinib). Our operations are treated as one operating segment. On June 1, 2016, we acquired (the “Acquisition”), pursuant to a Share Purchase Agreement dated as of May 9, 2016 (the “Share Purchase Agreement”), all of the outstanding shares of ARIAD Pharmaceuticals (Luxembourg) S.à.r.l., since renamed Incyte Biosciences Luxembourg S.à.r.l., the parent company of certain European subsidiaries of ARIAD Pharmaceuticals, Inc. (“ARIAD”). Refer to Note 3 for further information regarding the Acquisition. Principles of Consolidation. The consolidated financial statements include the accounts of Incyte Corporation and our wholly owned subsidiaries. All inter-company accounts, transactions, and profits have been eliminated in consolidation. Acquisitions. Acquired businesses are accounted for using the acquisition method of accounting, which requires that assets acquired and liabilities assumed be recorded at fair value, with limited exceptions. Any excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill. Transaction costs are expensed as incurred. The operating results of the acquired business are reflected in our consolidated financial statements after the date of acquisition. Acquired in-process research and development (“IPR&D”) is recognized at fair value and initially characterized as an indefinite-lived intangible asset, irrespective of whether the acquired IPR&D has an alternative future use. 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. 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 U.S. dollars are reflected as a component of other comprehensive income (loss). Transaction gains and losses are recorded in other income (expense), net, in the consolidated statements of operations. 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, and trade receivables 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 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 and money market funds that meet certain guidelines. Our receivables mainly relate to our product sales of JAKAFI, ICLUSIG and collaborative agreements with pharmaceutical companies. We have not experienced any significant credit losses on cash, cash equivalents, marketable securities, or trade receivables to date and do not require collateral on receivables. Cash and Cash Equivalents. Cash and cash equivalents are held in 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. Our marketable securities consist of investments in corporate debt securities and U.S. government securities that 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’ equity. We classify marketable securities that are available for use in current operations as current assets on the 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 other income (expense), net on the consolidated statements of operations. The cost of securities sold is based on the specific identification method. Accounts Receivable. As of December 31, 2018, we had a de minimus allowance for doubtful accounts and no allowance for the period ended December 31, 2017. 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 and net realizable value with cost determined under the specific identification method and may consist of raw materials, work in process and finished goods. JAKAFI raw materials and work‑in‑process inventory is not subject to expiration and the shelf life of finished goods inventory is 36 months from the start of manufacturing of the finished goods. ICLUSIG raw materials and work-in-process inventory is not subject to expiration and finished goods inventory has a shelf life of 24 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 consolidated balance sheets when we expect inventory to be consumed for commercial use within the next twelve months. The ICLUSIG inventories were recorded at fair value less costs to sell in connection with the Acquisition, which resulted in a higher cost of ICLUSIG product revenues over a one year period from the acquisition date. Variable Interest Entities. We perform an initial and ongoing evaluation of the entities with which we have variable interests, such as equity ownership, in order to identify entities (i) that 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 December 31, 2018, there were no entities in which we held a variable interest which we determined to be VIEs. Long Term Investments. Our long term investments consist of equity investments in common stock of publicly held companies with whom we have entered into collaboration and license agreements. We classify all of our equity investments in common stock of publicly held companies as long term investments on our consolidated balance sheets. Our equity investments are accounted for at fair value using readily determinable pricing available on a securities exchange on our consolidated balance sheets. For the year ended December 31, 2017, the change in fair value of our equity investment in Calithera Biosciences, Inc. was recorded in accumulated other comprehensive income (loss) prior to the adoption of ASU No. 2016-01, which is further described below under “Recent Accounting Pronouncements”. For the year ended December 31, 2018, all changes in fair value are reported in our consolidated statements of operations as an unrealized loss on long term investments. In assessing whether we exercise significant influence over any of the companies in which we hold equity investments, 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. Currently, none of our equity investments in publicly-held companies are considered relationships in which we are able to assert control. 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. Leasehold improvements are amortized over the shorter of the estimated useful life of the assets or lease term. 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 to determine the 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 consolidated balance sheets and depreciated in a manner similar to other property and equipment. For leases under which we are responsible for paying a portion of the renovation and construction costs, we are deemed, for accounting purposes, to be the owner of the building. As a result, Accounting Standard Codification (“ASC”) 840, Leases, defines these payments as automatic indicators of ownership and requires us to capitalize the asset and related construction costs with a corresponding financing lease liability. Other Intangible Assets, net. Other intangible assets, net consist of licensed intellectual property rights acquired in business combinations, which are reported at acquisition date fair value, less accumulated amortization. Intangible assets with finite lives are amortized over their estimated useful lives using the straight-line method. In-Process Research and Development. The fair value of in-process research and development (“IPR&D”) acquired through business combinations is capitalized as an indefinite-lived intangible asset until the completion or abandonment of the related research and development activities. When the related research and development is completed, the asset will be assigned a useful life and amortized. Impairment of Long-Lived Assets. Long-lived assets with finite lives are tested for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. If indicators of impairment are present, the asset is tested for recoverability by comparing the carrying value of the asset to the related estimated undiscounted future cash flows expected to be derived from the asset. If the expected cash flows are less than the carrying value of the asset, then the asset is considered to be impaired and its carrying value is written down to fair value, based on the related estimated discounted future cash flows. Indefinite-lived intangible assets, including IPR&D, are tested for impairment annually as of October 1 or more frequently if events or changes in circumstances between annual tests indicate that the asset may be impaired. Impairment losses on indefinite-lived intangible assets are recognized based solely on a comparison of the fair value of the asset to its carrying value. Due to the discontinuation of the OPTIC-2L study described in Note 3 below, we considered our indefinite-lived IPR&D asset to be impaired and recorded a $12.0 million impairment charge in research and development expense on the consolidated statements of operations during the third quarter of 2017. Goodwill. Goodwill is calculated as the difference between the acquisition date fair value of the consideration transferred and the values assigned to the assets acquired and liabilities assumed. Goodwill is not amortized but is tested for impairment at the reporting unit level at least annually as of October 1 or when a triggering event occurs that could indicate a potential impairment by assessing qualitative factors or performing a quantitative analysis in determining whether it is more likely than not that the fair value of net assets are below their carrying amounts. A reporting unit is the same as, or one level below, an operating segment. Our operations are currently comprised of a single, entity wide reporting unit. We completed our most recent annual impairment assessment as of October 1, 2018 and determined that the carrying value of our goodwill was not impaired. 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. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. We recognize the tax benefit from an uncertain tax position only if it is more-likely-than-not that the position will be sustained upon examination by the taxing authorities, including resolutions of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit that is recorded for these positions is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. We adjust the level of the liability to reflect any subsequent changes in the relevant facts surrounding the uncertain positions. Any interest and penalties on uncertain tax positions are included within the tax provision. 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 presented as a direct deduction from the carrying amount of the long-term debt liability, consistent with debt discounts, on the 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 other income (expense), net over the useful life of the related capital assets. Such amounts are recorded in other liabilities on the consolidated balance sheets. Net Income (Loss) Per Share. Our basic and diluted net income (loss) per share is calculated by dividing the net income (loss) by the weighted average number of shares of common stock outstanding during all periods presented. Options to purchase stock, restricted stock units, performance stock units 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 that are classified as available-for-sale, foreign currency translation gains or losses and defined benefit pension obligations. For the year ended December 31, 2017 and interim periods therein, accumulated other comprehensive income (loss) included unrealized gains and losses on our long-term investment classified as available-for-sale in Calithera Biosciences, Inc. Upon adoption of ASU No. 2016-01, we recorded a $2.8 million adjustment to retained earnings as of January 1, 2018, which is further described below under “Recent Accounting Pronouncements.” Revenue Recognition. The new accounting standard for the recognition of revenue, ASC 606, Revenue from Contracts with Customers, was adopted for the fiscal year beginning on January 1, 2018. Per the new standard, revenue-generating contracts are assessed to identify distinct performance obligations, allocating transaction prices to those performance obligations, and criteria for satisfaction of a performance obligation. The new standard allows for recognition of revenue only when we have satisfied a performance obligation through transferring control of the promised good or service to a customer. Control, in this instance, may mean the ability to prevent other entities from directing the use of, and receiving benefit from, a good or service. The standard indicates that an entity must determine at contract inception whether it will transfer control of a promised good or service over time or satisfy the performance obligation at a point in time through analysis of the following criteria: (i) the entity has a present right to payment, (ii) the customer has legal title, (iii) the customer has physical possession, (iv) the customer has the significant risks and rewards of ownership and (v) the customer has accepted the asset. We assess collectability based primarily on the customer’s payment history and on the creditworthiness of the customer. Overall, the adoption of the new standard did not significantly alter our methodology for recognition of revenue. Product Revenues Our product revenues consist of U.S. sales of JAKAFI and European sales of ICLUSIG. Product revenues are recognized once we satisfy the performance obligation at a point in time under the revenue recognition criteria as described above. In November 2011, we began shipping JAKAFI to our customers in the U.S., which include specialty pharmacies and wholesalers. In June 2016, we acquired the right to and began shipping ICLUSIG to our customers in the European Union and certain other jurisdictions, which include retail pharmacies, hospital pharmacies and distributors. We recognize revenues for product received by our customers net of allowances for customer credits, including estimated rebates, chargebacks, discounts, returns, distribution service fees, patient assistance programs, and government rebates, such as Medicare Part D coverage gap reimbursements in the U.S. At December 31, 2018 and 2017, $44.8 million and $34.7 million, respectively, of accrued sales allowances were included in accrued and other current liabilities on the consolidated balance sheets. Product shipping and handling costs are included in cost of product revenues. Customer Credits: Our customers are offered various forms of consideration, including allowances, service fees and prompt payment discounts. We expect our 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. Rebates and Discounts: Allowances for rebates include mandated discounts under the Medicaid Drug Rebate Program in the U.S. and mandated discounts in Europe in markets where government-sponsored healthcare systems are the primary payers for healthcare. 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 launches. Our estimates for expected utilization of rebates are based on data received from our 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 certain contracted customers, which currently consist primarily of group purchasing organizations, Public Health Service institutions, non‑profit clinics, and Federal government entities purchasing via the Federal Supply Schedule, purchase directly from our wholesalers. Contracted customers generally purchase the product at a discounted price. The wholesalers, in turn, charges back to us the difference between the price initially paid by the wholesalers and the discounted price paid by the contracted customers. In addition to actual chargebacks received we maintain an accrual for chargebacks based on the estimated contractual discounts on the inventory levels on hand in our distribution channel. If actual future chargebacks vary from these 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 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. Royalty revenues on commercial sales for baricitinib (marketed as OLUMIANT) by Eli Lilly and Company (“Lilly”) are based on net sales of licensed products in licensed territories as provided by Lilly. We recognize royalty revenues in the period the sales occur. Cost of Product Revenues Cost of product revenues includes all JAKAFI related product costs as well as ICLUSIG related product costs. The acquired ICLUSIG inventories were recorded at fair value less costs to sell in connection with the Acquisition, and resulted in a higher cost of ICLUSIG product revenues over a one year period from the acquisition date. In addition, cost of product revenues include low single-digit royalties under our collaboration and license agreement to Novartis on all future sales of JAKAFI in the United States. Subsequent to the Acquisition on June 1, 2016, cost of product revenues also includes the amortization of our licensed intellectual property for ICLUSIG using the straight-line method over the estimated useful life of 12.5 years. Milestone and Contract Revenues Our license agreements, which fall within the scope of ASC 606, Revenue from Contracts with Customers, include distinct drug compound out-licensing, collection of upfront payments, milestones or royalty revenues from a counterparty, and provision of commercially available products to suppliers. Our agreements often include contractual milestones, which typically relate to the achievement of pre-specified development, regulatory and commercialization events outside of our control, such as regulatory approval of a compound, first patient dosing or achievement of sales-based thresholds. For such cases, we believe that revenue related to these events should not be recognized until the milestone has been achieved. Some contracts form collaborative arrangements of various types with third-parties. We assess whether the nature of the arrangement is within the scope of ASC 808, Collaborative Arrangements, in conjunction with the new revenue guidance to determine the nature of the performance obligations and associated transaction prices. A collaborative relationship may exist when we participate in an activity or process with another party, such as performance of research and development services or the exchange of intellectual property for use in clinical trials, when both parties share in the risks and rewards that result from the activity or participate and govern contract activities through a joint steering committee. 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 (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 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 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. During the years ended December 31, 2018, 2017 and 2016, we incurred research and development expenses of $1.2 billion, $1.3 billion and $581.9 million, respectively. At December 31, 2018 and 2017, $98.6 million and $110.0 million, respectively, of accrued clinical research and development costs were included in accrued and other current liabilities on the consolidated balance sheets. 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 that are subject to cliff vesting are recognized as compensation expense over the requisite service period using the straight-line attribution method, and the fair value of RSUs that are subject to graded vesting are recognized as compensation expense over the requisite service period using the accelerated 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, which we assess as of the end of each reporting period. Once a performance condition is considered probable, we record compensation expense based on the portion of the service period elapsed to date with respect to that award, with a cumulative catch-up, net of estimated forfeitures, and recognize any remaining compensation expense, if any, over the remaining requisite service period using the straight-line attribution method for PSUs that are subject to cliff vesting and using the accelerated attribution method for PSUs that are subject to graded vesting. Long term Incentive Plans. We have long term incentive plans which provide eligible employees with the opportunity to receive performance and service-based incentive compensation, which may be comprised of cash, stock options, restricted stock units and/or performance shares. The payment of cash and the grant or vesting of equity may be contingent upon the achievement of pre-determined regulatory, sales and internal performance milestones. Acquisition-Related Contingent Consideration. Acquisition-related contingent consideration, which consists of our future royalty and certain potential milestone obligations to Takeda Pharmaceutical Company Limited, which acquired ARIAD (“Takeda”), is recorded on the acquisition date at the estimated fair value of the obligation, in accordance with the acquisition method of accounting. The fair value measurement is based on significant inputs that are unobservable in the market and thus represents a Level 3 measurement. The fair value of the acquisition-related contingent consideration is remeasured each reporting period, with changes in fair value recorded in the consolidated statements of operations. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” which replaced numerous requirements in U.S. GAAP, including industry-specific requirements. This guidance provides a five step model to be applied to all contracts with customers, with an underlying principle that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. We performed an impact assessment which consisted of a review of a representative sample of contracts, discussions with key stakeholders, and cataloging of potential impacts on our financial statements, accounting policies, financial controls, and operations. The guidance did not have a material impact on our revenue recognition practices for product and royalty revenues. The adoption only impacted two areas in our recognition methodology for milestone and contract revenues generated by our collaborative research and license agreements: (i)Changes in the model for distinct licenses of functional intellectual property which may result in a timing difference of revenue recognition. Whereas revenue from these arrangements was previously recognized over a period of time pursuant to revenue recognition guidance that was in place for our arrangements at the time such arrangements commenced, revenue from new arrangements we enter into may now be recognized at a point in time. (ii)Assessments of milestone payments linked to events that are in our control, may result in variable consideration that may be recognized at an earlier point in time, when it is probable that the milestone will be achieved without a significant future reversal of cumulative revenue expected. We adopted the new standard for the fiscal period beginning January 1, 2018, utilizing the “modified retrospective” adoption methodology on all contracts for which performance had not been completed as of the date of adoption, and applied the guidance to report new disclosures surrounding our recognition of revenues. There was no cumulative effect of adopting the standard at the date of initial application in retained earnings. We implemented a controls process to identify and evaluate all revenue-generating contracts with third-party customers on an on-going basis and have provided enhanced disclosures within this Form 10-K to provide greater detail on our revenue-generating activities. In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” The standard requires several changes including that equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) be measured at fair value with changes in fair value recognized in results of operations. These provisions will not impact the accounting for our investments in corporate debt and U.S. government securities. The new guidance also changes certain disclosure requirements and other aspects of current U.S. GAAP. Amendments are to be applied as a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The adoption of this standard resulted in a $2.8 million decrease in our accumulated deficit as of January 1, 2018 related to our investment in Calithera Biosciences, Inc. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” that requires lessees to recognize assets and liabilities on the balance sheet for most leases including operating leases. In 2018, the FASB issued clarifying guidance to the topic in ASUs No. 2018-10 and No. 2018-11, which clarified certain aspects of the new leases standard and provided an optional transition method. The guidance requires that the lessees classify leases as either a finance or operating lease and lessors classify all leases as sales-type, direct financing or operating leases. The statement of operations presentation and expense recognition for lessees for finance leases is similar to that of capital leases under ASC 840 with separate interest and amortization expense with higher periodic expense in the earlier periods of a lease. For operating leases, the statement of operations presentation and expense recognition is similar to that of operating leases under ASC 840 with a single lease cost recognized on a straight-line basis. This guidance is effective for annual periods beginning after December 15, 2018 and interim periods therein. We adopted ASC 842 as of January 1, 2019 and will first report utilizing the new guidance within the March 31, 2019 Form 10-Q. We have implemented a third-party software to facilitate activities for the new accounting and disclosure requirements and have implemented new internal control procedures to support the new accounting and reporting processes associated with adopting the guidance. We have elected the package of practical expedients and adopted utilizing the optional transition method defined within ASU No. 2018-11. We did not elect the hindsight expedient. As a result of adoption in January 2019, we estimate we will record approximately $26 million of operating lease right-of-use assets and corresponding operating lease liabilities. In addition, our capital lease assets and liabilities will be classified as financing lease assets and liabilities upon adoption in 2019. The capital asset and corresponding financing liability of $18.7 million recorded in 2018 related to the Morges office building and construction described more fully in Note 8 below will be derecognized. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This guidance applies to all entities and impacts how entities account for credit losses for most financial assets and other instruments. For available-for-sale debt securities, entities will be required to recognize an allowance for credit losses rather than a reduction to the carrying value of the asset. For trade receivables, loans and held-to-maturity debt securities, entities will be required to estimate lifetime expected credit losses. This guidance is effective for fiscal years beginning after December 15, 2019 and interim periods therein. Early adoption is permitted for annual periods beginning after December 15, 2018 and interim periods therein. We are currently analyzing the impact of ASU No. 2016-13 on our consolidated financial statements. In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash,” which requires entities to show the changes in total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. As a result, entities will no longer present transfers between cash and cash equivalents and restricted cash in the statement of cash flows. When cash, cash equivalents, restricted cash and restricted cash equivalents are presented in more than one line item on the balance sheet, the new guidance requires a reconciliation of the totals in the statement of cash flows to the related captions on the balance sheet. The reconciliation can be presented either on the face of the statement of cash flows or in the notes to the financial statements. We adopted the new standard for the period beginning January 1, 2018. Due to the retrospective adoption of the standard, the cash flows from financing activities for the years ended December 31, 2017 and 2016, no longer present the transfer of restricted investments to cash and cash equivalents. The change in total cash, cash equivalents, restricted cash and investments is now presented in the consolidated statement of cash flows and reconciles to the related captions on the consolidated balance sheet. In January 2017, the FASB issued ASU No. 2017-04, “Intangibles–Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” which eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Under the new standard, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. The new standard is effective for public business entities that are SEC filers for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019 and is to be applied on a prospective basis. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017. We have elected to early adopt the standard for our annual goodwill impairment testing as of October 1, 2018 and concluded there to be no impact on our consolidated financial statements. In March 2017, the FASB issued ASU No. 2017-07, “Compensation–Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” which requires the service cost component of net periodic benefit cost to be presented in the same income statement line as other employee compensation costs arising from services rendered during the period and the other components of net periodic benefit cost to be presented separately from the income statement lines that include service cost and outside of any subtotal of operating income. We adopted the new standard for the period beginning January 1, 2018, resulting in no change in presentation of the service cost component of net periodic benefit cost, which has historically been reported in research and development and selling, general and administrative expenses along with other employee compensation costs. The retrospective adoption resulted in a change in presentation of the other components of net periodic benefit cost for the year ended December 31, 2017, which reclassed these costs out of operating income and into other income (expense), net on the consolidated statement of operations. There was a de minimus impact to the consolidated statement of operations for the year ended December 31, 2016. The components of net periodic benefit cost are presented separately within our employee benefit plans footnote. In May 2017, the FASB issued ASU No. 2017-09, “Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting.” The guidance clarifies the application of modification accounting for stock-based compensation agreements. The guidance is effective for fiscal years beginning after December 15, 2017. We occasionally modify existing stock-based compensation agreements with employees under certain circumstances. We adopted the standard for the fiscal year beginning January 1, 2018 and concluded there to be no impact on our consolidated financial statements. In December 2017, the SEC issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Cuts and Jobs Act of 2017 (the “Act”). In accordance with SAB 118, we recorded provisional tax impacts related to the revaluation of deferred tax assets and liabilities as well as the temporary full expensing of certain business assets in our consolidated financial statements for the year ended December 31, 2017. Upon the completion of the 2017 U.S. federal corporate income tax return during the fourth quarter of 2018, we finalized our analysis of the Act and determined no additional adjustments were required. In January 2018, the FASB released guidance on the accounting for tax on the global intangible low-taxed income ("GILTI") provisions of the Act. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The guidance indicates that either accounting for deferred taxes related to GILTI inclusions or to treat any taxes on GILTI inclusions as period cost are both acceptable methods subject to an accounting policy election. Effective the first quarter of 2018, we have elected to treat any potential GILTI inclusions as a period charge in the future period in which it is incurred. We have determined there to be no impact associated with GILTI on our consolidated financial statements as of and for the year ended December 31, 2018. In February 2018, the FASB issued ASU No. 2018-02, “Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects From Accumulated Other Comprehensive Income,” which allows reclassification of certain tax effects created as a result of changing methodologies, laws and tax rates legislated in the Act. This new standard allows for stranded income tax effects resulting from the Act to be reclassified into retained earnings to allow for their tax effect to reflect the appropriate tax rate. Due to the full valuation allowance on our U.S. net deferred tax assets, a reclassification of stranded tax effects to retained earnings was not required. In June 2018, the FASB issued ASU No. 2018-07, “Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.” This guidance expanded the scope of ASC 718 to include share-based payments granted to nonemployees in exchange for goods or services and supersedes the guidance in ASC 505-50. Under this new standard, nonemployee awards are measured on the grant date by estimating the fair value of the equity instruments to be issued rather than the fair value of the goods or services received. Entities may use the expected term when estimating the fair value of a nonemployee option or elect to use the contractual term as the expected term, on an award-by-award basis. The cumulative effect of the transition adjustment is to be recorded as an adjustment to retained earnings as of the beginning of the annual period of adoption. This guidance is effective for fiscal years beginning after December 15, 2018 and interim periods therein. We are currently analyzing the impact of ASU No. 2018-07 and do not anticipate the adoption of this ASU to have a material impact on our consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-14, “Compensation – Retirement Benefits – Defined Benefit Plans – General,” an update to Subtopic ASC 715-20. The guidance amended year-end disclosure requirements related to defined benefit pension plans, and does not affect interim disclosures. The guidance is effective for fiscal years ending after December 15, 2020, and is permitted for early adoption. The standard is to be applied on a retrospective basis. Incyte sponsors defined benefit plans for employees located in Europe. We are currently analyzing the impact of ASU No. 2018-14 on our consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-15, “Intangibles – Goodwill and Other – Internal-Use Software,” an update to Subtopic ASC 350-40. The guidance directs accounting for service contracts for cloud computing arrangements to follow guidance within ASC 350-40 to determine capitalization of implementation costs. The guidance is effective for fiscal years beginning after December 15, 2019, and is permitted for early adoption. The standard may be applied on either a retrospective or prospective basis. We are currently analyzing the impact of ASU No. 2018-15 on our consolidated financial statements. In November 2018, the FASB issued ASU No. 2018-18, “Collaborative Arrangements (Topic 808): Clarifying the Interaction Between Topic 808 and Topic 606.” The guidance clarifies the interactions between Topic 808 and Topic 606, including clarifications on revenue recognition, unit of account, and reporting disclosure requirements. The guidance is effective for fiscal years beginning after December 15, 2019, and is permitted for early adoption. The standard is to be applied on a retrospective basis to the date of the initial application of Topic 606. We utilize collaborative arrangements as described in our license agreement footnote and are currently analyzing the impact of ASU No. 2018-18 on our consolidated financial statements.

Revenues

12 Months Ended

Dec. 31, 2018

Revenues

Revenues

Note 2. Revenues

Revenues for the years ended December 31, 2017 and 2016, were recognized under ASC 605, Revenue Recognition, when (i) persuasive evidence of an arrangement existed, (ii) delivery occurred or services were rendered, (iii) the price was fixed or determinable and (iv) collectability was reasonably assured. Revenues were deferred for fees received before earned or until no further obligations existed. We exercised judgment in determining that collectability was reasonably assured or that services were delivered in accordance with the arrangement. We assessed whether the fee was fixed or determinable based on the payment terms associated with the transaction and whether the sales price was subject to refund or adjustment.

As discussed in Note 1, ASC 606, Revenue from Contracts with Customers, was adopted for the fiscal year beginning on January 1, 2018. Per the new standard, revenue-generating contracts are assessed to identify distinct performance obligations, allocating transaction prices to those performance obligations, and criteria for satisfaction of a performance obligation. The new standard allows for recognition of revenue only when we have satisfied a performance obligation through transferring control of the promised good or service to a customer. The standard indicates that an entity must determine at contract inception whether it will transfer control of a promised good or service over time or satisfy the performance obligation at a point in time through analysis of the following criteria: (i) the entity has a present right to payment, (ii) the customer has legal title, (iii) the customer has physical possession, (iv) the customer has the significant risks and rewards of ownership and (v) the customer has accepted the asset. The new standard has been applied to contracts for which performance had not been completed as of the date of adoption. For those contracts that were modified prior to the date of adoption, we reflected the aggregate effect of those modifications when determining the appropriate accounting under the new standard. We do not believe the effect of applying this practical expedient resulted in material differences. Overall, the adoption of the new standard did not significantly alter our methodology for recognition of revenue.

The following table presents our disaggregated revenue for the periods presented (in thousands):


	For the Years Ended,
	December 31,
	2018		2017		2016
JAKAFI revenues, net	$	1,386,964	$	1,133,392	$	852,816
ICLUSIG revenues, net		79,936		66,920		29,588
Total product revenues, net		1,466,900		1,200,312		882,404
JAKAVI product royalty revenues		194,694		151,684		110,711
OLUMIANT product royalty revenues		40,086		9,107		—
Total product royalty revenues		234,780		160,791		110,711
Milestone and contract revenues		180,000		175,000		112,512
Other revenues		203		113		92
Total revenues	$	1,881,883	$	1,536,216	$	1,105,719

For further information on our revenue-generating contracts, refer to Note 7.

Business Combination

12 Months Ended

Dec. 31, 2018

Business Combination

Business Combination

Note 3. Business Combination

Description of the Transaction

On June 1, 2016, pursuant to the Share Purchase Agreement, we completed the Acquisition, and acquired all of the outstanding shares of ARIAD Pharmaceuticals (Luxembourg) S.à.r.l., since renamed Incyte Biosciences Luxembourg S.à.r.l., the parent company of ARIAD’s European subsidiaries responsible for the development and commercialization of ICLUSIG (ponatinib) in the European Union and other countries including Switzerland, Norway, Turkey, Israel and Russia (the “Territory”) in exchange for an upfront payment of $147.5 million, including customary working capital adjustments. ICLUSIG is approved in Europe for the treatment of patients with chronic myeloid leukemia and Philadelphia-positive acute lymphoblastic leukemia who are resistant to or intolerant of certain second generation BCR-ABL inhibitors and all patients who have the T3151 mutation. The acquisition of ARIAD Pharmaceuticals (Luxembourg) S.à.r.l. included a fully integrated and established pan-European team including medical, sales and marketing personnel. The existing platform and infrastructure acquired is expected to further our strategic plan and accelerate the establishment of our operations in Europe.

In connection with the closing of the Acquisition, we entered into an Amended and Restated Buy-in License Agreement with ARIAD (the “License Agreement”). Under the terms of the License Agreement, we were granted an exclusive license to develop and commercialize ICLUSIG in the Territory. ARIAD is eligible to receive from us tiered royalties ranging between 32% and 50% on net sales of ICLUSIG in the Territory. The royalties are subject to reduction for certain events related to exclusivity and, if necessary, any third-party patent rights. In addition, ARIAD is eligible to receive up to $135.0 million in potential future development and regulatory approval milestone payments for ICLUSIG in new oncology indications in the Territory, together with additional milestone payments for non-oncology indications, if approved, in the Territory. Under our agreement with ARIAD, we have agreed to fund a portion of the ongoing ICLUSIG clinical studies being conducted by ARIAD, OPTIC and OPTIC-2L, by paying up to $7.0 million in both 2016 and 2017. During the quarter ended September 30, 2017, ARIAD discontinued the OPTIC-2L clinical study.

Unless terminated earlier in accordance with its provisions, our obligations to pay full royalties under the License Agreement will continue to be in effect on a country-by-country basis until the latest to occur of (i) the expiration date of the composition patent in the relevant country, (ii) the expiration of any regulatory marketing exclusivity period or other statutory designation that provides similar exclusivity for the commercialization of ICLUSIG in such country and (iii) the seventh anniversary of the first commercial sale of ICLUSIG in such country. We will be obligated to pay royalties at a reduced rate for a specified period of time following such full royalty term. The License Agreement may be terminated in its entirety by us for convenience on 12 months’ notice after the third anniversary of the effective date of the License Agreement. The License Agreement may also be terminated by either party under certain other circumstances, including material breach, as set forth in the License Agreement.

Fair Value of Consideration Transferred

The fair value of consideration transferred totaled $440.5 million, which consisted of $147.5 million in cash pursuant to the Share Purchase Agreement, including net working capital adjustments, and $293.0 million of contingent consideration related to the License Agreement. Contingent consideration includes the future payments that we may pay to ARIAD for our royalty obligations on future net sales of ICLUSIG, as well as for any future potential milestone payments related to new oncology or non-oncology indications for ICLUSIG.

The fair value of contingent consideration as of the acquisition date was determined using an income approach based on estimated ICLUSIG revenues in the Territory for both the approved third line treatment, as well as the second line treatment that was under development and was therefore contingent on future clinical results and European Medicines Agency approval. The probability of technical success of the second line indication was estimated at 25% based on the early stage of development and competitive market landscape, and the estimated future cash flows for the second line indication were probability weighted accordingly. The total projected cash flows of the third line and second line indications were estimated over 18 years, and discounted to present value using a discount rate of 10%. In addition, based on the believed limited effectiveness of ICLUSIG beyond the existing oncology indications, the fact that no development is currently ongoing for any new oncology or any non-oncology indications, and the lack of intention by us, ARIAD, or another market participant, to develop ICLUSIG in additional oncology or non-oncology indications, the fair value of any cash flows for any new oncology or non-oncology indication was determined to be nil. The fair value of the contingent consideration was $293.0 million as of the Acquisition date.

Acquisition-Related Costs

We incurred $1.6 million of transaction costs directly related to the Acquisition, which includes expenditures for advisory, legal, valuation, accounting and other similar services. These costs have been expensed in selling, general and administrative costs on the consolidated statements of operations during the year ended December 31, 2016.

Revenue and Net Loss of ARIAD Pharmaceuticals (Luxembourg) S.à.r.l.

The revenues of ARIAD Pharmaceuticals (Luxembourg) S.à.r.l. for the period from the acquisition date to December 31, 2016 were $29.6 million and net loss was $48.7 million. The net loss includes the effects of the Acquisition accounting adjustments and acquisition-related costs.

Pro Forma Impact of Business Combination

The following unaudited pro forma information presents condensed consolidated results of operations for the year ended December 31, 2016, as if the Acquisition had occurred as of January 1, 2015 (in thousands):


	For the Year Ended
	December 31, 2016
Pro forma revenues	$	1,148,006
Pro forma net income	$	102,619

The unaudited pro forma condensed consolidated results of operations were prepared using the acquisition method of accounting and are based on the historical financial information of our company and the acquired business which has been adjusted for events that are (i) directly attributable to the Acquisition, (ii) factually supportable, and (iii) expected to have continuing impact on the combined results. The unaudited pro forma information reflects primarily the following adjustments:

To record amortization expense related to fair value adjustments recorded on the acquired definite lived intangibles;

To eliminate ARIAD Europe’s interest expense on the intercompany loan in accordance with the terms of the Acquisition;

To remove balances attributable to the ARIAD Australia entity which are not material. This entity was previously consolidated by ARIAD Europe; however it was not included in the Acquisition; and

To remove the recognition of revenue relating to distribution agreements in historic periods for those arrangements in which we have no continuing performance obligation and, therefore, the fair value of the assumed deferred revenue balance was zero.

The unaudited pro forma information is not necessarily indicative of the results that would have been obtained if the Acquisition had occurred as of January 1, 2015 or that may occur in the future, and does not reflect future synergies, integration costs, or other such costs or savings.

Marketable Securities

12 Months Ended

Dec. 31, 2018

Marketable Securities

Marketable Securities

Note 4. Marketable Securities

The following is a summary of our marketable security portfolio for the periods presented (in thousands):


			Net
	Amortized		Unrealized		Estimated
	Cost		Losses		Fair Value
December 31, 2018
Debt securities (corporate and government)	$	275,405	$	(1,062)	$	274,343

December 31, 2017
Debt securities (corporate and government)	$	271,401	$	(1,265)	$	270,136

Our debt securities generally have contractual maturity dates of between 12 to 18 months.

Fair Value Measurements

FASB accounting guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability (“the exit price”) in an orderly transaction between market participants at the measurement date. The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. In determining fair value we use quoted prices and observable inputs. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of us. The fair value hierarchy is broken down into three levels based on the source of inputs as follows:

Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2—Valuations based on observable inputs and quoted prices in active markets for similar assets and liabilities.

Level 3—Valuations based on inputs that are unobservable and models that are significant to the overall fair value measurement.

Recurring Fair Value Measurements

Our marketable securities consist of investments in corporate debt securities and U.S. government securities that are classified as available-for-sale.

At December 31, 2018 and 2017, our Level 2 corporate debt securities and U.S government securities were valued using readily available pricing sources which utilize market observable inputs, including the current interest rate and other characteristics for similar types of investments. Our long term investments classified as Level 1 were valued using their respective closing stock prices on The Nasdaq Stock Market.

Our policy is to recognize transfers into and transfers out of fair value hierarchy levels as of the end of the reporting period. There were no transfers out of or into hierarchy levels during the year ended December 31, 2018.

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


	Fair Value Measurement at Reporting Date Using:
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs		Balance as of
	(Level 1)		(Level 2)		(Level 3)		December 31, 2018
Cash and cash equivalents	$	1,163,980	$	—	$	—	$	1,163,980
Debt securities (corporate and government)		—		274,343		—		274,343
Long term investments (Note 7)		99,199		—		—		99,199
Total assets	$	1,263,179	$	274,343	$	—	$	1,537,522


	Fair Value Measurement at Reporting Date Using:
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs		Balance as of
	(Level 1)		(Level 2)		(Level 3)		December 31, 2017
Cash and cash equivalents	$	899,509	$	—	$	—	$	899,509
Debt securities (corporate and government)		—		270,136		—		270,136
Long term investment (Note 7)		134,356		—		—		134,356
Total assets	$	1,033,865	$	270,136	$	—	$	1,304,001

The following fair value hierarchy table presents information about each major category of our financial liabilities measured at fair value on a recurring basis (in thousands):


	Fair Value Measurement at Reporting Date Using:
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs		Balance as of
	(Level 1)		(Level 2)		(Level 3)		December 31, 2018
Acquisition-related contingent consideration	$	—	$	—	$	287,001	$	287,001
Total liabilities	$	—	$	—	$	287,001	$	287,001


	Fair Value Measurement at Reporting Date Using:
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs		Balance as of
	(Level 1)		(Level 2)		(Level 3)		December 31, 2017
Acquisition-related contingent consideration	$	—	$	—	$	287,000	$	287,000
Total liabilities	$	—	$	—	$	287,000	$	287,000

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


	2018		2017
Balance at January 1,	$	287,000	$	301,000
Contingent consideration earned during the period but not yet paid		(13,184)		(6,618)
Payments made during the period		(12,988)		(15,086)
Change in fair value of contingent consideration		26,173		7,704
Balance at December 31,	$	287,001	$	287,000

The fair value of the contingent consideration was determined using an income approach based on estimated ICLUSIG revenues in the European Union and other countries for the approved third line treatment. The fair value of the contingent consideration is remeasured each reporting period, with changes in fair value recorded in the consolidated statements of operations. The change in fair value of the contingent consideration during the period ending December 31, 2018 was due primarily to the passage of time as there were no other significant changes in the key assumptions. The change in fair value of the contingent consideration during the period ending December 31, 2017 was due primarily to the passage of time and a benefit of $24.0 million recorded during the third quarter to the lack of expected future sales royalties payable due to the discontinued OPTIC-2L clinical trial.

We make payments to Takeda quarterly based on the royalties or any additional milestone payments earned in the previous quarter. As of December 31, 2018, contingent consideration earned but not yet paid was $13.2 million. The royalties earned in the third quarter of $6.7 million were included in accounts payable and the royalties earned in the fourth quarter of $6.5 million were included in accrued and other current liabilities at December 31, 2018. As of December 31, 2017, contingent consideration earned but not yet paid was $6.6 million were included in accrued and other current liabilities.

Non-Recurring Fair Value Measurements

During the years ended December 31, 2018 and 2017, there were no measurements required for any assets or liabilities at fair value on a non-recurring basis.

Concentrations of Credit Risk

12 Months Ended

Dec. 31, 2018

Concentrations of Credit Risk

Concentrations of Credit Risk

Note 5. Concentrations of Credit Risk

In December 2009, we entered into a license, development and commercialization agreement with 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 Milestone and
	Contract Revenues for the
	Years Ended,
	December 31,
	2018		2017		2016
Collaboration Partner A	33	%	37	%	40	%
Collaboration Partner B	67	%	63	%	60	%

Collaboration Partner A and Collaboration Partner B comprised, in the aggregate, 42% and 47% of the accounts receivable balance as of December 31, 2018 and 2017, respectively.

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


	Percentage of Total Net
	Product Revenues for the
	Years Ended,
	December 31,
	2018		2017		2016
Customer A	20	%	24	%	25	%
Customer B	14	%	15	%	17	%
Customer C	15	%	13	%	13	%
Customer D	11	%	8	%	9	%

We are exposed to risks associated with extending credit to customers related to the sale of products. Customer A, Customer B, Customer C and Customer D comprised, in the aggregate, 30% and 25% of the accounts receivable balance as of December 31, 2018 and 2017, respectively.

The concentration of credit risk relating to ICLUSIG product revenues or accounts receivable is not significant.

Inventory

12 Months Ended

Dec. 31, 2018

Inventory

Inventory

Note 6. Inventory

Our inventory balance consists of the following:


	December 31,
	2018		2017
	(in thousands)
Raw materials	$	481	$	1,062
Work-in-process		3,488		8,615
Finished goods		6,436		4,771
		10,405		14,448
Inventories-current		6,967		6,482
Inventories-non-current	$	3,438	$	7,966

Inventories, stated at the lower of cost and net realizable value, consist of raw materials, work-in-process and finished goods. At December 31, 2018, $7.0 million of inventory was classified as current on the consolidated balance sheets as we expect this inventory to be consumed for commercial use within the next twelve months. At December 31, 2018, $3.4 million of inventory was classified as non‑current on the consolidated balance sheets as we did not expect this inventory to be consumed for commercial use within the next twelve months. We obtain some inventory components from a limited number of suppliers due to technology, availability, price, quality or other considerations. The loss of a supplier, the deterioration of our relationship with a supplier, or any unilateral violation of the contractual terms under which we are supplied components by a supplier could adversely affect our total revenues and gross margins.

JAKAFI 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. ICLUSIG raw materials and work-in-process inventory is not subject to expiration and the shelf life for finished goods inventory is 24 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.

License Agreements	12 Months Ended
License Agreements	Dec. 31, 2018
License Agreements
License Agreements	Note 7. License Agreements Novartis In November 2009, we entered into a Collaboration and License Agreement with Novartis. Under the terms of the agreement, Novartis received exclusive development and commercialization rights outside of the United States to our JAK inhibitor ruxolitinib and certain back‑up compounds for hematologic and oncology indications, including all hematological malignancies, solid tumors and myeloproliferative diseases. We retained exclusive development and commercialization rights to JAKAFI (ruxolitinib) in the United States and in certain other indications. Novartis also received worldwide exclusive development and commercialization rights to our MET inhibitor compound capmatinib and certain back‑up compounds in all indications. 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. In April 2016, we amended this agreement to provide that Novartis has exclusive research, development and commercialization rights outside of the United States to ruxolitinib (excluding topical formulations) in the graft-versus-host-disease (“GVHD”) field. We became eligible to receive up to $75.0 million of additional potential development and regulatory milestones relating to GVHD. Exclusive of the upfront payment of $150.0 million received in 2009 and the immediate milestone of $60.0 million earned in 2010, we have recognized and received in the aggregate $132.0 million for the achievement of development milestones, $215.0 million for the achievement of regulatory milestones and $120.0 million for the achievement of sales milestones through December 31, 2018. During the year ended December 31, 2018, under this agreement, we recognized a $60.0 million sales milestone for Novartis achieving annual net sales of a JAK licensed product of $900.0 million. In 2017, we recognized a $40.0 million sales milestone for Novartis achieving annual net sales of a JAK licensed product of $600.0 million and a $25.0 million development milestone based on the formal initiation by Novartis of a Phase III clinical trial evaluating ruxolitinib in GVHD. In 2016, we recognized a $5.0 million payment in exchange for the development and commercialization rights to ruxolitinib in GVHD outside of the United States and a $40.0 million regulatory milestone for the reimbursement of JAKAVI in Europe for the treatment of patients with polycythemia vera. In 2015, we recognized a $5.0 million development milestone based on the formal initiation by Novartis of a Phase II clinical trial evaluating capmatinib for a third indication, 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, a $15.0 million regulatory milestone for the approval of JAKAVI in Japan for the treatment of patients with polycythemia vera, and a $20.0 million sales milestone for Novartis achieving annual net sales of a JAK licensed product of $300.0 million. In 2014, we recognized a $60.0 million regulatory milestone related to reimbursement of JAKAVI in Europe, 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 a $25.0 million development milestone based on the formal initiation by Novartis of a Phase II clinical trial evaluating capmatinib. In 2012, we recognized a $40.0 million regulatory milestone for the achievement of a predefined milestone for the European Union regulatory approval of JAKAVI. In 2011, we recognized a $15.0 million development milestone 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 for the approval of JAKAFI in the United States. In 2010, we recognized $50.0 million in development milestones for the initiation of the global Phase III trial, RESPONSE, in patients with polycythemia vera. We determined that each of these milestones were 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, and tiered, worldwide royalties on future capmatinib net sales that range from 12% to 14%. Since the achievement of the $60.0 million regulatory milestone related to reimbursement of JAKAVI in Europe in September 2014, 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 years ended December 31, 2018, 2017 and 2016, such royalties payable to Novartis on net sales within the United States totaled $63.0 million, $50.5 million and $36.8 million, respectively, and are reflected in cost of product revenues on the consolidated statements of operations. At December 31, 2018 and 2017, $18.6 million and $14.8 million, respectively, of accrued royalties payable to Novartis were included in accrued and other current liabilities on the consolidated balance sheets. Each company is responsible for costs relating to the development and commercialization of ruxolitinib in its respective territories, with costs of collaborative studies shared equally. Novartis is also responsible for all costs relating to the development and commercialization of capmatinib. The Novartis agreement will continue on a program‑by‑program basis until Novartis has no royalty payment obligations with respect to such program or, if earlier, the termination of the agreement or any program in accordance with the terms of the agreement. Royalties are payable by Novartis on a product‑by‑product and country‑by‑country basis until the latest to occur of (i) the expiration of the last valid claim of the licensed patent rights covering the licensed product in the relevant country, (ii) the expiration of regulatory exclusivity for the licensed product in such country and (iii) a specified period from first commercial sale in such country of the licensed product by Novartis or its affiliates or sublicensees. The agreement may be terminated in its entirety or on a program‑by‑program basis by Novartis for convenience. The agreement may also be terminated by either party under certain other circumstances, including material breach. We determined that there were two deliverables under the agreement: (i) the ex-U.S. license for ruxolitinib and (ii) our obligations in connection with our participation on the joint development committee for myelofibrosis and polycythemia vera/essential thrombocythemia. We concluded that these deliverables should be accounted for as a single unit of accounting and the $150.0 million upfront payment received in December 2009 and the immediate $60.0 million milestone payment received in January 2010 should be recognized on a straight-line basis through December 2013, when we estimated we would complete our obligations in connection with our participation on the joint development committee for myelofibrosis and polycythemia vera, our estimated performance period under the agreement. We completed this substantive performance obligation related to this arrangement in December 2013. 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 are recorded net against the related research and development expenses. At December 31, 2018 and 2017, $0.7 million and $1.6 million, respectively, of reimbursable costs were included in accounts receivable on the consolidated balance sheets. Research and development expenses for the years ended December 31, 2018, 2017 and 2016 were net of $3.2 million, $3.0 million, and $0.7 million, respectively, of costs reimbursed by Novartis. Milestone and contract revenue under the Novartis agreement was $60.0 million, $65.0 million and $45.0 million for the years ended December 31, 2018, 2017 and 2016, respectively. In addition, for the years ended December 31, 2018, 2017 and 2016, we recorded $194.7 million, $151.7 million and $110.7 million, respectively, of product royalty revenues related to Novartis net sales of JAKAVI outside the United States. At December 31, 2018 and 2017, $55.4 million and $47.7 million, respectively, of product royalties were included in accounts receivable on the consolidated balance sheets. Lilly - Baricitinib In December 2009, we entered into a License, Development and Commercialization Agreement with Lilly. Under the terms of the agreement, Lilly received exclusive worldwide development and commercialization rights to our JAK inhibitor baricitinib, and certain back‑up compounds for inflammatory and autoimmune diseases. 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. Exclusive of the upfront payment of $90.0 million received in 2009, we have recognized and received, in aggregate, $149.0 million for the achievement of development milestones and $235.0 million for the achievement of regulatory milestones through December 31, 2018. In January 2016, Lilly submitted an NDA to the FDA and a Marketing Authorization Application (MAA) to the European Medicines Agency for baricitinib as treatment for rheumatoid arthritis. In February 2017, we and Lilly announced that the European Commission approved baricitinib as OLUMIANT for the treatment of moderate-to-severe rheumatoid arthritis in adult patients who have responded inadequately to, or who are intolerant to, one or more disease-modifying antirheumatic drugs. In July 2017, Japan's Ministry of Health, Labor and Welfare granted marketing approval for OLUMIANT for the treatment of rheumatoid arthritis in patients with inadequate response to standard-of-care therapies. In June 2018, the FDA approved the 2mg dose of OLUMIANT for the treatment of adults with moderately-to-severely active rheumatoid arthritis who have had an inadequate response to one or more tumor necrosis factor inhibitor therapies. During the year ended December 31, 2018, under this agreement, we recognized a $20.0 million development milestone for the first patient treated in the systemic lupus erythematosus Phase III program for baricitinib and a $100.0 million regulatory milestone for the FDA approval of the 2mg dose of OLUMIANT (baricitinib) for the treatment of adults with moderately-to-severely active rheumatoid arthritis. In 2017, we recognized a $30.0 million development milestone for the first patient treated in the atopic dermatitis Phase III program for baricitinib, $15.0 million regulatory milestone for the approval of baricitinib for the treatment of rheumatoid arthritis by Japan’s Ministry of Health, Labor and Welfare and a $65.0 million regulatory milestone for the approval of baricitinib for the treatment of moderate-to-severe rheumatoid arthritis in adult patients by the European Commission. In 2016, we recognized a $35.0 million regulatory milestone for the submission of an NDA to the FDA for the approval of oral once-daily baricitinib for the treatment of moderate-to-severe rheumatoid arthritis and a $20.0 million regulatory milestone for the submission of a Marketing Authorization Application to the European Medicines Agency for the approval of oral once-daily baricitinib for the treatment of moderate-to-severe rheumatoid arthritis. In 2012, we recognized a $50.0 million development milestone for the initiation of the rheumatoid arthritis Phase III program for baricitinib. In 2010, we recognized a $30.0 million development milestone 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 for the Phase IIb clinical trial initiation of baricitinib for the treatment of rheumatoid arthritis. We determined that each of these milestones were substantive as their achievement required substantive efforts by us and was at risk until the milestones were ultimately achieved. 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, including post-launch studies required by a regulatory authority. We subsequently elected to co-develop baricitinib with Lilly in psoriatic arthritis, atopic dermatitis, alopecia areata, systemic lupus erythematosus and axial spondyloarthritis and are responsible for funding 30% of future global development costs for those indications through regulatory approval, including post-launch studies required by a regulatory authority. We retained options to co-develop our JAK1/JAK2 inhibitors with Lilly on a compound-by-compound and indication-by-indication basis. Lilly is responsible for all costs relating to the development and commercialization of the compounds unless we elect to co-develop any compounds or indications. If we elect to co-develop any compounds and/or indications, we would be responsible for funding 30% of the associated future global development costs from the initiation of a Phase IIb trial through regulatory approval, including post-launch studies required by a regulatory authority. We would receive an incremental royalty rate increase across all tiers resulting in effective royalty rates ranging up to the high twenties on potential future global net sales for compounds and/or indications that we elect to co-develop. For indications that we elect not to co‑develop, we would receive tiered, double‑digit royalty payments on future global net sales with rates ranging up to 20% if the product is successfully commercialized. We previously had retained an option to co-promote products in the United States but, in March 2016, we waived our co-promotion option as part of an amendment to the agreement. Research and development expenses recorded under the Lilly agreement representing 30% of the global development costs for baricitinib for the treatment of rheumatoid arthritis, psoriatic arthritis, atopic dermatitis, alopecia areata, systemic lupus erythematosus and axial spondyloarthritis were $68.6 million, $40.8 million and $27.3 million, respectively, for the years ended December 31, 2018, 2017 and 2016. At December 31, 2018 and 2017, a total of $23.1 million and $13.6 million, respectively, of such costs were included in accrued and other liabilities on the consolidated balance sheet. 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 (i) the expiration of the last valid claim of the licensed patent rights covering the licensed product in the relevant country, (ii) the expiration of regulatory exclusivity for the licensed product in such country and (iii) a specified period from first commercial sale in such country of the licensed product by Lilly or its affiliates or sublicensees. The agreement may be terminated by Lilly for convenience, and may also be terminated under certain other circumstances, including material breach. 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. We completed our substantive performance obligation related to this arrangement in December 2016. Milestone and contract revenue under the Lilly agreement was $120.0 million, $110.0 million and $67.5 million, respectively, for the years ended December 31, 2018, 2017 and 2016. In addition, for the years ended December 31, 2018 and 2017, we recorded $40.1 million and $9.1 million, respectively, of product royalty revenues related to Lilly net sales of OLUMIANT outside the United States. At December 31, 2018 and 2017, $14.0 million and $4.6 million, respectively, of product royalties were included in accounts receivable on the consolidated balance sheets. Lilly – Ruxolitinib In March 2016, we entered into an amendment to the agreement with Lilly that amended the non-compete provision of the agreement to allow us to engage in the development and commercialization of ruxolitinib in the GVHD field. We paid Lilly an upfront payment of $35.0 million and Lilly is eligible to receive up to $40.0 million in additional regulatory milestone payments relating to ruxolitinib in the GVHD field. During the year ended December 31, 2016, the $35.0 million upfront payment was recorded in research and development expense in our consolidated statement of operations. Agenus In January 2015, we entered into a License, Development and Commercialization Agreement with Agenus Inc. and its wholly-owned subsidiary, 4-Antibody AG (now known as Agenus Switzerland Inc.), which we collectively refer to as Agenus. Under this agreement, the parties have agreed to collaborate on the discovery of novel immuno-therapeutics using Agenus’ antibody discovery platforms. 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. Upon closing of the agreement, we paid Agenus total consideration of $60.0 million. In February 2017, we and Agenus amended this agreement (the “Amended Agreement”). Under the terms of the Amended Agreement, we received exclusive worldwide development and commercialization rights to four checkpoint modulators directed against GITR, OX40, LAG-3 and TIM-3. In addition to the initial four program targets, we and Agenus have the option to jointly nominate and pursue additional targets within the framework of the collaboration, and in November 2015, three more targets were added. Targets may be designated profit-share programs, where all costs and profits are shared equally by us and Agenus, or royalty-bearing programs, where we are responsible for all costs associated with discovery, preclinical, clinical development and commercialization activities. The programs relating to GITR and OX40 and two of the undisclosed targets were profit-share programs until February 2017, while the other targets currently under collaboration are royalty-bearing programs. The Amended Agreement converted the programs relating to GITR and OX40 to royalty-bearing programs and removed from the collaboration the profit-share programs relating to the two undisclosed targets, with one reverting to us and one reverting to Agenus. Should any of those removed programs be successfully developed by a party, the other party will be eligible to receive the same milestone payments as the royalty-bearing programs and royalties at a 15% rate on global net sales. There are currently no profit-share programs. For each royalty-bearing product other than GITR and OX40, Agenus will be eligible to receive tiered royalties on global net sales ranging from 6% to 12%. For GITR and OX40, Agenus will be eligible to receive 15% royalties on global net sales. Under the Amended Agreement, we paid Agenus $20.0 million in accelerated milestones relating to the clinical development of the GITR and OX40 programs, which is recorded in research and development expense on the consolidated statement of operations during the year ended December 31, 2017. Agenus is eligible to receive up to an additional $510.0 million in future contingent development, regulatory and commercialization milestones across all programs in the collaboration. The agreement may be terminated by us for convenience upon 12 months’ notice and may also be terminated under certain other circumstances, including material breach. In June 2018, we recorded a $5.0 million development milestone due to Agenus for the LAG-3 program and in September 2018 we recorded a $5.0 million development milestone due to Agenus for the TIM-3 program, which are recorded in research and development expense on the consolidated statement of operations for the year ended December 31, 2018. In connection with the Amended Agreement, we also agreed to purchase 10.0 million shares of Agenus Inc. common stock for an aggregate purchase price of $60.0 million in cash, or $6.00 per share. We completed the purchase of the shares on February 14, 2017, when the closing price on The Nasdaq Stock Market for Agenus Inc. shares was $4.40 per share. The shares we acquired were not registered under the Securities Act of 1933 on the purchase date and were subject to certain security specific restrictions for a period of time, and accordingly, we estimated a discount for lack of marketability on the shares on the issuance date of $4.5 million, which resulted in a net fair value of the shares on the issuance date of $39.5 million. Therefore, of the total consideration paid of $60.0 million, $39.5 million was allocated to our stock purchase in Agenus Inc. and was recorded within long term investments on the consolidated balance sheets and $20.5 million was allocated to research and development expense on the consolidated statement of operations during the year ended December 31, 2017. 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. From the date of our initial stock purchase in February 2015 and up to the date of our second stock purchase in February 2017, we owned between 9% and 11% of the outstanding shares of Agenus Inc. common stock. As a result of our February 2017 stock purchase, we owned approximately 15% of the outstanding shares of Agenus Inc. common stock as of December 31, 2018. We concluded that we have the ability to exercise significant influence, but not control, over Agenus Inc. based primarily on our ownership interest, the fact that we have been the largest Agenus stockholder since the date of our initial stock purchase, 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 years ended December 31, 2018, 2017 and 2016, we recorded an unrealized loss of $15.6 million, $13.6 million and $3.3 million, respectively, based on the changes in the market price of Agenus Inc.’s common stock during these periods. The fair market value of our long term investment in Agenus Inc. as of December 31, 2018 and 2017 was $42.3 million and $57.9 million, respectively. For the three and nine months ended September 30, 2018, Agenus Inc. reported total revenues of $12.8 million and $30.3 million, respectively, and net losses of $33.7 million and $113.2 million, respectively, within their consolidated financial statements. For the three and nine months ended September 30, 2017, Agenus Inc. reported total revenues of $3.4 million and $34.5 million, respectively, and net losses of $36.8 million and $85.7 million, respectively, within their consolidated financial statements. As of September 30, 2018, Agenus Inc. reported current assets of $67.6 million, noncurrent assets of $62.8 million, current liabilities of $58.2 million and noncurrent liabilities of $203.7 million. As of December 31, 2017, Agenus Inc. reported current assets of $73.6 million, noncurrent assets of $64.8 million, current liabilities of $56.4 million and noncurrent liabilities of $157.8 million. At this time, we have no plans to participate in any future equity-based fundraising, and, in the event of any future equity-based fundraising, anticipate dilution of our ownership percentage and a significant permanent decrease in the value of our overall investment. Research and development expenses for the years ended December 31, 2018, 2017 and 2016, also included $4.6 million, $19.5 million and $17.5 million, respectively, of development costs incurred pursuant to the Agenus arrangement. At December 31, 2018 and 2017, a total of $2.3 million and $3.2 million, respectively, of such costs were included in accrued and other liabilities on the consolidated balance sheet. Hengrui In September 2015, we entered into a License and Collaboration Agreement with Jiangsu Hengrui Medicine Co., Ltd. (“Hengrui”). Under the terms of this agreement, we received exclusive development and commercialization rights worldwide, with the exception of Mainland China, Hong Kong, Macau and Taiwan, to INCSHR1210, an investigational PD-1 monoclonal antibody, and certain back-up compounds. In February 2018, Incyte and Hengrui agreed to terminate the collaboration, pursuant to the terms of the License and Collaboration Agreement. Research and development expenses for the years ended December 31, 2018, 2017, and 2016, included $1.5 million, $3.2 million and $9.8 million, respectively, of development costs incurred pursuant to the Hengrui agreement. Merus In December 2016, we entered into a Collaboration and License Agreement with Merus N.V. Under this agreement, which became effective in January 2017, the parties have agreed to collaborate with respect to the research, discovery and development of bispecific antibodies utilizing Merus’ technology platform. The collaboration encompasses up to eleven independent programs. The most advanced collaboration program is MCLA-145, a bispecific antibody targeting PD-L1 and CD137, for which we received exclusive development and commercialization rights outside of the United States. Merus retained exclusive development and commercialization rights in the United States to MCLA-145. Each party will share equally the costs of mutually agreed global development activities for MCLA-145, and fund itself any independent development activities in its territory. Merus will be responsible for commercializing MCLA-145 in the United States and we will be responsible for commercializing it outside of the United States. In addition to receiving rights to MCLA-145 outside of the United States, we received worldwide exclusive development and commercialization rights to up to ten additional programs. Of these ten additional programs, Merus retained the option, subject to certain conditions, to co-fund development of up to two such programs. If Merus exercises its co-funding option for a program, Merus would be responsible for funding 35% of the associated future global development costs and, for certain of such programs, would be responsible for reimbursing us for certain development costs incurred prior to the option exercise. Merus will also have the right to participate in a specified proportion of detailing activities in the United States for one of those co-developed programs. All costs related to the co-funded collaboration programs are subject to joint research and development plans and overseen by a joint development committee, but we will have final determination as to such plans in cases of dispute. We will be responsible for all research, development and commercialization costs relating to all other programs. In February 2017, we paid Merus an upfront non-refundable payment of $120.0 million. For each program as to which Merus does not have commercialization or development co-funding rights, Merus will be eligible to receive up to $100.0 million in future contingent development and regulatory milestones, and up to $250.0 million in commercialization milestones as well as tiered royalties ranging from 6% to 10% of global net sales. For each program as to which Merus exercises its option to co-fund development, Merus will be eligible to receive a 50% share of profits (or sustain 50% of any losses) in the United States and be eligible to receive tiered royalties ranging from 6% to 10% of net sales of products outside of the United States. If Merus opts to cease co-funding a program as to which it exercised its co-development option, then Merus will no longer receive a share of profits in the United States but will be eligible to receive the same milestones from the co-funding termination date and the same tiered royalties described above with respect to programs where Merus does not have a right to co-fund development and, depending on the stage at which Merus chose to cease co-funding development costs, Merus will be eligible to receive additional royalties ranging up to 4% of net sales in the United States. For MCLA-145, we and Merus will each be eligible to receive tiered royalties on net sales in the other party’s territory at rates ranging from 6% to 10%. The Merus agreement will continue on a program-by-program basis until we have no royalty payment obligations with respect to such program or, if earlier, the termination of the agreement or any program in accordance with the terms of the agreement. The agreement may be terminated in its entirety or on a program-by-program basis by us for convenience. The agreement may also be terminated by either party under certain other circumstances, including material breach, as set forth in the agreement. If the agreement is terminated with respect to one or more programs, all rights in the terminated programs revert to Merus, subject to payment to us of a reverse royalty of up to 4% on sales of future products, if Merus elects to pursue development and commercialization of products arising from the terminated programs. In addition, in December 2016, we entered into a Share Subscription Agreement with Merus, pursuant to which we agreed to purchase 3.2 million common shares of Merus for an aggregate purchase price of $80.0 million in cash, or $25.00 per share. We agreed to certain standstill provisions whereby we are obligated to refrain from taking certain actions with respect to Merus or Merus’ common shares during a period ending on the earliest of (i) three years from the closing date of our share purchase, (ii) the date Merus publicly announces any merger or similar business combination or another party announces an intention to acquire a substantial portion of Merus’ securities, and (iii) the termination of the Collaboration and License Agreement. The standstill provisions are subject to certain exceptions, including an exception that allows us to maintain our percentage ownership following equity financings by Merus. We also agreed, subject to limited exceptions, not to sell or otherwise transfer any of our Merus shares for a period, referred to as the Lock-Up Period, ending on the earlier of 18 months after the closing date of the sale of the Shares or the end of the standstill period. In addition, if the standstill period has not been terminated earlier upon the occurrence of certain events, for a period of three years after the Lock-Up Period, we will be restricted from selling or otherwise transferring more than one-third of our Merus shares during any 12-month period or 10% of our Merus shares during any three-month period, unless Merus consents otherwise. We have further agreed that during the standstill period, we will vote all of our Merus shares in accordance with the recommendation of a majority of Merus’ supervisory board. However, we may vote our Merus shares at our own discretion for certain extraordinary matters, including a change in control of Merus. Merus has agreed to customary resale registration rights with respect to our Merus shares; however, any such resales will be subject to the Lock-Up Period and volume limitations on sale and transfer described above. We completed the purchase of the shares on January 23, 2017 when the closing price on The Nasdaq Stock Market for Merus shares was $24.50 per share. The shares we acquired were not registered under the Securities Act of 1933 on the purchase date and were subject to certain security specific restrictions for a period of time, and accordingly, we estimated a discount for lack of marketability on the shares on the issuance date of $5.6 million, which resulted in a net fair value of the shares on the issuance date of $72.8 million. Of the total consideration paid of $80.0 million, $72.8 million was allocated to our stock purchase in Merus and was recorded as a long term investment on the consolidated balance sheets and $7.2 million was allocated to research and development expense on the consolidated statement of operations during the year ended December 31, 2017. The fair market value of our total long term investment in Merus as of December 31, 2018 and 2017 was $44.8 million and $62.1 million, respectively. We have concluded Merus 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. As of December 31, 2018, we owned approximately 14% of the outstanding shares of Merus common stock and conclude that we have the ability to exercise significant influence, but not control, over Merus based primarily on our ownership interest, the level of intra-entity transactions between us and Merus related to development expenses, as well as other qualitative factors. We have elected the fair value option to account for our long term investment in Merus whereby the investment is marked to market through earnings in each reporting period. We believe the fair value option to be the most appropriate accounting method to account for securities in publicly held collaborators for which we have significant influence. For the years ended December 31, 2018 and 2017, we recorded an unrealized loss of $17.3 million and $10.7 million, respectively, based on the change in fair value of Merus’ common stock during these periods. For the three and nine months ended September 30, 2018, Merus reported within its Form 6-K total revenues of approximately €6.5 million and €23.0 million, respectively, and net loss of approximately €10.7 million and €23.7 million, respectively, within its condensed consolidated financial statements. For the three and nine months ended September 30, 2017, Merus reported within its Form 6-K total revenues of approximately €5.7 million and €15.8 million, respectively, and net loss of approximately €13.4 million and €52.7 million, respectively, within its condensed consolidated financial statements. As of September 30, 2018, Merus reported within its Form 6-K current assets of €202.6 million, noncurrent assets of €22.1 million, current liabilities of €38.2 million and noncurrent liabilities of €101.5 million. As of December 31, 2017, Merus reported within its Form 6-K current assets of €188.1 million, noncurrent assets of €8.7 million, current liabilities of €27.7 million and noncurrent liabilities of €112.6 million. Research and development expenses for the years ended December 31, 2018 and 2017 included $10.3 million and $6.5 million, respectively, of additional development costs incurred pursuant to the Merus agreement. At December 31, 2018 and 2017, a total of $2.9 million and $2.1 million, respectively, of such costs were included in accrued and other liabilities on the consolidated balance sheets. Calithera In January 2017, we entered into a Collaboration and License Agreement with Calithera Biosciences, Inc. (“Calithera”). Under this agreement, we received an exclusive, worldwide license to develop and commercialize small molecule arginase inhibitors, including CB-1158, which is currently in Phase I clinical trials, for hematology and oncology indications. We have agreed to co-fund 70% of the global development costs for the development of the licensed products for hematology and oncology indications. Calithera will have the right to conduct certain clinical development under the collaboration, including combination studies of a licensed product with a proprietary compound of Calithera. We will be entitled to 60% of the profits and losses from net sales of licensed product in the United States, and Calithera will have the right to co-detail licensed products in the United States, and we have agreed to pay Calithera tiered royalties ranging from the low to mid-double digits on net sales of licensed products outside the United States. Calithera may opt out of its co-funding obligation, in which case the U.S. profit sharing will no longer be in effect, and we have agreed to pay Calithera tiered royalties ranging from the low to mid-double digits on net sales of licensed products both in the United States and outside the United States, and additional royalties to reimburse Calithera for previously incurred development costs. In January 2017, we paid Calithera an upfront license fee of $45.0 million and have agreed to pay potential development, regulatory and sales milestone payments of over $430.0 million if the profit share is in effect, or $750.0 million if the profit share terminates. In March 2017, Calithera earned a $12.0 million milestone payment from us for the achievement of pharmacokinetic and pharmacodynamics goals for CB-1158 which was recorded in research and development expense on our consolidated statement of operations. The Calithera agreement will continue on a product-by-product and country-by-country basis for so long as we are developing or commercializing products in the United States (if the parties are sharing profits in the United States) and until we have no further royalty payment obligations, unless earlier terminated according to the terms of the agreement. The agreement may be terminated in its entirety or on a product-by-product and/or a country-by-country basis by us for convenience. The agreement may also be terminated by us for Calithera’s uncured material breach, by Calithera for our uncured material breach and by either party for bankruptcy or patent challenge. If the agreement is terminated early with respect to one or more products or countries, all rights in the terminated products and countries revert to Calithera. In addition, in January 2017, we entered into a Stock Purchase Agreement with Calithera for the purchase of 1.7 million common shares of Calithera for an aggregate purchase price of $8.0 million in cash, or $4.65 per share. We completed the purchase of the shares on January 30, 2017 when the closing price on The Nasdaq Stock Market was $6.75 per share. The shares we acquired were registered under the Securities Act of 1933 on the purchase date and there were no security specific restrictions for these shares, and therefore the value of the 1.7 million shares acquired by us was $11.6 million. We paid total consideration of $53.0 million to Calithera, composed of the $45.0 million upfront license fee and the $8.0 million stock purchase price. Of the $53.0 million, $11.6 million was allocated to our stock purchase in Calithera and was recorded within long term investments on the consolidated balance sheets and $41.4 million was allocated to research and development expense on the consolidated statement of operations during the year ended December 31, 2017. The fair market value of our long term investment in Calithera as of December 31, 2018 and 2017 was $6.9 million and $14.4 million, respectively. We have concluded Calithera 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. As of December 31, 2018, we owned approximately 4.5% of the outstanding shares of Calithera common stock and there are several other stockholders who hold larger positions of Calithera. As we do not hold a significant position of the voting shares of Calithera and lack the qualitative characteristics associated with the ability to exercise significant influence, our ownership interest does not meet the criteria to be accounted for as an equity method investment. We intend to hold the investment in Calithera for the foreseeable future, and thereby have classified the investment within long term investments on the accompanying consolidated balance sheets. Under guidance implemented by ASU No. 2016-01, the investment is marked to market through earnings in each reporting period. Prior to implementation, the unrealized gains and losses on our investment in Calithera were recorded in accumulated other comprehensive income (loss). To adopt ASU No. 2016-01, the January 1, 2018 accumulated deficit balance decreased by $2.8 million to reflect these prior period unrealized gains. For the year ended December 31, 2018 and 2017, we recorded an unrealized loss of $7.5 million and an unrealized gain of $2.8 million, respectively, based on the change in fair value of Calithera’s common stock during these periods. Research and development expenses for the years ended December 31, 2018 and 2017 also included $12.0 million and $23.4 million, respectively, of additional development costs incurred pursuant to the Calithera agreement. At December 31, 2018 and 2017, a total of $2.6 million and $0.9 million, respectively, of such costs were included in accrued and other liabilities on the consolidated balance sheets. MacroGenics In October 2017, we entered into a Global Collaboration and License Agreement with MacroGenics, Inc. (“MacroGenics”). Under this agreement, we received exclusive development and commercialization rights worldwide to MacroGenics’ INCMGA0012 (formerly MGA012), an investigational monoclonal antibody that inhibits PD-1. Except as set forth in the succeeding sentence, we will have sole authority over and bear all costs and expenses in connection with the development and commercialization of INCMGA0012 in all indications, whether as a monotherapy or as part of a combination regimen. MacroGenics has retained the right to develop and commercialize, at its cost and expense, its pipeline assets in combination with INCMGA0012. In addition, MacroGenics has the right to manufacture a portion of both companies’ global clinical and commercial supply needs of INCMGA0012. In December 2017, we paid MacroGenics an upfront payment of $150.0 million which was recorded in research and development expense on our consolidated statement of operations. MacroGenics will be eligible to receive up to $420.0 million in future contingent development and regulatory milestones and up to $330.0 million in commercial milestones as well as tiered royalties ranging from 15% to 24% of global net sales. In September 2018, we recorded $10.0 million and in November 2018 we recorded $5.0 million in aggregate milestones due to MacroGenics for the achievement of certain clinical milestones as part of our collaboration and license agreement, which were recorded in research and development expense on our consolidated statement of operations for the year ended December 31, 2018. The MacroGenics agreement will continue until we are no longer commercializing, developing or manufacturing INCMGA0012 or, if earlier, the termination of the agreement in accordance with its terms. The agreement may be terminated in its entirety or on a licensed product by licensed product basis by us for convenience. The agreement may also be terminated by either party under certain other circumstances, including material breach, as set forth in the agreement. Research and development expenses for the years ended December 31, 2018 and 2017, also included $35.4 million and $1.1 million, respectively, of additional development costs incurred pursuant to the MacroGenics agreement. At December 31, 2018 and 2017, a total of $3.2 million and $1.1 million, respectively, of such costs were included in accrued and other liabilities on the consolidated balance sheets. Syros In January 2018, we entered into a target discovery, research collaboration and option agreement with Syros Pharmaceuticals, Inc. (“Syros”). Under this agreement, Syros will use its proprietary gene control platform to identify novel therapeutic targets with a focus in myeloproliferative neoplasms and we have received options to obtain exclusive worldwide rights to intellectual property resulting from the collaboration for up to seven validated targets. We will have exclusive worldwide rights to develop and commercialize any therapies under the collaboration that modulate those validated targets. We have agreed to pay Syros up to $54.0 million in target selection and option exercise fees should we decide to exercise all of our options under the agreement. For products resulting from the collaboration against each of the seven selected and validated targets, we have agreed to pay up to $50.0 million in potential development and regulatory milestones and up to $65.0 million in potential commercial milestones. Syros is also eligible to receive low single-digit royalties on net sales of products resulting from the collaboration. In January 2018, we paid Syros an upfront non-refundable (except in the event of a material breach of the agreement by Syros) payment of $10.0 million, which was recorded in research and development expense during the year ended December 31, 2018. In addition, in January 2018, we entered into a Stock Purchase Agreement with Syros for the purchase of 0.8 million common shares of Syros for an aggregate purchase price of $10.0 million in cash, or $12.61 per share. We agreed to not sell or otherwise transfer any of our Syros shares for a period, referred to as the Lock-Up Period, of 12 months after the closing date of the sale. We completed the purchase of the shares on January 8, 2018 when the closing price on The Nasdaq Stock Market was $9.77 per share. The shares we acquired were not registered on the purchase date, and accordingly, we estimated a discount for lack of marketability on the shares of $0.1 million, which resulted in a net fair value of the shares on the issuance date of $7.6 million. Of the $10.0 million aggregate purchase price paid, $7.6 million was allocated to our stock purchase in Syros and was recorded within long term investments on the consolidated balance sheet and $2.4 million, representing premium paid on the purchase, was allocated to research and development expense on the consolidated statement of operations for the year ended December 31, 2018. Also in January 2018, we entered into an Amended Stock Purchase Agreement with Syros for the purchase of an additional 0.1 million common shares of Syros for an aggregate purchase price of $1.4 million in cash, or $9.55 per share. The shares were acquired in February 2018 and the $1.4 million aggregate purchase price was recorded within long term investments on the consolidated balance sheet. All acquired shares were subsequently registered under the Securities Act of 1933 in February 2018. The fair market value of our long term investment in Syros as of December 31, 2018 was $5.2 million. We have concluded Syros 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. As of December 31, 2018, we owned approximately 3% of the outstanding shares of Syros common stock and there are several other stockholders who hold larger positions of Syros. As we do not hold a significant position of the voting shares of Syros and lack the qualitative characteristics associated with the ability to exercise significant influence, our ownership interest does not meet the criteria to be accounted for as an equity method investment. We intend to hold the investment in Syros for the foreseeable future and therefore, are accounting for our shares held in Syros at fair value under ASU No. 2016-01, and the investment is marked to market through earnings in each reporting period. Given our intent to hold the investment for the foreseeable future, we have classified the investment within long term investments on the accompanying consolidated balance sheet. For the year ended December 31, 2018, we recorded an unrealized loss of $3.7 million based on the change in the market price of Syros’ common stock during the period. Innovent In December 2018, we entered into a research collaboration and licensing agreement with Innovent Biologics, Inc. (“Innovent”). Under the terms of this agreement, Innovent received exclusive development and commercialization rights to our clinical-stage product candidates pemigatinib, itacitinib and parsaclisib in hematology and oncology in Mainland China, Hong Kong, Macau and Taiwan. In January 2019, we received an upfront payment under this agreement of $40.0 million. In addition, we are eligible to receive $20.0 million in connection with the first related IND filing in China, up to $129.0 million in potential development and regulatory milestones, and up to $202.5 million in potential commercial milestones. We are also eligible to receive tiered royalties from the high-teens to the low-twenties on future sales of products resulting from the collaboration. We retain an option to assist in the promotion of the three product candidates in the Innovent territories.

Property and Equipment

12 Months Ended

Dec. 31, 2018

Property and Equipment

Property and Equipment

Note 8. Property and Equipment

Property and equipment, net consists of the following (in thousands):


	December 31,
	2018		2017
Office equipment	$	16,955	$	14,665
Laboratory equipment		61,697		45,048
Computer equipment		55,436		48,733
Land		10,122		5,350
Building and leasehold improvements		213,196		209,260
Construction in progress		65,576		11,371
		422,982		334,427
Less accumulated depreciation and amortization		(103,231)		(74,664)
Property and equipment, net	$	319,751	$	259,763

Depreciation expense, including amortization expense of leasehold improvements, was $32.3 million, $24.6 million and $14.2 million for the years ended December 31, 2018, 2017 and 2016, respectively.

In October 2017, we completed the construction of a 154,000 square foot office building located in Wilmington, Delaware totaling approximately $91.3 million and are depreciating the building over its estimated useful life of 40 years.

In February 2018, we signed an agreement to rent a building in Morges, Switzerland for an initial term of 15 years, with multiple options to extend for an additional 20 years. The building will undergo extensive renovations prior to our occupation and, when completed, will serve as our new European headquarters. The new building will consist of approximately 100,000 square feet of office space. This building will allow for consolidation of our European operations that are currently located in Geneva and Lausanne, Switzerland. Building permits were granted by the local government authorities in September 2018, and construction activity began immediately thereafter. We are responsible for a portion of the renovation and construction costs, and are deemed, for accounting purposes, to be the owner of the building. As a result, we recorded the fair value of the building as a capital asset of approximately $15.8 million and a corresponding financing liability in accrued and other current liabilities on our consolidated balance sheet at December 31, 2018. We also recorded approximately $2.9 million in construction costs as a capital asset and corresponding financing liability on our consolidated balance sheet at December 31, 2018. Due to new accounting guidance within ASC 842, Leases, the assets and liabilities associated to this lease will be derecognized upon adoption on January 1, 2019. We anticipate beginning our portion of construction activity in July 2019, with completion of the office complex anticipated in the first half of 2020.

In July 2018, we signed an agreement to purchase land located within Y-PARC, Switzerland’s largest technology park in Yverdon. The land was purchased, in cash, for $4.8 million. Upon this parcel, we are constructing a large molecule production facility. Construction activity commenced in July 2018 and as of December 31, 2018, we have recorded approximately $37.5 million in costs for construction, ground preparation and architectural and engineering studies. We currently anticipate the facility to be completed in the second half of 2020.

Intangible Assets and Goodwill

12 Months Ended

Dec. 31, 2018

Intangible Assets and Goodwill

Intangible Assets and Goodwill

Note 9. Intangible Assets and Goodwill

Intangible Assets, Net

The components of intangible assets were as follows (in thousands, except for useful life):

Balance at December 31, 2018

Balance at December 31, 2017

Weighted-

Gross

Net

Gross

Net

Average Useful

Carrying

Accumulated

Carrying

Accumulated

Carrying

Lives (Years)

Amount

Amortization

Amount

Amortization

Amount

Finite-lived intangible assets:

Licensed IP

12.5

271,000

55,636

215,364

271,000

34,099

236,901

Amortization expense was $21.5 million, $21.5 million and $12.6 million for the years ended December 31, 2018, 2017, and 2016, respectively, and is recorded in cost of product revenues on the consolidated statement of operations. Estimated aggregate amortization expense based on the current carrying value of amortizable intangible assets will be as follows for the years ending December 31 (in thousands):


		2019		2020		2021		2022		2023		Thereafter
Amortization expense	$	21,536	$	21,536	$	21,536	$	21,536	$	21,536	$	107,684

Goodwill

There were no changes to the carrying amount of goodwill for the years ended December 31, 2018 and 2017.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References + Details

Accrued and Other Current Liabilities

12 Months Ended

Dec. 31, 2018

Accrued and Other Current Liabilities

Accrued and Other Current Liabilities

Note 10. Accrued and Other Current Liabilities

Accrued and other current liabilities at December 31, 2018 and 2017 consisted of the following (in thousands):


	December 31,		December 31,
	2018		2017
Royalties	$	25,087	$	21,433
Clinical related costs		98,607		110,037
Sales allowances		44,770		34,679
Construction in progress		7,673		9,945
Financing lease liability		18,696		—
Other current liabilities		34,568		22,807
Total accrued and other current liabilities	$	229,401	$	198,901

Convertible Notes

12 Months Ended

Dec. 31, 2018

Convertible Notes

Convertible Notes

Note 11. Convertible Notes

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


				Carrying Amount
	Interest Rates			December 31,
Debt	December 31, 2018		Maturities	2018		2017
0.375% Convertible Senior Notes due 2018	0.375	%	2018	$	—	$	7,393
1.25% Convertible Senior Notes due 2020	1.25	%	2020		17,434		16,608
					17,434		24,001
Less current portion					—		7,393
				$	17,434	$	16,608

Annual maturities of all convertible notes are as follows (in thousands):


2019	$	—
2020		19,094
2021		—
2022		—
Thereafter		—
	$	19,094

The carrying amount and fair value of our convertible notes as of the dates shown were as follows (in thousands):


	December 31,
	2018				2017
	Carrying				Carrying
	Amount		Fair Value		Amount		Fair Value
0.375% Convertible Senior Notes due 2018	$	—	$	—	$	7,393	$	14,129
1.25% Convertible Senior Notes due 2020		17,434		25,073		16,608		35,431
	$	17,434	$	25,073	$	24,001	$	49,560

The fair values of our 0.375% Convertible Senior Notes due 2018 (the “2018 Notes”) and 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, are classified within Level 2 in the fair value hierarchy.

On November 14, 2013, we issued, in a private placement, $375.0 million aggregate principal amount of the 2018 Notes and $375.0 million aggregate principal amount of the 2020 Notes. Entities affiliated with Julian C. Baker, one of our directors and principal stockholders (the “Baker Entities”), purchased $250.0 million aggregate principal amount of the 2018 Notes and $250.0 million aggregate principal amount of the 2020 Notes in this private placement. As of December 31, 2016, the Baker Entities owned $259.0 million and $274.5 million aggregate principal amounts of the 2018 and 2020 Notes, respectively, which were exchanged in 2017 for shares of common stock as described below. The 2018 Notes bore interest at a rate of 0.375% per annum and the 2020 Notes bear interest at a rate of 1.25% per annum, in each case payable semi‑annually in arrears in cash on May 15 and November 15, beginning on May 15, 2014. The 2018 Notes matured on November 15, 2018 and the 2020 Notes will mature on November 15, 2020, unless earlier purchased or converted. We may not redeem the 2020 Notes prior to their relevant scheduled maturity dates.

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 Notes were and the 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 2018 Notes were and the 2020 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. Management’s intent is to settle any conversions of the 2020 Notes in shares of our common stock.

The conversion rate for the 2018 Notes was 19.3207 shares of common stock per $1,000 principal amount, equivalent to an initial conversion price of approximately $51.76 per share. The initial conversion rate for the 2020 Notes is 19.3207 shares of common stock per $1,000 principal amount, equivalent to an initial conversion price of approximately $51.76 per share. The conversion rate for the 2018 Notes was and the conversion rate for the 2020 Notes will be subject to adjustment for certain events but will not be adjusted for any accrued and unpaid interest. Upon the occurrence of certain fundamental changes, the holders of the 2020 Notes may require us to purchase all or a portion of their 2020 Notes for cash at a price equal to 100% of the principal amount of the 2020 Notes, plus accrued and unpaid interest, including additional interest, if any, to, but excluding, the fundamental change purchase date. In addition, if, and to the extent, a holder elects to convert any 2020 Notes in connection with a make‑whole fundamental change transaction, as defined in the indenture, we will, under certain circumstances, increase the applicable conversion rate by a number of additional shares of our common stock. The 2018 Notes had similar provisions relating to fundamental changes and make-whole fundamental changes.

Since the 2018 Notes could and the 2020 Notes can be settled in cash or common shares or a combination of cash and common shares at our option, we determined the embedded conversion options in the 2018 and 2020 Notes are not required to be separately accounted for as a derivative. However, since the 2018 and 2020 Notes are within the scope of the accounting guidance for cash convertible instruments, we are required to separate the 2018 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 a similar liability that does not have an associated equity component using the effective interest method. The equity component is not re‑measured as long as it continues to meet the conditions for equity classification in the accounting guidance for contracts in an entity’s own equity.

The liability component of the 2018 Notes on the date of issuance was estimated at $299.4 million, and accordingly, the equity component on the date of issuance was $75.6 million. The discount on the 2018 Notes was amortized to interest expense over the term of the 2018 Notes, using the effective interest method. The 2018 Notes were due on November 15, 2018 and the remaining de minimis principal balance of 2018 Notes that were not converted into common stock were repaid on that date. The carrying value of the 2018 Notes was $7.4 million (net of $0.3 million of debt discount and issuance costs) at December 31, 2017.

The liability component of the 2020 Notes on the date of issuance was estimated at $274.8 million, and accordingly, the equity component on the date of issuance was $100.2 million. The discount on the 2020 Notes is being amortized to interest expense over the term of the 2020 Notes, using the effective interest method. The carrying value of the 2020 Notes was $17.4 million and $16.6 million, respectively, (net of $1.7 million and $2.5 million debt discount and issuance costs, respectively) at December 31, 2018 and 2017.

During the year ended December 31, 2017, we entered into separately negotiated agreements with certain holders of the 2018 Notes pursuant to which such holders agreed to exchange a total of $367.2 million in aggregate principal amount of the 2018 Notes for the shares of our common stock into which the 2018 Notes were originally convertible, aggregating 7.1 million shares, an additional 0.1 million of premium shares (equivalent to $12.6 million in value) and $2.0 million in cash. Similarly we entered into separately negotiated agreements with certain holders of the 2020 Notes pursuant to which such holders agreed to exchange a total of $355.6 million in aggregate principal amount of the 2020 Notes for the shares of our common stock into which the 2020 Notes were originally convertible, aggregating 6.9 million shares, an additional 0.2 million of premium shares (equivalent to $26.8 million in value) and $7.0 million in cash. Included in the agreements were those with the Baker Entities, which agreed to exchange $259.0 million in aggregate principal amount of the 2018 Notes and $274.5 million in aggregate principal amount of the 2020 Notes for an aggregate of 10.6 million shares.

Pursuant to the guidance within the ASC 470-20-40-20, we measured the difference between the fair value and carrying value of the liability portion of the 2018 and 2020 Notes which resulted in recording expense related to senior note conversions of $1.4 million related to the 2018 Notes and $5.1 million related to the 2020 Notes. The estimated fair value of the debt component was determined using a valuation model which is subject to judgement. Assumptions used within the valuation model include an estimated credit rating and an estimated market-based cost of debt. These assumptions were used to perform a discounted cash flow analysis on the future interest and principal payments to determine the estimated fair value of the debt at inducement.

In addition, the fair value of the premium shares issued pursuant to these agreements as well as the cash paid in connection with the agreements totaled $48.4 million and is also included within expense related to senior note conversions on the consolidated statement of operations during the year ended December 31, 2017.

Stockholders’ Equity

12 Months Ended

Dec. 31, 2018

Stockholders’ Equity

Stockholders’ Equity

Note 12. Stockholders’ Equity

Preferred Stock. We are authorized to issue 5,000,000 shares of preferred stock, none of which was outstanding as of December 31, 2018 and 2017. The Board of Directors may determine the rights, preferences and privileges of any preferred stock issued in the future.

Common Stock. We are authorized to issue 400,000,000 shares of common stock.

On September 7, 2017, we completed a public offering of 4,945,000 shares of our authorized but unissued common stock pursuant to an effective shelf registration statement. The underwriter had an option for a period of 30 days to purchase a maximum of 741,750 additional shares of our common stock, which expired unexercised. We sold the shares of common stock to the underwriter at a price of $131.46 per share, resulting in net proceeds, after deducting expenses related to the offering, of approximately $649.4 million.

Stock Compensation Plans. As of December 31, 2018, we had a total of 7,716,849 shares of our common stock available for future issuance related to our stock plans as described below.

2010 Stock Incentive Plan. In May 2010 the Board of Directors adopted the 2010 Stock Incentive Plan, which was amended and restated in April 2013 (the “2010 Plan”) for issuance of common stock to employees, non‑employee directors, consultants, and scientific advisors. Options are granted to employees, consultants, and scientific advisors under the 2010 Plan, pursuant to a formula determined by our Board of Directors. All options are exercisable at the fair market value of the stock on the date of grant. Non‑employee director options expire after ten years.

In May 2012, our stockholders approved an increase in the number of shares of common stock reserved for issuance under the 2010 Plan from 12,553,475 to 16,553,475. In May 2013, our stockholders approved an increase in the number of shares of common stock reserved for issuance under the 2010 Plan from 16,553,475 to 21,753,475. In May 2014, our stockholders approved an increase in the number of shares of common stock reserved for issuance under the 2010 Plan from 21,753,475 to 24,753,475. In May 2016, our stockholders approved an increase in the number of shares of common stock reserved for issuance under the 2010 Plan from 24,753,475 to 30,753,475. In May 2018, our stockholders approved an increase in the number of shares of common stock reserved for issuance under the 2010 Plan from 30,753,475 to 36,753,475.

Option activity under the 2010 Stock Plan was as follows:


		Shares Subject to
		Outstanding Options
	Shares Available		Weighted Average
	for Grant	Shares	Exercise Price
Balance at December 31, 2017	3,909,701	11,206,553	$	68.36
Additional authorization	5,000,000	—		—
Options granted	(3,245,314)	3,245,314	$	78.64
Options exercised	—	(1,353,518)	$	22.42
Options cancelled	813,190	(813,190)	$	94.82
Balance at December 31, 2018	6,477,577	12,285,159	$	74.39

In July 2016, we revised the terms of our annual stock option grants to provide that new option grants would generally have a 10-year term and vest over four years, with 25% vesting after one year and the remainder vesting in 36 equal monthly installments. Previously, our option grants generally had 7-year terms and vested over three years, with 33% vesting after one year and the remainder vesting in 24 equal monthly installments.

Options to purchase a total of 7,194,171, 7,250,283 and 7,995,735 shares as of December 31, 2018, 2017 and 2016, respectively, were exercisable. The aggregate intrinsic value of options exercised for the years ended December 31, 2018, 2017 and 2016 were $73.9 million, $264.2 million and $137.0 million, respectively. At December 31, 2018 the aggregate intrinsic value of options outstanding and vested options were $118.5 million.

The following table summarizes information about stock options outstanding as of December 31, 2018 for the 2010 Plan:


	Options Outstanding				Options Exercisable
		Weighted Average	Weighted			Weighted
		Remaining	Average			Average
	Number	Contractual Life	Exercise		Number	Exercise
Range of Exercise Prices	Outstanding	(in years)	Price		Exercisable	Price
$2.80 - $17.79	588,741	0.31	$	16.48	588,741	$	16.48
$17.89 - $18.32	1,474,120	1.09		18.31	1,474,120		18.31
$18.97 - $64.55	1,652,452	3.12		49.41	1,439,924		47.60
$65.36 - $68.40	142,566	8.70		66.34	19,555		67.39
$68.62 - $68.62	1,426,578	9.39		68.62	—		—
$68.82 - $81.16	1,234,047	4.24		73.59	892,781		73.69
$83.83 - $94.63	1,701,957	7.73		88.55	894,810		87.36
$95.34 - $95.76	1,578,529	6.09		95.62	780,898		95.76
$100.81 - $113.64	1,462,739	7.63		112.39	636,592		111.63
$115.19 - $138.52	1,023,430	8.09		128.30	466,750		128.88
	12,285,159				7,194,171

Restricted Stock Units and Performance Shares.

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. Each RSU granted prior to July 2016 was subject to cliff vesting after three years. In July 2016, we revised the terms of our RSU grants to provide that the awards will vest 25% annually over four years.

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 December 31, 2018, a total of 266,667 RSUs granted to Mr. Hoppenot vested, leaving 133,333 RSUs outstanding.

In June 2018, we granted 190,000 RSUs and 446,500 PSUs under long term incentive plans with performance and/or service-based milestones with graded and/or cliff vesting over three to four years. For one of the long term incentive plans, under which 106,500 PSUs were granted, the actual number of shares of our common stock into which each PSU may convert are subject to a multiplier of up to 267% based on the level at which the performance conditions are achieved. Compensation expense for the performance-based awards is recorded over the estimated service period for each milestone when the performance conditions are deemed probable of achievement. For the period ended December 31, 2018, the stock compensation expense recorded during the period was for service-based awards and performance conditions deemed probable of achievement. For PSUs containing performance conditions which were not deemed probable of achievement at December 31, 2018, no stock compensation expense was recognized.

In July 2018, we granted 77,243 PSUs to executives with a performance milestone and graded vesting over four years. The shares of our common stock into which each PSU may convert is subject to a multiplier up to 150% based on the level at which the performance condition is achieved. Compensation expense for the performance-based awards is recorded over the estimated service period when the performance condition is deemed probable of achievement. The actual number of shares of our common stock into which each PSU converted was at a multiplier of 83% based on the performance condition being achieved as of December 31, 2018.

We did not grant any PSUs during the years ended December, 31, 2017 and 2016. We granted a total of 55,326 PSUs during the year ended December 31, 2014 which had performance conditions that required expense recognition assessments during the year ended December 31, 2016. At December 31, 2016, we recognized stock compensation expense for those awards that had performance conditions deemed probable of achievement at that date. For PSUs, containing performance conditions which were not deemed probable of achievement at December 31, 2016, no stock compensation expense was recognized for those awards. The actual number of shares of our common stock into which each PSU converted was at a multiplier of 100% based on the performance conditions achieved as of December 31, 2016.

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 as the awards vest 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.

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, 2017	769,202	1,178,660	$	98.88
Additional authorization	1,000,000	—		—
RSUs granted	(898,598)	898,598	$	70.39
PSUs granted	(523,743)	523,743	$	66.18
RSUs cancelled	120,591	(120,591)	$	95.33
PSUs cancelled	78,299	(78,299)	$	66.44
RSUs released	—	(358,774)	$	93.64
Balance at December 31, 2018	545,751	2,043,337	$	80.35

Employee Stock Purchase Plan. On May 21, 1997, our stockholders adopted the 1997 Employee Stock Purchase Plan (the “ESPP”). Each regular full‑time and part‑time employee working 20 hours or more per week is eligible to participate after one month of employment. We issued 233,712, 157,277 and 126,648 shares under the ESPP in 2018, 2017 and 2016, respectively. For the years ended December 31, 2018, 2017 and 2016, we recorded stock compensation expense of $3.7 million, $3.2 million and $2.4 million, respectively, as the ESPP is considered compensatory under the FASB stock compensation rules. As of December 31, 2018, 693,521 shares remain available for issuance under the ESPP.

Stock Compensation

12 Months Ended

Dec. 31, 2018

Stock Compensation

Stock Compensation

Note 13. Stock Compensation

We recorded $148.2 million, $133.1 million and $96.2 million, respectively, of stock compensation expense for the years ended December 31, 2018, 2017 and 2016. For the year ended December 31, 2018, we capitalized $0.1 million of stock compensation expense as part of the cost of an asset. We utilized the Black-Scholes valuation model for estimating the fair value of the stock options granted, with the following weighted‑average assumptions:


	Employee Stock Options						Employee Stock Purchase Plan
	For the year ended December 31,						For the year ended December 31,
	2018		2017		2016		2018		2017		2016
Average risk-free interest rates	2.61	%	1.80	%	1.30	%	2.62	%	1.53	%	0.90	%
Average expected life (in years)	5.26		5.25		4.99		0.50		0.50		0.50
Volatility	45	%	49	%	50	%	46	%	38	%	48	%
Weighted-average fair value (in dollars)	34.20		53.41		39.35		15.80		19.42		18.82

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.

Total compensation cost of options granted but not yet vested as of December 31, 2018, was $99.7 million, which is expected to be recognized over the weighted average period of 1.5 years. Total compensation cost of RSUs granted but not yet vested, as of December 31, 2018, was $61.4 million, which is expected to be recognized over the weighted average period of 1.5 years. Total compensation cost of PSUs granted but not yet vested, as of December 31, 2018, was $29.1 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.

Income Taxes

12 Months Ended

Dec. 31, 2018

Income Taxes

Income Taxes

Note 14. Income Taxes

We are subject to U.S. federal, state and foreign corporate income taxes. The provision for income taxes is based on income (loss) before provision for income taxes as follows (in thousands):


	Year Ended December 31,
	2018		2017		2016
U.S.	$	478,050	$	36,493	$	272,574
Non-U.S.		(362,703)		(348,783)		(165,170)
Income (loss) before provision for income taxes	$	115,347	$	(312,290)	$	107,404

Our provision for income taxes consists of the following (in thousands):


	Year Ended December 31,
	2018		2017		2016
Current:
State	$	5,010	$	486	$	2,700
Foreign		1,303		1,171		482
		6,313		1,657		3,182
Deferred:
State		111		(805)		—
Foreign		(570)		—		—
		(459)		(805)		—
Total provision for income taxes	$	5,854	$	852	$	3,182

A reconciliation of income taxes at the U.S. federal statutory rate to the provision for income taxes is as follows (in thousands):


	Year Ended December 31,
	2018		2017		2016
Provision (benefit) at U.S. federal statutory rate1	$	24,223	$	(109,302)	$	37,591
Unbenefited net operating losses and tax credits		(51,861)		(99,254)		(47,410)
Excess tax benefits related to share-based compensation		(8,233)		(81,021)		(29,541)
Deferred tax impact of Tax Cuts and Jobs Act of 2017		—		196,751		—
Foreign tax rate differential		37,061		86,777		39,975
Non-deductible officer compensation		4,114		6,351		2,061
Other		550		550		506
Provision for income taxes	$	5,854	$	852	$	3,182

1. Statutory U.S. federal income tax rate of 21% in 2018 and 35% in 2017 and 2016.

The foreign tax rate differential in the table above reflects the impact of operations in jurisdictions with tax rates that differ from the U.S. federal statutory rate.

Significant components of our deferred tax assets and liabilities are as follows (in thousands):


	December 31,
	2018		2017
Deferred tax assets:
Net operating loss carry forwards	$	148,142	$	259,189
Federal and state research credits		402,798		333,311
Capitalized research and development		53,871		37,044
Deferred revenue and accruals		9,443		11,721
Non-cash compensation		58,194		44,647
Acquisition-related contingent consideration		43,676		41,831
Intangibles, net		93,730		94,249
Long term investments		23,621		12,244
Other		22,211		12,815
Total gross deferred tax assets		855,686		847,051
Less valuation allowance for deferred tax assets		(836,992)		(834,783)
Net deferred tax assets	$	18,694	$	12,268

Deferred tax liabilities:
Property and equipment	$	(17,424)	$	(11,463)
Total gross deferred tax liabilities		(17,424)		(11,463)
Net deferred income taxes	$	1,270	$	805

The net deferred income tax balance is reported in other assets, net on the consolidated balance sheets as of December 31, 2018 and 2017.

As of December 31, 2018, the Company has net operating loss (“NOL”) carryforwards, research and development credit carryforwards and orphan drug tax credit carryforwards as follows (in thousands):


	Amount		Expiring if not utilized
Net operating loss carryforwards
Federal	$	216,970	2034
State		343,022	2020 through 2037; indefinite
Foreign		757,312	2020 through 2025
Research and development credit carryforwards
Federal		197,400	2019 through 2038
State		25,247	2021 through 2032; indefinite
Orphan drug tax credit carryforwards		210,242	2029 through 2038

Our ability to utilize our federal and state NOLs may be limited under Internal Revenue Code Section 382 (“Section 382”). Section 382 imposes annual limitations on the utilization of NOL carryforwards and other tax attributes upon an ownership change. In general terms, an ownership change may result from transactions that increase the aggregate ownership of certain stockholders in our stock by more than 50 percentage points over a testing period (generally three years). We have completed a Section 382 analysis through the year ended December 31, 2017. Based on this analysis, our NOLs and other tax attributes accumulated through 2017 should not be limited under Section 382. We have not updated our analysis through 2018.

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (“the Act”) was signed into law making significant changes to the Internal Revenue Code. The Act contains numerous provisions impacting corporate taxpayers. Changes include a federal corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, the transition of U.S. international taxation from a worldwide tax system to a territorial system and temporary full expensing of certain business assets. We recorded provisional tax impacts related to the revaluation of deferred tax assets and liabilities as well as the temporary full expensing of certain business assets in our consolidated financial statements for the year ended December 31, 2017. Upon the completion of the 2017 U.S. federal corporate income tax return during the fourth quarter of 2018, we finalized our analysis of the Act and determined no additional adjustments were required.

The valuation allowance for deferred tax assets increased by approximately $2.2 million during the year ended December 31, 2018, increased by approximately $14.6 million during the year ended December 31, 2017 and increased by approximately $277.3 million during the year ended December 31, 2016. The net valuation allowance increase during 2018 was primarily due to the generation of U.S. federal R&D credits, orphan drug credits and Swiss NOLs, offset by the utilization of NOLs in the U.S.

Valuation allowances require an assessment of both positive and negative evidence when determining whether it is more likely than not that deferred tax assets are recoverable. Such assessment is required on a jurisdiction-by-jurisdiction basis. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

Based upon our analysis of our historical operating results, as well as projections of our future taxable income (losses) during the periods in which the temporary differences will be recoverable, management believes the uncertainty regarding the realization of our U.S. and Swiss net deferred tax assets requires a full valuation allowance against such net assets as of December 31, 2018. When performing our assessment on projections of future taxable income (losses), we consider factors such as the likelihood of regulatory approval and commercial success of products currently under development, among other factors.

The financial statement recognition of the benefit for a tax position is dependent upon the benefit being more likely than not to be sustainable upon audit by the applicable taxing authority. If this threshold is met, the tax benefit is then measured and recognized at the largest amount that is greater than 50% likely of being realized upon ultimate settlement. If such unrecognized tax benefits were realized and not subject to valuation allowances, we would recognize a tax benefit of $22.4 million. The following table summarizes the gross amounts of unrecognized tax benefits (in thousands):


	Year Ended December 31,
	2018		2017
Balance at beginning of year	$	18,022	$	10,798
Additions related to prior periods tax positions		2,098		2,571
Reductions related to prior periods tax positions		—		(821)
Additions related to current period tax positions		2,466		5,555
Reductions due to lapse of applicable statute of limitations		(130)		(81)
Currency translation adjustment		(61)		—
Balance at end of year	$	22,395	$	18,022

Our policy is to recognize interest and penalties related to uncertain tax positions, if any, as a component of income tax expense. During the years ended December 31, 2018, 2017 and 2016, we recorded interest and penalties as a component of income tax expense of $0.1 million, $0.3 million and $0.3 million, respectively. Due to NOL and tax credit carry forwards that remain unutilized, U.S. federal and state income tax returns remain subject to examination for three years after utilization of that year’s NOL carryforward. The earliest year which generated an NOL included in our current NOL carryforward is 2014 for U.S. federal tax purposes. All tax years for our foreign subsidiaries are open to audit in their respective jurisdictions.

Net Income (Loss) Per Share

12 Months Ended

Dec. 31, 2018

Net Income (Loss) Per Share

Net Income (Loss) Per Share

Note 15. Net Income (Loss) Per Share

Our basic net income (loss) per share is computed by dividing the net income (loss) by the number of weighted average common shares outstanding during the period. Our diluted net income (loss) per share is computed by dividing net income (loss) by the weighted average common shares outstanding during the period assuming potentially dilutive common shares of stock options, RSUs, PSUs and common shares issuable upon conversion of the 2018 Notes and 2020 Notes using the if-converted method. Common shares issuable upon conversion of the 2018 Notes and 2020 Notes were excluded from the diluted net income (loss) per share computation for all periods presented as their share effect was anti-dilutive.

Net income (loss) per share was calculated as follows for the periods indicated below:


	Year Ended December 31,
(in thousands, except per share data)	2018		2017		2016
Basic Net Income (Loss) Per Share
Basic net income (loss)	$	109,493	$	(313,142)	$	104,222
Weighted average common shares outstanding		212,383		204,580		187,873

Basic net income (loss) per share	$	0.52	$	(1.53)	$	0.55
				0		0
Diluted Net Income (Loss) Per Share
Diluted net income (loss)	$	109,493	$	(313,142)	$	104,222
Weighted average common shares outstanding		212,383		204,580		187,873

Dilutive stock options and RSUs		3,252		—		6,252

Weighted average shares used to compute diluted net income (loss) per share		215,635		204,580		194,125

Diluted net income (loss) per share	$	0.51	$	(1.53)	$	0.54

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


	2018	2017	2016
Outstanding stock options and awards	8,255,992	12,585,213	2,792,424
Common shares issuable upon conversion of the 2018 Notes	—	149,375	7,245,149
Common shares issuable upon conversion of the 2020 Notes	368,939	368,939	7,241,284
Total potential common shares excluded from diluted net income (loss) per share computation	8,624,931	13,103,527	17,278,857

Employee Benefit Plans

12 Months Ended

Dec. 31, 2018

Employee Benefit Plans

Employee Benefit Plans

Note 16. Employee Benefit Plans

Defined Contribution Plans

We have a defined contribution plan qualified under Section 401(k) of the Internal Revenue Code covering all U.S. employees and defined contribution plans for other Incyte employees in Europe. Employees may contribute a portion of their compensation, which is then matched by us, subject to certain limitations. Defined contribution expense was $10.5 million, $8.9 million and $6.6 million for the years ended December 31, 2018, 2017 and 2016, respectively. Included in the 2018, 2017 and 2016 defined contribution expense was $1.4 million, $1.0 million and $0.3 million, respectively, of expense related to matching contributions under the European defined contribution plans.

Defined Benefit Pension Plans

We have defined benefit pension plans for our employees in Europe which provide benefits to employees upon retirement, death or disability. The assets of the pension plans are held in collective investment accounts represented by the cash surrender value of an insurance policy and are classified as Level 2 within the fair value hierarchy.

The pension plans assumptions reflect the expected investment return and discount rate on plan assets and disability rate probabilities. The benefit obligation at December 31, 2018 for the plans was determined using a discount rate of 0.75%, rate of compensation increase of 2.25% and long-term expected return on plan assets of 0.75%. The 2018 net periodic benefit cost for the plans was determined using discount rates of 0.75% to 1.00%, rates of compensation increase of 2.00% to 2.25% and long-term expected return on plan assets of 0.75%. The benefit obligation at December 31, 2017 for the plans was determined using a discount rate of 0.75%, rate of compensation increase of 2.00% and long-term expected return on plan assets of 0.75%. The 2017 net periodic benefit cost for the plans was determined using a discount rate of 0.75%, rate of compensation increase of 1.50% and long-term expected return on plan assets of 0.75%.

Summarized information regarding changes in the obligations and plan assets, the funded status and the amounts recorded were as follows (in thousands):


	Year Ended December 31,
	2018		2017
Benefit obligation, beginning of year	$	37,584	$	23,787
Employer service cost		4,450		2,836
Interest cost		278		190
Plan participants' contributions		1,282		1,101
Actuarial loss		698		4,514
Plan change		—		1,430
Transfer of benefits net of payments from fund		2,268		2,853
Expenses paid from assets		(51)		(36)
Translation (gain) loss		(471)		909
Benefit obligation, end of year		46,038		37,584

Fair value of plan assets, beginning of year		24,191		16,699
Actual return on plan assets		95		88
Employer contributions		3,133		2,891
Plan participants' contributions		1,282		1,101
Transfer of benefits net of payments from fund		1,910		2,853
Expenses paid from assets		(51)		(36)
Translation (gain) loss		(192)		595
Fair value of plan assets, end of year		30,368		24,191

Unfunded liability, end of year	$	15,670	$	13,393

The unfunded liability is reported in other liabilities on the consolidated balance sheet as of December 31, 2018 and 2017. The accumulated benefit obligation is $39.8 million and $33.1 million as of December 31, 2018 and 2017, respectively.

The net periodic benefit cost was as follows (in thousands):


	Year Ended December 31,
	2018		2017		2016
Service cost	$	4,450	$	2,836	$	1,225
Interest cost		278		190		76
Expected return on plan assets		(195)		(138)		(59)
Amortization of prior service cost		179		154		—
Amortization of actuarial losses		265		141		—
Net periodic benefit cost	$	4,977	$	3,183	$	1,242

The components of net periodic benefit cost other than the service cost component are included in other income (expense), net on the consolidated statements of operations.

Other changes in the plans assets and the benefit obligation that is recognized in accumulated other comprehensive income (loss) were as follows, net of tax (in thousands):


	Year Ended December 31,
	2018		2017		2016
Pension liability, beginning of year	$	8,450	$	2,750	$	—
Plan change		—		1,276		506
Net prior service costs		(179)		(140)		—
Net loss		875		4,564		2,244
Pension liability, end of year	$	9,146	$	8,450	$	2,750

The prior service cost for the pension plans that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year is $0.2 million. The actuarial loss for the pension plans that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year is $0.3 million.

We expect to contribute a total of $3.6 million to the pension plans in 2019. The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid (in thousands):


2019	$	1,647
2020		1,759
2021		2,020
2022		2,131
2023		1,973
2024-2027		11,790
Total	$	21,320

Commitments and Contingencies

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies

Commitments and Contingencies

Note 17. Commitments and Contingencies

Rent expense for all leases for the years ended December 31, 2018, 2017 and 2016, was approximately $9.4 million, $8.2 million and $5.4 million, respectively.

Future non‑cancelable minimum payments are as follows (in thousands):


Year Ended December 31,	Operating Leases		Capital Leases		Financing Lease1
2019	$	12,909	$	688	$	—
2020		8,589		472		—
2021		3,899		—		466
2022		2,011		—		2,793
2023		1,155		—		2,793
Thereafter		—		—		35,850
Total minimum lease payments	$	28,563	$	1,160	$	41,902

1. Represents the future minimum lease payments relating to leases where we are deemed, for accounting purposes, to be the owner of the building (see Note 1 of the Notes to the Consolidated Financial Statements).

We lease approximately 112,000 square feet of office space in Chadds Ford, Pennsylvania, approximately 100,000 square feet of laboratory and office space in Wilmington, Delaware and approximately 63,000 square feet of office space in Europe and Japan.

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 upfront fees, milestone payments, and royalties on sales of future products, which are not reflected in the table above.

In December 2018, we received a civil investigative demand from the U.S. Department of Justice for documents and information relating to our speaker programs and patient assistance programs, including our support of non-profit organizations that provide financial assistance to eligible patients. We are cooperating with this inquiry. Given that the investigation is still ongoing and that we have not yet been made aware of the substance of any civil claims, we cannot predict the outcome of the investigation, the timing of the ultimate resolution of this matter, or reasonably estimate the possible range of loss, if any, that may result from this matter. Accordingly, no reserve has been made with respect to this matter in the 2018 consolidated financial statements.

Segment Information	12 Months Ended
Segment Information	Dec. 31, 2018
Segment Information
Segment Information	Note 18. Segment Information We currently operate in one operating business segment focused on the discovery, development and commercialization of proprietary therapeutics. Our chief operating decision-maker manages the operations of our company as a single operating segment. We do not operate in any material separate lines of business or separate business entities with respect to our products or product development. During the year ended December 31, 2018, total revenues generated by subsidiaries in the United States was $1.8 billion and total revenues generated from subsidiaries in Europe was $79.9 million. During the year ended December 31, 2017, total revenues generated by subsidiaries in the United States was $1.5 billion and total revenues generated from subsidiaries in Europe was $66.9 million. During the year ended December 31, 2016, total revenues generated by subsidiaries in the United States was $1.1 billion and total revenues generated from subsidiaries in Europe was $29.6 million. As of December 31, 2018, property and equipment, net was approximately $252.5 million in the United States and approximately $67.3 million in Europe. As of December 31, 2017, property and equipment, net was approximately $252.4 million in the United States and approximately $7.4 million in Europe.

Interim Consolidated Financial Information (Unaudited)

12 Months Ended

Dec. 31, 2018

Interim Consolidated Financial Information (Unaudited)

Interim Consolidated Financial Information (Unaudited)

Note 19. Interim Consolidated Financial Information (Unaudited)


	Fiscal 2018 Quarter Ended
(in thousands, except per share data)	March 31,		June 30,		September 30,		December 31,
Revenues(1)	$	382,282	$	521,516	$	449,683	$	528,402
Net income (loss)	$	(41,140)	$	52,394	$	29,176	$	69,063
Basic net income (loss) per share	$	(0.19)	$	0.25	$	0.14	$	0.32
Diluted net income (loss) per share	$	(0.19)	$	0.24	$	0.14	$	0.32
Shares used in computation of basic net income (loss) per share		211,681		212,210		212,627		213,013
Shares used in computation of diluted net income (loss) per share		211,681		215,103		215,964		216,042


	Fiscal 2017 Quarter Ended
(in thousands, except per share data)	March 31,		June 30,		September 30,		December 31,
Revenues(2)	$	384,082	$	326,444	$	381,534	$	444,156
Net income (loss)	$	(187,083)	$	(12,484)	$	36,054	$	(149,629)
Basic net income (loss) per share	$	(0.96)	$	(0.06)	$	0.17	$	(0.71)
Diluted net income (loss) per share	$	(0.96)	$	(0.06)	$	0.17	$	(0.71)
Shares used in computation of basic net income (loss) per share		195,260		205,141		206,796		211,125
Shares used in computation of diluted net income (loss) per share		195,260		205,141		212,610		211,125

(1)

The quarters ended March 31, 2018, June 30, 2018, September 30, 2018 and December 31, 2018 include $334.5 million, $365.5 million, $367.7 million, and $399.2 million, respectively, of product revenues, net, relating to JAKAFI and ICLUSIG. The quarters ended March 31, 2018, June 30, 2018, September 30, 2018 and December 31, 2018 include $47.7 million, $56.0 million, $61.9 million and $69.2 million, respectively, of product royalty revenues related to the sale of JAKAVI and OLUMIANT outside the United States. In November 2009 and December 2009, we entered into collaborative research and license agreements with Novartis and Lilly, respectively. The quarters ended March 31, 2018, June 30, 2018, September 30, 2018 and December 31, 2018 include $0.0 million, $100.0 million, $20.0 million and $60.0 million, respectively, of milestone and contract revenues relating to these agreements.

(2)

The quarters ended March 31, 2017, June 30, 2017, September 30, 2017 and December 31, 2017 include $264.8 million, $291.7 million, $322.0 million, and $321.8 million, respectively, of product revenues, net, relating to JAKAFI and ICLUSIG. The quarters ended March 31, 2017, June 30, 2017, September 30, 2017 and December 31, 2017 include $29.2 million, $34.8 million, $44.5 million and $52.3 million, respectively, of product royalty revenues related to the sale of JAKAVI and OLUMIANT outside the United States. In November 2009 and December 2009, we entered into collaborative research and license agreements with Novartis and Lilly, respectively. The quarters ended March 31, 2017, June 30, 2017, September 30, 2017 and December 31, 2017 include $90.0 million, $0.0 million, $15.0 million and $70.0 million, respectively, of milestone and contract revenues relating to these agreements.

Organization and Summary of Significant Accounting Policies (Policies)	12 Months Ended
	Dec. 31, 2018
Organization and Summary of Significant Accounting Policies
Principles of Consolidation	Principles of Consolidation. The consolidated financial statements include the accounts of Incyte Corporation and our wholly owned subsidiaries. All inter-company accounts, transactions, and profits have been eliminated in consolidation.
Acquisitions	Acquisitions. Acquired businesses are accounted for using the acquisition method of accounting, which requires that assets acquired and liabilities assumed be recorded at fair value, with limited exceptions. Any excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill. Transaction costs are expensed as incurred. The operating results of the acquired business are reflected in our consolidated financial statements after the date of acquisition. Acquired in-process research and development (“IPR&D”) is recognized at fair value and initially characterized as an indefinite-lived intangible asset, irrespective of whether the acquired IPR&D has an alternative future use.
Foreign Currency Translation	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. 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 U.S. dollars are reflected as a component of other comprehensive income (loss). Transaction gains and losses are recorded in other income (expense), net, in the consolidated statements of operations.
Use of Estimates	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	Concentrations of Credit Risk. Cash, cash equivalents, marketable securities, and trade receivables 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 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 and money market funds that meet certain guidelines. Our receivables mainly relate to our product sales of JAKAFI, ICLUSIG and collaborative agreements with pharmaceutical companies. We have not experienced any significant credit losses on cash, cash equivalents, marketable securities, or trade receivables to date and do not require collateral on receivables.
Cash and Cash Equivalents	Cash and Cash Equivalents. Cash and cash equivalents are held in 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	Marketable Securities—Available‑for‑Sale. Our marketable securities consist of investments in corporate debt securities and U.S. government securities that 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’ equity. We classify marketable securities that are available for use in current operations as current assets on the 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 other income (expense), net on the consolidated statements of operations. The cost of securities sold is based on the specific identification method.
Accounts Receivable	Accounts Receivable. As of December 31, 2018, we had a de minimus allowance for doubtful accounts and no allowance for the period ended December 31, 2017. 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	Inventory. Inventories are determined at the lower of cost and net realizable value with cost determined under the specific identification method and may consist of raw materials, work in process and finished goods. JAKAFI raw materials and work‑in‑process inventory is not subject to expiration and the shelf life of finished goods inventory is 36 months from the start of manufacturing of the finished goods. ICLUSIG raw materials and work-in-process inventory is not subject to expiration and finished goods inventory has a shelf life of 24 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 consolidated balance sheets when we expect inventory to be consumed for commercial use within the next twelve months. The ICLUSIG inventories were recorded at fair value less costs to sell in connection with the Acquisition, which resulted in a higher cost of ICLUSIG product revenues over a one year period from the acquisition date.
Variable Interest Entities	Variable Interest Entities. We perform an initial and ongoing evaluation of the entities with which we have variable interests, such as equity ownership, in order to identify entities (i) that 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 December 31, 2018, there were no entities in which we held a variable interest which we determined to be VIEs.
Long Term Equity Investments	Long Term Investments. Our long term investments consist of equity investments in common stock of publicly held companies with whom we have entered into collaboration and license agreements. We classify all of our equity investments in common stock of publicly held companies as long term investments on our consolidated balance sheets. Our equity investments are accounted for at fair value using readily determinable pricing available on a securities exchange on our consolidated balance sheets. For the year ended December 31, 2017, the change in fair value of our equity investment in Calithera Biosciences, Inc. was recorded in accumulated other comprehensive income (loss) prior to the adoption of ASU No. 2016-01, which is further described below under “Recent Accounting Pronouncements”. For the year ended December 31, 2018, all changes in fair value are reported in our consolidated statements of operations as an unrealized loss on long term investments. In assessing whether we exercise significant influence over any of the companies in which we hold equity investments, 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. Currently, none of our equity investments in publicly-held companies are considered relationships in which we are able to assert control.
Property and Equipment	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. Leasehold improvements are amortized over the shorter of the estimated useful life of the assets or lease term.
Lease Accounting	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 to determine the 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 consolidated balance sheets and depreciated in a manner similar to other property and equipment. For leases under which we are responsible for paying a portion of the renovation and construction costs, we are deemed, for accounting purposes, to be the owner of the building. As a result, Accounting Standard Codification (“ASC”) 840, Leases, defines these payments as automatic indicators of ownership and requires us to capitalize the asset and related construction costs with a corresponding financing lease liability.
Other Intangible Assets, net	Other Intangible Assets, net. Other intangible assets, net consist of licensed intellectual property rights acquired in business combinations, which are reported at acquisition date fair value, less accumulated amortization. Intangible assets with finite lives are amortized over their estimated useful lives using the straight-line method.
In-Process Research and Development	In-Process Research and Development. The fair value of in-process research and development (“IPR&D”) acquired through business combinations is capitalized as an indefinite-lived intangible asset until the completion or abandonment of the related research and development activities. When the related research and development is completed, the asset will be assigned a useful life and amortized.
Impairment of Long-Lived Assets	Impairment of Long-Lived Assets. Long-lived assets with finite lives are tested for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. If indicators of impairment are present, the asset is tested for recoverability by comparing the carrying value of the asset to the related estimated undiscounted future cash flows expected to be derived from the asset. If the expected cash flows are less than the carrying value of the asset, then the asset is considered to be impaired and its carrying value is written down to fair value, based on the related estimated discounted future cash flows. Indefinite-lived intangible assets, including IPR&D, are tested for impairment annually as of October 1 or more frequently if events or changes in circumstances between annual tests indicate that the asset may be impaired. Impairment losses on indefinite-lived intangible assets are recognized based solely on a comparison of the fair value of the asset to its carrying value. Due to the discontinuation of the OPTIC-2L study described in Note 3 below, we considered our indefinite-lived IPR&D asset to be impaired and recorded a $12.0 million impairment charge in research and development expense on the consolidated statements of operations during the third quarter of 2017.
Goodwill	Goodwill. Goodwill is calculated as the difference between the acquisition date fair value of the consideration transferred and the values assigned to the assets acquired and liabilities assumed. Goodwill is not amortized but is tested for impairment at the reporting unit level at least annually as of October 1 or when a triggering event occurs that could indicate a potential impairment by assessing qualitative factors or performing a quantitative analysis in determining whether it is more likely than not that the fair value of net assets are below their carrying amounts. A reporting unit is the same as, or one level below, an operating segment. Our operations are currently comprised of a single, entity wide reporting unit. We completed our most recent annual impairment assessment as of October 1, 2018 and determined that the carrying value of our goodwill was not impaired.
Income Taxes	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. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. We recognize the tax benefit from an uncertain tax position only if it is more-likely-than-not that the position will be sustained upon examination by the taxing authorities, including resolutions of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit that is recorded for these positions is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. We adjust the level of the liability to reflect any subsequent changes in the relevant facts surrounding the uncertain positions. Any interest and penalties on uncertain tax positions are included within the tax provision.
Financing Costs Related to Long-term Debt	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 presented as a direct deduction from the carrying amount of the long-term debt liability, consistent with debt discounts, on the consolidated balance sheets.
Grant Accounting	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 other income (expense), net over the useful life of the related capital assets. Such amounts are recorded in other liabilities on the consolidated balance sheets.
Net Income (Loss) Per Share	Net Income (Loss) Per Share. Our basic and diluted net income (loss) per share is calculated by dividing the net income (loss) by the weighted average number of shares of common stock outstanding during all periods presented. Options to purchase stock, restricted stock units, performance stock units 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). Accumulated other comprehensive income (loss) consists of unrealized gains or losses on marketable securities that are classified as available-for-sale, foreign currency translation gains or losses and defined benefit pension obligations. For the year ended December 31, 2017 and interim periods therein, accumulated other comprehensive income (loss) included unrealized gains and losses on our long-term investment classified as available-for-sale in Calithera Biosciences, Inc. Upon adoption of ASU No. 2016-01, we recorded a $2.8 million adjustment to retained earnings as of January 1, 2018, which is further described below under “Recent Accounting Pronouncements.”
Revenue Recognition	Revenue Recognition. The new accounting standard for the recognition of revenue, ASC 606, Revenue from Contracts with Customers, was adopted for the fiscal year beginning on January 1, 2018. Per the new standard, revenue-generating contracts are assessed to identify distinct performance obligations, allocating transaction prices to those performance obligations, and criteria for satisfaction of a performance obligation. The new standard allows for recognition of revenue only when we have satisfied a performance obligation through transferring control of the promised good or service to a customer. Control, in this instance, may mean the ability to prevent other entities from directing the use of, and receiving benefit from, a good or service. The standard indicates that an entity must determine at contract inception whether it will transfer control of a promised good or service over time or satisfy the performance obligation at a point in time through analysis of the following criteria: (i) the entity has a present right to payment, (ii) the customer has legal title, (iii) the customer has physical possession, (iv) the customer has the significant risks and rewards of ownership and (v) the customer has accepted the asset. We assess collectability based primarily on the customer’s payment history and on the creditworthiness of the customer. Overall, the adoption of the new standard did not significantly alter our methodology for recognition of revenue. Product Revenues Our product revenues consist of U.S. sales of JAKAFI and European sales of ICLUSIG. Product revenues are recognized once we satisfy the performance obligation at a point in time under the revenue recognition criteria as described above. In November 2011, we began shipping JAKAFI to our customers in the U.S., which include specialty pharmacies and wholesalers. In June 2016, we acquired the right to and began shipping ICLUSIG to our customers in the European Union and certain other jurisdictions, which include retail pharmacies, hospital pharmacies and distributors. We recognize revenues for product received by our customers net of allowances for customer credits, including estimated rebates, chargebacks, discounts, returns, distribution service fees, patient assistance programs, and government rebates, such as Medicare Part D coverage gap reimbursements in the U.S. At December 31, 2018 and 2017, $44.8 million and $34.7 million, respectively, of accrued sales allowances were included in accrued and other current liabilities on the consolidated balance sheets. Product shipping and handling costs are included in cost of product revenues. Customer Credits: Our customers are offered various forms of consideration, including allowances, service fees and prompt payment discounts. We expect our 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. Rebates and Discounts: Allowances for rebates include mandated discounts under the Medicaid Drug Rebate Program in the U.S. and mandated discounts in Europe in markets where government-sponsored healthcare systems are the primary payers for healthcare. 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 launches. Our estimates for expected utilization of rebates are based on data received from our 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 certain contracted customers, which currently consist primarily of group purchasing organizations, Public Health Service institutions, non‑profit clinics, and Federal government entities purchasing via the Federal Supply Schedule, purchase directly from our wholesalers. Contracted customers generally purchase the product at a discounted price. The wholesalers, in turn, charges back to us the difference between the price initially paid by the wholesalers and the discounted price paid by the contracted customers. In addition to actual chargebacks received we maintain an accrual for chargebacks based on the estimated contractual discounts on the inventory levels on hand in our distribution channel. If actual future chargebacks vary from these 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 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. Royalty revenues on commercial sales for baricitinib (marketed as OLUMIANT) by Eli Lilly and Company (“Lilly”) are based on net sales of licensed products in licensed territories as provided by Lilly. We recognize royalty revenues in the period the sales occur. Cost of Product Revenues Cost of product revenues includes all JAKAFI related product costs as well as ICLUSIG related product costs. The acquired ICLUSIG inventories were recorded at fair value less costs to sell in connection with the Acquisition, and resulted in a higher cost of ICLUSIG product revenues over a one year period from the acquisition date. In addition, cost of product revenues include low single-digit royalties under our collaboration and license agreement to Novartis on all future sales of JAKAFI in the United States. Subsequent to the Acquisition on June 1, 2016, cost of product revenues also includes the amortization of our licensed intellectual property for ICLUSIG using the straight-line method over the estimated useful life of 12.5 years. Milestone and Contract Revenues Our license agreements, which fall within the scope of ASC 606, Revenue from Contracts with Customers, include distinct drug compound out-licensing, collection of upfront payments, milestones or royalty revenues from a counterparty, and provision of commercially available products to suppliers. Our agreements often include contractual milestones, which typically relate to the achievement of pre-specified development, regulatory and commercialization events outside of our control, such as regulatory approval of a compound, first patient dosing or achievement of sales-based thresholds. For such cases, we believe that revenue related to these events should not be recognized until the milestone has been achieved. Some contracts form collaborative arrangements of various types with third-parties. We assess whether the nature of the arrangement is within the scope of ASC 808, Collaborative Arrangements, in conjunction with the new revenue guidance to determine the nature of the performance obligations and associated transaction prices. A collaborative relationship may exist when we participate in an activity or process with another party, such as performance of research and development services or the exchange of intellectual property for use in clinical trials, when both parties share in the risks and rewards that result from the activity or participate and govern contract activities through a joint steering committee. 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 (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	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. 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 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. During the years ended December 31, 2018, 2017 and 2016, we incurred research and development expenses of $1.2 billion, $1.3 billion and $581.9 million, respectively. At December 31, 2018 and 2017, $98.6 million and $110.0 million, respectively, of accrued clinical research and development costs were included in accrued and other current liabilities on the consolidated balance sheets.
Stock Compensation and Long-term Incentive Plans	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 that are subject to cliff vesting are recognized as compensation expense over the requisite service period using the straight-line attribution method, and the fair value of RSUs that are subject to graded vesting are recognized as compensation expense over the requisite service period using the accelerated 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, which we assess as of the end of each reporting period. Once a performance condition is considered probable, we record compensation expense based on the portion of the service period elapsed to date with respect to that award, with a cumulative catch-up, net of estimated forfeitures, and recognize any remaining compensation expense, if any, over the remaining requisite service period using the straight-line attribution method for PSUs that are subject to cliff vesting and using the accelerated attribution method for PSUs that are subject to graded vesting. Long term Incentive Plans. We have long term incentive plans which provide eligible employees with the opportunity to receive performance and service-based incentive compensation, which may be comprised of cash, stock options, restricted stock units and/or performance shares. The payment of cash and the grant or vesting of equity may be contingent upon the achievement of pre-determined regulatory, sales and internal performance milestones.
Acquisition-Related Contingent Consideration	Acquisition-Related Contingent Consideration. Acquisition-related contingent consideration, which consists of our future royalty and certain potential milestone obligations to Takeda Pharmaceutical Company Limited, which acquired ARIAD (“Takeda”), is recorded on the acquisition date at the estimated fair value of the obligation, in accordance with the acquisition method of accounting. The fair value measurement is based on significant inputs that are unobservable in the market and thus represents a Level 3 measurement. The fair value of the acquisition-related contingent consideration is remeasured each reporting period, with changes in fair value recorded in the consolidated statements of operations.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” which replaced numerous requirements in U.S. GAAP, including industry-specific requirements. This guidance provides a five step model to be applied to all contracts with customers, with an underlying principle that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. We performed an impact assessment which consisted of a review of a representative sample of contracts, discussions with key stakeholders, and cataloging of potential impacts on our financial statements, accounting policies, financial controls, and operations. The guidance did not have a material impact on our revenue recognition practices for product and royalty revenues. The adoption only impacted two areas in our recognition methodology for milestone and contract revenues generated by our collaborative research and license agreements: (i)Changes in the model for distinct licenses of functional intellectual property which may result in a timing difference of revenue recognition. Whereas revenue from these arrangements was previously recognized over a period of time pursuant to revenue recognition guidance that was in place for our arrangements at the time such arrangements commenced, revenue from new arrangements we enter into may now be recognized at a point in time. (ii)Assessments of milestone payments linked to events that are in our control, may result in variable consideration that may be recognized at an earlier point in time, when it is probable that the milestone will be achieved without a significant future reversal of cumulative revenue expected. We adopted the new standard for the fiscal period beginning January 1, 2018, utilizing the “modified retrospective” adoption methodology on all contracts for which performance had not been completed as of the date of adoption, and applied the guidance to report new disclosures surrounding our recognition of revenues. There was no cumulative effect of adopting the standard at the date of initial application in retained earnings. We implemented a controls process to identify and evaluate all revenue-generating contracts with third-party customers on an on-going basis and have provided enhanced disclosures within this Form 10-K to provide greater detail on our revenue-generating activities. In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” The standard requires several changes including that equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) be measured at fair value with changes in fair value recognized in results of operations. These provisions will not impact the accounting for our investments in corporate debt and U.S. government securities. The new guidance also changes certain disclosure requirements and other aspects of current U.S. GAAP. Amendments are to be applied as a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The adoption of this standard resulted in a $2.8 million decrease in our accumulated deficit as of January 1, 2018 related to our investment in Calithera Biosciences, Inc. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” that requires lessees to recognize assets and liabilities on the balance sheet for most leases including operating leases. In 2018, the FASB issued clarifying guidance to the topic in ASUs No. 2018-10 and No. 2018-11, which clarified certain aspects of the new leases standard and provided an optional transition method. The guidance requires that the lessees classify leases as either a finance or operating lease and lessors classify all leases as sales-type, direct financing or operating leases. The statement of operations presentation and expense recognition for lessees for finance leases is similar to that of capital leases under ASC 840 with separate interest and amortization expense with higher periodic expense in the earlier periods of a lease. For operating leases, the statement of operations presentation and expense recognition is similar to that of operating leases under ASC 840 with a single lease cost recognized on a straight-line basis. This guidance is effective for annual periods beginning after December 15, 2018 and interim periods therein. We adopted ASC 842 as of January 1, 2019 and will first report utilizing the new guidance within the March 31, 2019 Form 10-Q. We have implemented a third-party software to facilitate activities for the new accounting and disclosure requirements and have implemented new internal control procedures to support the new accounting and reporting processes associated with adopting the guidance. We have elected the package of practical expedients and adopted utilizing the optional transition method defined within ASU No. 2018-11. We did not elect the hindsight expedient. As a result of adoption in January 2019, we estimate we will record approximately $26 million of operating lease right-of-use assets and corresponding operating lease liabilities. In addition, our capital lease assets and liabilities will be classified as financing lease assets and liabilities upon adoption in 2019. The capital asset and corresponding financing liability of $18.7 million recorded in 2018 related to the Morges office building and construction described more fully in Note 8 below will be derecognized. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This guidance applies to all entities and impacts how entities account for credit losses for most financial assets and other instruments. For available-for-sale debt securities, entities will be required to recognize an allowance for credit losses rather than a reduction to the carrying value of the asset. For trade receivables, loans and held-to-maturity debt securities, entities will be required to estimate lifetime expected credit losses. This guidance is effective for fiscal years beginning after December 15, 2019 and interim periods therein. Early adoption is permitted for annual periods beginning after December 15, 2018 and interim periods therein. We are currently analyzing the impact of ASU No. 2016-13 on our consolidated financial statements. In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash,” which requires entities to show the changes in total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. As a result, entities will no longer present transfers between cash and cash equivalents and restricted cash in the statement of cash flows. When cash, cash equivalents, restricted cash and restricted cash equivalents are presented in more than one line item on the balance sheet, the new guidance requires a reconciliation of the totals in the statement of cash flows to the related captions on the balance sheet. The reconciliation can be presented either on the face of the statement of cash flows or in the notes to the financial statements. We adopted the new standard for the period beginning January 1, 2018. Due to the retrospective adoption of the standard, the cash flows from financing activities for the years ended December 31, 2017 and 2016, no longer present the transfer of restricted investments to cash and cash equivalents. The change in total cash, cash equivalents, restricted cash and investments is now presented in the consolidated statement of cash flows and reconciles to the related captions on the consolidated balance sheet. In January 2017, the FASB issued ASU No. 2017-04, “Intangibles–Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” which eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Under the new standard, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. The new standard is effective for public business entities that are SEC filers for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019 and is to be applied on a prospective basis. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017. We have elected to early adopt the standard for our annual goodwill impairment testing as of October 1, 2018 and concluded there to be no impact on our consolidated financial statements. In March 2017, the FASB issued ASU No. 2017-07, “Compensation–Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” which requires the service cost component of net periodic benefit cost to be presented in the same income statement line as other employee compensation costs arising from services rendered during the period and the other components of net periodic benefit cost to be presented separately from the income statement lines that include service cost and outside of any subtotal of operating income. We adopted the new standard for the period beginning January 1, 2018, resulting in no change in presentation of the service cost component of net periodic benefit cost, which has historically been reported in research and development and selling, general and administrative expenses along with other employee compensation costs. The retrospective adoption resulted in a change in presentation of the other components of net periodic benefit cost for the year ended December 31, 2017, which reclassed these costs out of operating income and into other income (expense), net on the consolidated statement of operations. There was a de minimus impact to the consolidated statement of operations for the year ended December 31, 2016. The components of net periodic benefit cost are presented separately within our employee benefit plans footnote. In May 2017, the FASB issued ASU No. 2017-09, “Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting.” The guidance clarifies the application of modification accounting for stock-based compensation agreements. The guidance is effective for fiscal years beginning after December 15, 2017. We occasionally modify existing stock-based compensation agreements with employees under certain circumstances. We adopted the standard for the fiscal year beginning January 1, 2018 and concluded there to be no impact on our consolidated financial statements. In December 2017, the SEC issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Cuts and Jobs Act of 2017 (the “Act”). In accordance with SAB 118, we recorded provisional tax impacts related to the revaluation of deferred tax assets and liabilities as well as the temporary full expensing of certain business assets in our consolidated financial statements for the year ended December 31, 2017. Upon the completion of the 2017 U.S. federal corporate income tax return during the fourth quarter of 2018, we finalized our analysis of the Act and determined no additional adjustments were required. In January 2018, the FASB released guidance on the accounting for tax on the global intangible low-taxed income ("GILTI") provisions of the Act. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The guidance indicates that either accounting for deferred taxes related to GILTI inclusions or to treat any taxes on GILTI inclusions as period cost are both acceptable methods subject to an accounting policy election. Effective the first quarter of 2018, we have elected to treat any potential GILTI inclusions as a period charge in the future period in which it is incurred. We have determined there to be no impact associated with GILTI on our consolidated financial statements as of and for the year ended December 31, 2018. In February 2018, the FASB issued ASU No. 2018-02, “Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects From Accumulated Other Comprehensive Income,” which allows reclassification of certain tax effects created as a result of changing methodologies, laws and tax rates legislated in the Act. This new standard allows for stranded income tax effects resulting from the Act to be reclassified into retained earnings to allow for their tax effect to reflect the appropriate tax rate. Due to the full valuation allowance on our U.S. net deferred tax assets, a reclassification of stranded tax effects to retained earnings was not required. In June 2018, the FASB issued ASU No. 2018-07, “Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.” This guidance expanded the scope of ASC 718 to include share-based payments granted to nonemployees in exchange for goods or services and supersedes the guidance in ASC 505-50. Under this new standard, nonemployee awards are measured on the grant date by estimating the fair value of the equity instruments to be issued rather than the fair value of the goods or services received. Entities may use the expected term when estimating the fair value of a nonemployee option or elect to use the contractual term as the expected term, on an award-by-award basis. The cumulative effect of the transition adjustment is to be recorded as an adjustment to retained earnings as of the beginning of the annual period of adoption. This guidance is effective for fiscal years beginning after December 15, 2018 and interim periods therein. We are currently analyzing the impact of ASU No. 2018-07 and do not anticipate the adoption of this ASU to have a material impact on our consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-14, “Compensation – Retirement Benefits – Defined Benefit Plans – General,” an update to Subtopic ASC 715-20. The guidance amended year-end disclosure requirements related to defined benefit pension plans, and does not affect interim disclosures. The guidance is effective for fiscal years ending after December 15, 2020, and is permitted for early adoption. The standard is to be applied on a retrospective basis. Incyte sponsors defined benefit plans for employees located in Europe. We are currently analyzing the impact of ASU No. 2018-14 on our consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-15, “Intangibles – Goodwill and Other – Internal-Use Software,” an update to Subtopic ASC 350-40. The guidance directs accounting for service contracts for cloud computing arrangements to follow guidance within ASC 350-40 to determine capitalization of implementation costs. The guidance is effective for fiscal years beginning after December 15, 2019, and is permitted for early adoption. The standard may be applied on either a retrospective or prospective basis. We are currently analyzing the impact of ASU No. 2018-15 on our consolidated financial statements. In November 2018, the FASB issued ASU No. 2018-18, “Collaborative Arrangements (Topic 808): Clarifying the Interaction Between Topic 808 and Topic 606.” The guidance clarifies the interactions between Topic 808 and Topic 606, including clarifications on revenue recognition, unit of account, and reporting disclosure requirements. The guidance is effective for fiscal years beginning after December 15, 2019, and is permitted for early adoption. The standard is to be applied on a retrospective basis to the date of the initial application of Topic 606. We utilize collaborative arrangements as described in our license agreement footnote and are currently analyzing the impact of ASU No. 2018-18 on our consolidated financial statements.

Revenues (Tables)

12 Months Ended

Dec. 31, 2018

Revenues

Schedule of disaggregated revenue

The following table presents our disaggregated revenue for the periods presented (in thousands):


	For the Years Ended,
	December 31,
	2018		2017		2016
JAKAFI revenues, net	$	1,386,964	$	1,133,392	$	852,816
ICLUSIG revenues, net		79,936		66,920		29,588
Total product revenues, net		1,466,900		1,200,312		882,404
JAKAVI product royalty revenues		194,694		151,684		110,711
OLUMIANT product royalty revenues		40,086		9,107		—
Total product royalty revenues		234,780		160,791		110,711
Milestone and contract revenues		180,000		175,000		112,512
Other revenues		203		113		92
Total revenues	$	1,881,883	$	1,536,216	$	1,105,719

Business Combination (Tables)

12 Months Ended

Dec. 31, 2018

Business Combination

Schedule of unaudited pro forma information


	For the Year Ended
	December 31, 2016
Pro forma revenues	$	1,148,006
Pro forma net income	$	102,619

Marketable Securities (Tables)

12 Months Ended

Dec. 31, 2018

Marketable Securities

Summary of marketable securities portfolio

The following is a summary of our marketable security portfolio for the periods presented (in thousands):


			Net
	Amortized		Unrealized		Estimated
	Cost		Losses		Fair Value
December 31, 2018
Debt securities (corporate and government)	$	275,405	$	(1,062)	$	274,343

December 31, 2017
Debt securities (corporate and government)	$	271,401	$	(1,265)	$	270,136

Schedule of fair value of assets measured on recurring basis

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


	Fair Value Measurement at Reporting Date Using:
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs		Balance as of
	(Level 1)		(Level 2)		(Level 3)		December 31, 2018
Cash and cash equivalents	$	1,163,980	$	—	$	—	$	1,163,980
Debt securities (corporate and government)		—		274,343		—		274,343
Long term investments (Note 7)		99,199		—		—		99,199
Total assets	$	1,263,179	$	274,343	$	—	$	1,537,522


	Fair Value Measurement at Reporting Date Using:
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs		Balance as of
	(Level 1)		(Level 2)		(Level 3)		December 31, 2017
Cash and cash equivalents	$	899,509	$	—	$	—	$	899,509
Debt securities (corporate and government)		—		270,136		—		270,136
Long term investment (Note 7)		134,356		—		—		134,356
Total assets	$	1,033,865	$	270,136	$	—	$	1,304,001

Schedule of fair value of liabilities measured on recurring basis

The following fair value hierarchy table presents information about each major category of our financial liabilities measured at fair value on a recurring basis (in thousands):


	Fair Value Measurement at Reporting Date Using:
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs		Balance as of
	(Level 1)		(Level 2)		(Level 3)		December 31, 2018
Acquisition-related contingent consideration	$	—	$	—	$	287,001	$	287,001
Total liabilities	$	—	$	—	$	287,001	$	287,001


	Fair Value Measurement at Reporting Date Using:
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs		Balance as of
	(Level 1)		(Level 2)		(Level 3)		December 31, 2017
Acquisition-related contingent consideration	$	—	$	—	$	287,000	$	287,000
Total liabilities	$	—	$	—	$	287,000	$	287,000

Schedule of roll forward of Level 3 liabilities

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


	2018		2017
Balance at January 1,	$	287,000	$	301,000
Contingent consideration earned during the period but not yet paid		(13,184)		(6,618)
Payments made during the period		(12,988)		(15,086)
Change in fair value of contingent consideration		26,173		7,704
Balance at December 31,	$	287,001	$	287,000

Concentrations of Credit Risk (Tables)

12 Months Ended

Dec. 31, 2018

Concentrations of Credit Risk

Schedule of concentration of credit risk related to collaborative partners


	Percentage of Total Milestone and
	Contract Revenues for the
	Years Ended,
	December 31,
	2018		2017		2016
Collaboration Partner A	33	%	37	%	40	%
Collaboration Partner B	67	%	63	%	60	%

Schedule of concentration of credit risk related to specialty pharmacy customers


	Percentage of Total Net
	Product Revenues for the
	Years Ended,
	December 31,
	2018		2017		2016
Customer A	20	%	24	%	25	%
Customer B	14	%	15	%	17	%
Customer C	15	%	13	%	13	%
Customer D	11	%	8	%	9	%

Inventory (Tables)

12 Months Ended

Dec. 31, 2018

Inventory

Schedule of inventory


	December 31,
	2018		2017
	(in thousands)
Raw materials	$	481	$	1,062
Work-in-process		3,488		8,615
Finished goods		6,436		4,771
		10,405		14,448
Inventories-current		6,967		6,482
Inventories-non-current	$	3,438	$	7,966

Property and Equipment (Tables)

12 Months Ended

Dec. 31, 2018

Property and Equipment

Schedule of property and equipment, net


	December 31,
	2018		2017
Office equipment	$	16,955	$	14,665
Laboratory equipment		61,697		45,048
Computer equipment		55,436		48,733
Land		10,122		5,350
Building and leasehold improvements		213,196		209,260
Construction in progress		65,576		11,371
		422,982		334,427
Less accumulated depreciation and amortization		(103,231)		(74,664)
Property and equipment, net	$	319,751	$	259,763

Intangible Assets and Goodwill (Tables)

12 Months Ended

Dec. 31, 2018

Intangible Assets and Goodwill

Schedule of intangible assets, net

The components of intangible assets were as follows (in thousands, except for useful life):

Balance at December 31, 2018

Balance at December 31, 2017

Weighted-

Gross

Net

Gross

Net

Average Useful

Carrying

Accumulated

Carrying

Accumulated

Carrying

Lives (Years)

Amount

Amortization

Amount

Amortization

Amount

Finite-lived intangible assets:

Licensed IP

12.5

271,000

55,636

215,364

271,000

34,099

236,901

Schedule of estimated aggregate amortization expense

Estimated aggregate amortization expense based on the current carrying value of amortizable intangible assets will be as follows for the years ending December 31 (in thousands):


		2019		2020		2021		2022		2023		Thereafter
Amortization expense	$	21,536	$	21,536	$	21,536	$	21,536	$	21,536	$	107,684

Accrued and Other Current Liabilities (Tables)

12 Months Ended

Dec. 31, 2018

Accrued and Other Current Liabilities

Schedule of accrued and other current liabilities

Accrued and other current liabilities at December 31, 2018 and 2017 consisted of the following (in thousands):


	December 31,		December 31,
	2018		2017
Royalties	$	25,087	$	21,433
Clinical related costs		98,607		110,037
Sales allowances		44,770		34,679
Construction in progress		7,673		9,945
Financing lease liability		18,696		—
Other current liabilities		34,568		22,807
Total accrued and other current liabilities	$	229,401	$	198,901

Convertible Notes (Tables)

12 Months Ended

Dec. 31, 2018

Convertible Notes

Schedule of components of convertible notes

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


				Carrying Amount
	Interest Rates			December 31,
Debt	December 31, 2018		Maturities	2018		2017
0.375% Convertible Senior Notes due 2018	0.375	%	2018	$	—	$	7,393
1.25% Convertible Senior Notes due 2020	1.25	%	2020		17,434		16,608
					17,434		24,001
Less current portion					—		7,393
				$	17,434	$	16,608

Schedule of annual maturities of convertible notes

Annual maturities of all convertible notes are as follows (in thousands):


2019	$	—
2020		19,094
2021		—
2022		—
Thereafter		—
	$	19,094

Schedule of carrying amount and fair value of convertible notes

The carrying amount and fair value of our convertible notes as of the dates shown were as follows (in thousands):


	December 31,
	2018				2017
	Carrying				Carrying
	Amount		Fair Value		Amount		Fair Value
0.375% Convertible Senior Notes due 2018	$	—	$	—	$	7,393	$	14,129
1.25% Convertible Senior Notes due 2020		17,434		25,073		16,608		35,431
	$	17,434	$	25,073	$	24,001	$	49,560

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.22)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=84159872&loc=d3e21475-112644

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 470
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=75038535&loc=d3e64711-112823

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(e),(f))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 55
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=64930739&loc=d3e28878-108400

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=84159872&loc=d3e21538-112644

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=84159872&loc=d3e21506-112644

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 1A
-URI http://asc.fasb.org/extlink&oid=64930785&loc=d3e28541-108399

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=64930785&loc=d3e28551-108399

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=84159872&loc=d3e21521-112644

+ Details

Stockholders’ Equity (Tables)

12 Months Ended

Dec. 31, 2018

Stockholders’ Equity

Schedule of option activity under the 2010 Stock Plan


		Shares Subject to
		Outstanding Options
	Shares Available		Weighted Average
	for Grant	Shares	Exercise Price
Balance at December 31, 2017	3,909,701	11,206,553	$	68.36
Additional authorization	5,000,000	—		—
Options granted	(3,245,314)	3,245,314	$	78.64
Options exercised	—	(1,353,518)	$	22.42
Options cancelled	813,190	(813,190)	$	94.82
Balance at December 31, 2018	6,477,577	12,285,159	$	74.39

Schedule of stock options outstanding and exercisable by exercise price range


	Options Outstanding				Options Exercisable
		Weighted Average	Weighted			Weighted
		Remaining	Average			Average
	Number	Contractual Life	Exercise		Number	Exercise
Range of Exercise Prices	Outstanding	(in years)	Price		Exercisable	Price
$2.80 - $17.79	588,741	0.31	$	16.48	588,741	$	16.48
$17.89 - $18.32	1,474,120	1.09		18.31	1,474,120		18.31
$18.97 - $64.55	1,652,452	3.12		49.41	1,439,924		47.60
$65.36 - $68.40	142,566	8.70		66.34	19,555		67.39
$68.62 - $68.62	1,426,578	9.39		68.62	—		—
$68.82 - $81.16	1,234,047	4.24		73.59	892,781		73.69
$83.83 - $94.63	1,701,957	7.73		88.55	894,810		87.36
$95.34 - $95.76	1,578,529	6.09		95.62	780,898		95.76
$100.81 - $113.64	1,462,739	7.63		112.39	636,592		111.63
$115.19 - $138.52	1,023,430	8.09		128.30	466,750		128.88
	12,285,159				7,194,171

Schedule of activity summarized under all stock plans other than options


		Shares Subject to
	Shares Available	Outstanding Awards
	for Grant	Shares	Grant Date Value
Balance at December 31, 2017	769,202	1,178,660	$	98.88
Additional authorization	1,000,000	—		—
RSUs granted	(898,598)	898,598	$	70.39
PSUs granted	(523,743)	523,743	$	66.18
RSUs cancelled	120,591	(120,591)	$	95.33
PSUs cancelled	78,299	(78,299)	$	66.44
RSUs released	—	(358,774)	$	93.64
Balance at December 31, 2018	545,751	2,043,337	$	80.35

Stock Compensation (Tables)

12 Months Ended

Dec. 31, 2018

Stock Compensation

Schedule of valuation assumptions used for valuation of fair value of stock compensation granted


	Employee Stock Options						Employee Stock Purchase Plan
	For the year ended December 31,						For the year ended December 31,
	2018		2017		2016		2018		2017		2016
Average risk-free interest rates	2.61	%	1.80	%	1.30	%	2.62	%	1.53	%	0.90	%
Average expected life (in years)	5.26		5.25		4.99		0.50		0.50		0.50
Volatility	45	%	49	%	50	%	46	%	38	%	48	%
Weighted-average fair value (in dollars)	34.20		53.41		39.35		15.80		19.42		18.82

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Income Taxes

Income (loss) from operations before income taxes

The provision for income taxes is based on income (loss) before provision for income taxes as follows (in thousands):


	Year Ended December 31,
	2018		2017		2016
U.S.	$	478,050	$	36,493	$	272,574
Non-U.S.		(362,703)		(348,783)		(165,170)
Income (loss) before provision for income taxes	$	115,347	$	(312,290)	$	107,404

Schedule of provision (benefit) for income taxes

Our provision for income taxes consists of the following (in thousands):


	Year Ended December 31,
	2018		2017		2016
Current:
State	$	5,010	$	486	$	2,700
Foreign		1,303		1,171		482
		6,313		1,657		3,182
Deferred:
State		111		(805)		—
Foreign		(570)		—		—
		(459)		(805)		—
Total provision for income taxes	$	5,854	$	852	$	3,182

Schedule of reconciliation of income taxes at the U.S. federal statutory rate to the provision for income taxes

A reconciliation of income taxes at the U.S. federal statutory rate to the provision for income taxes is as follows (in thousands):


	Year Ended December 31,
	2018		2017		2016
Provision (benefit) at U.S. federal statutory rate1	$	24,223	$	(109,302)	$	37,591
Unbenefited net operating losses and tax credits		(51,861)		(99,254)		(47,410)
Excess tax benefits related to share-based compensation		(8,233)		(81,021)		(29,541)
Deferred tax impact of Tax Cuts and Jobs Act of 2017		—		196,751		—
Foreign tax rate differential		37,061		86,777		39,975
Non-deductible officer compensation		4,114		6,351		2,061
Other		550		550		506
Provision for income taxes	$	5,854	$	852	$	3,182

Schedule of significant components of deferred tax assets and liabilities

Significant components of our deferred tax assets and liabilities are as follows (in thousands):


	December 31,
	2018		2017
Deferred tax assets:
Net operating loss carry forwards	$	148,142	$	259,189
Federal and state research credits		402,798		333,311
Capitalized research and development		53,871		37,044
Deferred revenue and accruals		9,443		11,721
Non-cash compensation		58,194		44,647
Acquisition-related contingent consideration		43,676		41,831
Intangibles, net		93,730		94,249
Long term investments		23,621		12,244
Other		22,211		12,815
Total gross deferred tax assets		855,686		847,051
Less valuation allowance for deferred tax assets		(836,992)		(834,783)
Net deferred tax assets	$	18,694	$	12,268

Deferred tax liabilities:
Property and equipment	$	(17,424)	$	(11,463)
Total gross deferred tax liabilities		(17,424)		(11,463)
Net deferred income taxes	$	1,270	$	805

Schedule of operating loss and tax credit carryforwards


	Amount		Expiring if not utilized
Net operating loss carryforwards
Federal	$	216,970	2034
State		343,022	2020 through 2037; indefinite
Foreign		757,312	2020 through 2025
Research and development credit carryforwards
Federal		197,400	2019 through 2038
State		25,247	2021 through 2032; indefinite
Orphan drug tax credit carryforwards		210,242	2029 through 2038

Unrecognized tax benefits

The following table summarizes the gross amounts of unrecognized tax benefits (in thousands):


	Year Ended December 31,
	2018		2017
Balance at beginning of year	$	18,022	$	10,798
Additions related to prior periods tax positions		2,098		2,571
Reductions related to prior periods tax positions		—		(821)
Additions related to current period tax positions		2,466		5,555
Reductions due to lapse of applicable statute of limitations		(130)		(81)
Currency translation adjustment		(61)		—
Balance at end of year	$	22,395	$	18,022

Net Income (Loss) Per Share (Tables)

12 Months Ended

Dec. 31, 2018

Net Income (Loss) Per Share

Schedule of calculation of net income (loss) per share


	Year Ended December 31,
(in thousands, except per share data)	2018		2017		2016
Basic Net Income (Loss) Per Share
Basic net income (loss)	$	109,493	$	(313,142)	$	104,222
Weighted average common shares outstanding		212,383		204,580		187,873

Basic net income (loss) per share	$	0.52	$	(1.53)	$	0.55
				0		0
Diluted Net Income (Loss) Per Share
Diluted net income (loss)	$	109,493	$	(313,142)	$	104,222
Weighted average common shares outstanding		212,383		204,580		187,873

Dilutive stock options and RSUs		3,252		—		6,252

Weighted average shares used to compute diluted net income (loss) per share		215,635		204,580		194,125

Diluted net income (loss) per share	$	0.51	$	(1.53)	$	0.54

Schedule of antidilutive securities excluded from the computation of earnings per share

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


	2018	2017	2016
Outstanding stock options and awards	8,255,992	12,585,213	2,792,424
Common shares issuable upon conversion of the 2018 Notes	—	149,375	7,245,149
Common shares issuable upon conversion of the 2020 Notes	368,939	368,939	7,241,284
Total potential common shares excluded from diluted net income (loss) per share computation	8,624,931	13,103,527	17,278,857

Employee Benefit Plans (Tables)

12 Months Ended

Dec. 31, 2018

Employee Benefit Plans

Schedule of changes in the obligations and plan assets, the funded status and the amounts recorded

Summarized information regarding changes in the obligations and plan assets, the funded status and the amounts recorded were as follows (in thousands):


	Year Ended December 31,
	2018		2017
Benefit obligation, beginning of year	$	37,584	$	23,787
Employer service cost		4,450		2,836
Interest cost		278		190
Plan participants' contributions		1,282		1,101
Actuarial loss		698		4,514
Plan change		—		1,430
Transfer of benefits net of payments from fund		2,268		2,853
Expenses paid from assets		(51)		(36)
Translation (gain) loss		(471)		909
Benefit obligation, end of year		46,038		37,584

Fair value of plan assets, beginning of year		24,191		16,699
Actual return on plan assets		95		88
Employer contributions		3,133		2,891
Plan participants' contributions		1,282		1,101
Transfer of benefits net of payments from fund		1,910		2,853
Expenses paid from assets		(51)		(36)
Translation (gain) loss		(192)		595
Fair value of plan assets, end of year		30,368		24,191

Unfunded liability, end of year	$	15,670	$	13,393

Schedule of net periodic benefit cost

The net periodic benefit cost was as follows (in thousands):


	Year Ended December 31,
	2018		2017		2016
Service cost	$	4,450	$	2,836	$	1,225
Interest cost		278		190		76
Expected return on plan assets		(195)		(138)		(59)
Amortization of prior service cost		179		154		—
Amortization of actuarial losses		265		141		—
Net periodic benefit cost	$	4,977	$	3,183	$	1,242

Schedule of changes recognized in other comprehensive income (loss)

Other changes in the plans assets and the benefit obligation that is recognized in accumulated other comprehensive income (loss) were as follows, net of tax (in thousands):


	Year Ended December 31,
	2018		2017		2016
Pension liability, beginning of year	$	8,450	$	2,750	$	—
Plan change		—		1,276		506
Net prior service costs		(179)		(140)		—
Net loss		875		4,564		2,244
Pension liability, end of year	$	9,146	$	8,450	$	2,750

Schedule of expected benefit payments

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid (in thousands):


2019	$	1,647
2020		1,759
2021		2,020
2022		2,131
2023		1,973
2024-2027		11,790
Total	$	21,320

Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies

Schedule of future non-cancellable minimum payments under operating, direct financing and capital leases

Future non‑cancelable minimum payments are as follows (in thousands):


Year Ended December 31,	Operating Leases		Capital Leases		Financing Lease1
2019	$	12,909	$	688	$	—
2020		8,589		472		—
2021		3,899		—		466
2022		2,011		—		2,793
2023		1,155		—		2,793
Thereafter		—		—		35,850
Total minimum lease payments	$	28,563	$	1,160	$	41,902

Interim Consolidated Financial Information (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2018

Interim Consolidated Financial Information (Unaudited)

Schedule of Interim Consolidated Financial Information

Note 19. Interim Consolidated Financial Information (Unaudited)


	Fiscal 2018 Quarter Ended
(in thousands, except per share data)	March 31,		June 30,		September 30,		December 31,
Revenues(1)	$	382,282	$	521,516	$	449,683	$	528,402
Net income (loss)	$	(41,140)	$	52,394	$	29,176	$	69,063
Basic net income (loss) per share	$	(0.19)	$	0.25	$	0.14	$	0.32
Diluted net income (loss) per share	$	(0.19)	$	0.24	$	0.14	$	0.32
Shares used in computation of basic net income (loss) per share		211,681		212,210		212,627		213,013
Shares used in computation of diluted net income (loss) per share		211,681		215,103		215,964		216,042


	Fiscal 2017 Quarter Ended
(in thousands, except per share data)	March 31,		June 30,		September 30,		December 31,
Revenues(2)	$	384,082	$	326,444	$	381,534	$	444,156
Net income (loss)	$	(187,083)	$	(12,484)	$	36,054	$	(149,629)
Basic net income (loss) per share	$	(0.96)	$	(0.06)	$	0.17	$	(0.71)
Diluted net income (loss) per share	$	(0.96)	$	(0.06)	$	0.17	$	(0.71)
Shares used in computation of basic net income (loss) per share		195,260		205,141		206,796		211,125
Shares used in computation of diluted net income (loss) per share		195,260		205,141		212,610		211,125

(1)

(2)

Organization and Summary of Significant Accounting Policies (Details) $ in Thousands	3 Months Ended	12 Months Ended
	Sep. 30, 2017 USD ($)	Dec. 31, 2018 USD ($) item	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Jan. 01, 2018 USD ($)
Organization and Business
Number of operating segments \| item		1
Concentrations of Credit Risk
Number of issuer to which company limits the amount of credit exposure other than US Government guaranteed securities \| item		1
Number of financial investment to which company limits the amount of credit exposure other than US Government guaranteed securities \| item		1
Impairment of Long-Lived Assets
Write-off of the acquired IPR&D	$ 12,000		$ 12,000
Revenue Recognition
Accrued sales allowances		$ 44,800	34,700
Percentage of Medicare Part D insurance coverage gap mandate to be funded by manufacturers		50.00%
Research and development expense		$ 1,197,957	1,326,134	$ 581,861
Accrued research and development costs		98,600	$ 110,000
ASU No. 2016-02
Recent Accounting Pronouncements
Financing lease right-of-use assets		26,000
Financing liability		$ 18,700
Calithera \| ASU 2016-01
Recent Accounting Pronouncements
Decrease in accumulated deficit					$ 2,800
JAKAFI
Inventory
Shelf life for finished goods inventory, maximum		36 months
ICLUSIG
Inventory
Shelf life for finished goods inventory, maximum		24 months
ICLUSIG \| Licensed IP
Revenue Recognition
Amortization period		12 years 6 months

Revenues (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
Revenues (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Revenues
Total revenues	$ 528,402	$ 449,683	$ 521,516	$ 382,282	$ 444,156	$ 381,534	$ 326,444	$ 384,082	$ 1,881,883
Before topic 606
Revenues
Total revenues										$ 1,536,216	$ 1,105,719
Product revenues, net
Revenues
Total revenues	399,200	367,700	365,500	334,500	321,800	322,000	291,700	264,800	1,466,900	1,200,312	882,404
JAKAFI
Revenues
Total revenues									1,386,964	1,133,392	852,816
ICLUSIG
Revenues
Total revenues									79,936	66,920	29,588
Product royalty revenues
Revenues
Total revenues									234,780	160,791	110,711
JAKAVI Royalty Revenues
Revenues
Total revenues									194,694	151,684	110,711
OLUMIANT Royalty Revenues
Revenues
Total revenues									40,086	9,107
Milestone and contract revenues
Revenues
Total revenues	$ 60,000	$ 20,000	$ 100,000	$ 0	$ 70,000	$ 15,000	$ 0	$ 90,000	180,000	175,000	112,512
Other revenues
Revenues
Total revenues									$ 203	$ 113	$ 92

Business Combination - Narratives (Details) $ in Millions		12 Months Ended
Business Combination - Narratives (Details) $ in Millions	Jun. 01, 2016 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)
Maximum
Business combinations
Potential future oncology development and regulatory approval milestone payments	$ 135.0
ARIAD
Business combinations
Upfront Payment	147.5
Fair value of consideration transferred
Fair value of consideration transferred	440.5
Cash	147.5
Contingent consideration	$ 293.0
ARIAD \| Contingent Consideration
Fair value of consideration transferred
Probability of technical success (“PTS”) (as a percent)	25.00%
Projected cash flows period	18 years
ARIAD \| Contingent Consideration \| Discount rate
Fair value of consideration transferred
Discount rate (as a percent)	10
ARIAD \| Minimum
Business combinations
Royalties paid (as a percentage)	32.00%
ARIAD \| Maximum
Business combinations
Royalties paid (as a percentage)	50.00%
Development costs		$ 7.0	$ 7.0

Business Combination - Pro Forma Impact of Business Combination (Details) - ARIAD - USD ($) $ in Thousands	7 Months Ended	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2016	Dec. 31, 2015
Unaudited pro forma information
Acquisition-Related Costs		$ 1,600
Revenue of ARIAD	$ 29,600
Net loss of ARIAD	(48,700)
Pro forma revenues		1,148,006
Pro forma net income		102,619
Deferred Revenue	$ 0	$ 0	$ 0

Marketable Securities - Marketable securities portfolio (Details) - Debt securities (corporate and government) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Summary of marketable security portfolio
Amortized Cost	$ 275,405	$ 271,401
Net Unrealized Losses	(1,062)	(1,265)
Estimated Fair Value	$ 274,343	$ 270,136
Minimum
Summary of marketable security portfolio
Contractual maturity dates	12 months
Maximum
Summary of marketable security portfolio
Contractual maturity dates	18 months

Marketable Securities - Fair value on a recurring basis (Details) - USD ($) $ in Thousands	3 Months Ended			12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2018	Dec. 31, 2017	Jun. 01, 2016
Fair value of financial instruments
Assets transfers from Level 1 to Level 2	$ 0			$ 0
Assets transfers from Level 2 to Level 1	0			0
Assets transfers into Level 3				0
Assets transfers out of Level 3				0
Liabilities transfers from Level 1 to Level 2	0			0
Liabilities transfers from Level 2 to Level 1	0			0
Liabilities transfers into Level 3				0
Liabilities transfers out of Level 3				0
Long term investments	99,199			99,199	$ 134,356
ARIAD
Fair value of financial instruments
Acquisition-related contingent consideration						$ 293,000
Roll forward of Level 3 liabilities
Contingent consideration earned during the period but not yet paid				13,200
ARIAD \| Account payable
Roll forward of Level 3 liabilities
Contingent consideration earned during the period but not yet paid		$ (6,700)
ARIAD \| Accrued and other current liabilities
Roll forward of Level 3 liabilities
Contingent consideration earned during the period but not yet paid	(6,500)				(6,600)
Level 3
Fair value of financial instruments
Lack of expected future sales royalties payable			$ 24,000
Level 3 \| Fair Value
Roll forward of Level 3 liabilities
Balance at the beginning of the period				287,000	301,000
Contingent consideration earned during the period but not yet paid				(13,184)	(6,618)
Payments made during the period				(12,988)	(15,086)
Change in fair value of contingent consideration				26,173	7,704
Balance at the end of the period	287,001			287,001	287,000
Recurring \| Fair Value
Fair value of financial instruments
Cash and cash equivalents	1,163,980			1,163,980	899,509
Debt securities (corporate and government)	274,343			274,343	270,136
Long term investments	99,199			99,199	134,356
Total assets	1,537,522			1,537,522	1,304,001
Acquisition-related contingent consideration	287,001			287,001	287,000
Total liabilities	287,001			287,001	287,000
Recurring \| Level 1
Fair value of financial instruments
Cash and cash equivalents	1,163,980			1,163,980	899,509
Long term investments	99,199			99,199	134,356
Total assets	1,263,179			1,263,179	1,033,865
Recurring \| Level 2
Fair value of financial instruments
Debt securities (corporate and government)	274,343			274,343	270,136
Total assets	274,343			274,343	270,136
Recurring \| Level 3
Fair value of financial instruments
Acquisition-related contingent consideration	287,001			287,001	287,000
Total liabilities	$ 287,001			$ 287,001	$ 287,000

Concentrations of Credit Risk (Details)	12 Months Ended
Concentrations of Credit Risk (Details)	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Milestone Revenues \| Customer Concentration Risk \| Collaboration Partner A
Concentration of risk
Percentage of concentration risk	33.00%	37.00%	40.00%
Milestone Revenues \| Customer Concentration Risk \| Collaboration Partner B
Concentration of risk
Percentage of concentration risk	67.00%	63.00%	60.00%
Net Product Revenues \| Customer Concentration Risk \| Customer A
Concentration of risk
Percentage of concentration risk	20.00%	24.00%	25.00%
Net Product Revenues \| Customer Concentration Risk \| Customer B
Concentration of risk
Percentage of concentration risk	14.00%	15.00%	17.00%
Net Product Revenues \| Customer Concentration Risk \| Customer C
Concentration of risk
Percentage of concentration risk	15.00%	13.00%	13.00%
Net Product Revenues \| Customer Concentration Risk \| Customer D
Concentration of risk
Percentage of concentration risk	11.00%	8.00%	9.00%
Accounts Receivable \| Credit Concentration Risk \| Collaboration Partner A and B
Concentration of risk
Percentage of concentration risk	42.00%	47.00%
Accounts Receivable \| Credit Concentration Risk \| Customer A, B, C and D
Concentration of risk
Percentage of concentration risk	30.00%	25.00%

Inventory (Details) - USD ($) $ in Thousands	12 Months Ended
Inventory (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Raw materials	$ 481	$ 1,062
Work-in-process	3,488	8,615
Finished goods	6,436	4,771
Total inventories	10,405	14,448
Inventories - current	6,967	6,482
Inventories - non -current	$ 3,438	$ 7,966
JAKAFI
Shelf life for finished goods inventory, maximum	36 months
ICLUSIG
Shelf life for finished goods inventory, maximum	24 months

License Agreements - Novartis (Details) $ in Thousands	1 Months Ended				3 Months Ended								12 Months Ended									110 Months Ended
License Agreements - Novartis (Details) $ in Thousands	Apr. 30, 2016 USD ($)	Jan. 31, 2010 USD ($)	Dec. 31, 2009 USD ($)	Nov. 30, 2009 USD ($) item	Dec. 31, 2018 USD ($)	Sep. 30, 2018 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Sep. 30, 2017 USD ($)	Jun. 30, 2017 USD ($)	Mar. 31, 2017 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)	Dec. 31, 2012 USD ($)	Dec. 31, 2011 USD ($)	Dec. 31, 2010 USD ($)	Dec. 31, 2018 USD ($)
License agreements
Revenues					$ 528,402	$ 449,683	$ 521,516	$ 382,282	$ 444,156	$ 381,534	$ 326,444	$ 384,082	$ 1,881,883
Europe
License agreements
Revenues													79,900	$ 66,900	$ 29,600
U.S.
License agreements
Revenues													1,800,000	1,500,000	1,100,000
JAKAFI
License agreements
Revenues													1,386,964	1,133,392	852,816
Novartis
License agreements
Upfront and immediate milestone payment to be received under license agreement				$ 210,000
Upfront payment received under license agreement			$ 150,000
Immediate milestone payment received under license agreement		$ 60,000
Revenues													60,000	65,000	45,000
Number of deliverables under license agreement \| item				2
Reimbursable costs recorded as deferred revenue			$ 10,900
Reimbursable costs included in accounts receivable					700				1,600				700	1,600								$ 700
Research and development expenses reimbursed													3,200	3,000	700
Product royalties in accounts receivable					55,400				47,700				55,400	47,700								55,400
Novartis \| Pre-specified Events \| Maximum
License agreements
Upfront and immediate milestone payment to be received under license agreement				$ 1,200,000
Novartis \| Development Milestones
License agreements
Amount recognized and received for the achievement of a predefined milestone																						132,000
Novartis \| Development Milestones \| Phase III
License agreements
Amount recognized and received for the achievement of a predefined milestone																					$ 50,000
Novartis \| Development Milestones \| Maximum
License agreements
Upfront and immediate milestone payment to be received under license agreement				174,000
Novartis \| Regulatory Milestones
License agreements
Amount recognized and received for the achievement of a predefined milestone																						215,000
Novartis \| Regulatory Milestones \| Maximum
License agreements
Upfront and immediate milestone payment to be received under license agreement				495,000
Novartis \| Commercialization Milestones
License agreements
Amount recognized and received for the achievement of a predefined milestone																						120,000
Novartis \| Commercialization Milestones \| Maximum
License agreements
Upfront and immediate milestone payment to be received under license agreement				$ 500,000
Novartis \| LY3009104 \| Development Milestones
License agreements
Amount recognized and received for the achievement of a predefined milestone																$ 5,000	$ 7,000	$ 25,000		$ 15,000
Novartis \| GVHD \| Development Milestones \| Phase III
License agreements
Amount recognized and received for the achievement of a predefined milestone														25,000
Novartis \| GVHD \| Development and Regulatory Milestones \| Maximum
License agreements
Upfront and immediate milestone payment to be received under license agreement	$ 75,000
Novartis \| GVHD \| Development and Commercialization Milestones
License agreements
Amount recognized and received for the achievement of a predefined milestone															5,000
Novartis \| JAKAFI \| U.S.
License agreements
Revenues													63,000	50,500	36,800
Royalties payable					$ 18,600				$ 14,800				18,600	14,800								$ 18,600
Novartis \| JAKAFI \| Regulatory Milestones \| U.S.
License agreements
Amount recognized and received for the achievement of a predefined milestone																				$ 10,000
Novartis \| JAKAVI
License agreements
Revenues													$ 194,700	151,700	110,700
Novartis \| JAKAVI \| Minimum
License agreements
Royalty payments on future global net sales (as a percent)													12.00%
Novartis \| JAKAVI \| Maximum
License agreements
Royalty payments on future global net sales (as a percent)													14.00%
Novartis \| JAKAVI \| Regulatory Milestones \| Europe
License agreements
Amount recognized and received for the achievement of a predefined milestone															$ 40,000	25,000	60,000		$ 40,000
Novartis \| JAKAVI \| Regulatory Milestones \| JAPAN
License agreements
Amount recognized and received for the achievement of a predefined milestone																15,000	$ 25,000
Novartis \| JAKAVI \| Commercialization Milestones
License agreements
Amount recognized and received for the achievement of a predefined milestone													$ 60,000	40,000		20,000
Revenues													$ 900,000	$ 600,000		$ 300,000

License Agreements - Lilly (Details) $ in Thousands	1 Months Ended			3 Months Ended								12 Months Ended					109 Months Ended
License Agreements - Lilly (Details) $ in Thousands	Mar. 31, 2016 USD ($)	Jul. 31, 2010	Dec. 31, 2009 USD ($) item	Dec. 31, 2018 USD ($)	Sep. 30, 2018 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Sep. 30, 2017 USD ($)	Jun. 30, 2017 USD ($)	Mar. 31, 2017 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2012 USD ($)	Dec. 31, 2010 USD ($)	Dec. 31, 2018 USD ($)
License agreements
Research and Development Expense												$ 1,197,957	$ 1,326,134	$ 581,861
Revenues				$ 528,402	$ 449,683	$ 521,516	$ 382,282	$ 444,156	$ 381,534	$ 326,444	$ 384,082	1,881,883
U.S.
License agreements
Revenues												1,800,000	1,500,000	1,100,000
Europe
License agreements
Revenues												79,900	66,900	29,600
Product royalty revenues
License agreements
Revenues												$ 234,780	160,791	110,711
Product royalty revenues \| Non-U.S.
License agreements
Revenues				69,200	$ 61,900	$ 56,000	$ 47,700	52,300	$ 44,500	$ 34,800	$ 29,200
Eli Lilly
License agreements
Upfront payment received under license agreement			$ 90,000
Associated future global development costs from the initiation of a Phase IIb trial, if elected to co-develop (as a percentage)												30.00%
Research and Development Expense												$ 68,600	40,800	27,300
Number of deliverables under license agreement \| item			2
Revenues												120,000	110,000	67,500
Product royalties in accounts receivable				14,000				4,600				14,000	4,600				$ 14,000
Eli Lilly \| Non-U.S.
License agreements
Revenues												40,100	9,100
Eli Lilly \| Phase IIB
License agreements
Associated future global development costs from the initiation of a Phase IIb trial, if elected to co-develop (as a percentage)		30.00%	30.00%
Eli Lilly \| Pre-specified Events \| Maximum
License agreements
Upfront and immediate milestone payment to be received under license agreement			$ 665,000
Eli Lilly \| Development Milestones
License agreements
Amount recognized and received for the achievement of a predefined milestone												20,000	30,000				149,000
Eli Lilly \| Development Milestones \| Maximum
License agreements
Upfront and immediate milestone payment to be received under license agreement			150,000
Eli Lilly \| Development Milestones \| Phase III
License agreements
Amount recognized and received for the achievement of a predefined milestone															$ 50,000
Eli Lilly \| Development Milestones \| Phase IIA
License agreements
Amount recognized and received for the achievement of a predefined milestone																$ 30,000
Eli Lilly \| Development Milestones \| Phase IIB
License agreements
Amount recognized and received for the achievement of a predefined milestone																$ 19,000
Eli Lilly \| Regulatory Milestones
License agreements
Amount recognized and received for the achievement of a predefined milestone												$ 100,000		35,000			235,000
Eli Lilly \| Regulatory Milestones \| JAPAN
License agreements
Amount recognized and received for the achievement of a predefined milestone													15,000
Eli Lilly \| Regulatory Milestones \| Europe
License agreements
Amount recognized and received for the achievement of a predefined milestone													65,000	$ 20,000
Eli Lilly \| Regulatory Milestones \| Maximum
License agreements
Upfront and immediate milestone payment to be received under license agreement			365,000
Eli Lilly \| Commercialization Milestones \| Maximum
License agreements
Upfront and immediate milestone payment to be received under license agreement			$ 150,000
Royalty payments on future global net sales (as a percent)												20.00%
Eli Lilly \| Accrued and other liabilities
License agreements
Accrued and other liabilities				$ 23,100				$ 13,600				$ 23,100	13,600				$ 23,100
Eli Lilly \| GVHD
License agreements
Upfront payment received under license agreement	$ 35,000
Research and development expenses reimbursed													$ 35,000
Additional milestone payment received under license agreement	$ 40,000

License Agreements - Agenus (Details) $ / shares in Units, $ in Thousands, shares in Millions				1 Months Ended					3 Months Ended		9 Months Ended		12 Months Ended
	Feb. 14, 2017 USD ($) $ / shares	Feb. 01, 2017 USD ($) $ / shares shares	Feb. 18, 2015 USD ($)	Sep. 30, 2018 USD ($)	Jun. 30, 2018 USD ($)	Feb. 28, 2017 USD ($) item	Nov. 30, 2015 item	Feb. 28, 2015	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)
License agreements
Long term investment													$ 99,199	$ 134,356
Research and development expense													1,197,957	1,326,134	$ 581,861
Unrealized gain (loss) on long term investments													(44,093)	(24,275)	(3,261)
Current assets													1,832,254	1,504,854
Current liabilities													425,277	375,396
Cash and cash equivalents													$ 1,163,980	899,509
Agenus
License agreements
Number of program targets \| item						4	3
Royalty payments on future global net sales (as a percent)													15.00%
Research and development expense													$ 4,600	19,500	17,500
Agenus \| Accrued and other liabilities
License agreements
Accrued and other liabilities													$ 2,300	3,200
Agenus \| Development, Regulatory and Commercialization Milestones \| Minimum
License agreements
Royalty payments on future global net sales (as a percent)													6.00%
Agenus \| Development, Regulatory and Commercialization Milestones \| Maximum
License agreements
Royalty payments on future global net sales (as a percent)													12.00%
Additional milestone payments under the license agreement						$ 510,000
Agenus \| Development Milestones
License agreements
Upfront payment under license agreement				$ 5,000	$ 5,000	$ 20,000
Agenus
License agreements
Long term investment													$ 42,300	57,900
Shares owned following stock purchase (as a percent)						11.00%		9.00%
Ownership percentage (as a percent)													15.00%
Unrealized gain (loss) on long term investments													$ (15,600)	(13,600)	$ (3,300)
Total revenues									$ 12,800	$ 3,400	$ 30,300	$ 34,500
Net income (loss)									(33,700)	$ (36,800)	(113,200)	$ (85,700)
Current assets				67,600					67,600		67,600			73,600
Noncurrent assets				62,800					62,800		62,800			64,800
Current liabilities				58,200					58,200		58,200			56,400
Noncurrent liabilities				$ 203,700					$ 203,700		$ 203,700			157,800
Agenus \| Stock purchase agreement
License agreements
Purchase of common stock under Stock Purchase Agreement (in shares ) \| shares		10.0
Purchase price of common stock		$ 60,000
Per share price \| $ / shares	$ 4.40	$ 6.00
Discount for lack of marketability	$ 4,500
Fair value of shares on the issuance date	39,500
Total consideration paid	$ 60,000		$ 60,000
Long term investment														39,500
Research and development expense														$ 20,500

License Agreements - Hengrui (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
License agreements
Research and development expense	$ 1,197,957	$ 1,326,134	$ 581,861
Hengrui
License agreements
Research and development expense	$ 1,500	$ 3,200	$ 9,800

License Agreements - Merus (Details) $ / shares in Units, $ in Thousands, € in Millions, shares in Millions		1 Months Ended			3 Months Ended		9 Months Ended		12 Months Ended
	Jan. 23, 2017 USD ($) $ / shares	Feb. 28, 2017 USD ($)	Jan. 31, 2017 USD ($) item	Dec. 31, 2016 USD ($) $ / shares shares	Sep. 30, 2018 EUR (€)	Sep. 30, 2017 EUR (€)	Sep. 30, 2018 EUR (€)	Sep. 30, 2017 EUR (€)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($) $ / shares	Dec. 31, 2017 EUR (€)	Dec. 31, 2017 USD ($)
License agreements
Long term investment									$ 99,199				$ 134,356
Research and development expense									1,197,957	$ 1,326,134	$ 581,861
Unrealized gain (loss) on long term investments									(44,093)	(24,275)	(3,261)
Current assets									1,832,254				1,504,854
Current liabilities									425,277				375,396
Merus
License agreements
Number of independent programs \| item			11
Upfront payment under license agreement		$ 120,000
Research and development expense									10,300	6,500
Merus \| Accrued and other liabilities
License agreements
Accrued and other liabilities									2,900				2,100
Merus \| U.S.
License agreements
Profit sharing (as a percent)			50.00%
Percentage of profit (losses)			50.00%
Merus \| Minimum
License agreements
Royalty payments on future global net sales (as a percent)			6.00%
Merus \| Minimum \| U.S.
License agreements
Royalty payments on future global net sales (as a percent)			6.00%
Merus \| Minimum \| Non-U.S.
License agreements
Royalty payments on future global net sales (as a percent)			6.00%
Merus \| Maximum
License agreements
Royalty payments on future global net sales (as a percent)			10.00%
Percentage of additional royalties			4.00%
Percentage of reverse royalty			4.00%
Merus \| Maximum \| U.S.
License agreements
Royalty payments on future global net sales (as a percent)			10.00%
Merus \| Maximum \| Non-U.S.
License agreements
Royalty payments on future global net sales (as a percent)			10.00%
Merus \| Maximum \| Development and Regulatory Milestones
License agreements
Additional milestone payments under the license agreement			$ 100,000
Merus \| Maximum \| Commercialization Milestones
License agreements
Additional milestone payments under the license agreement			$ 250,000
Merus
License agreements
Number of programs under the resulting products are co-funded for development \| item			2
Associated future global development costs , if elected to co-develop (as a percent)			35.00%
Total revenues \| €					€ 6.5	€ 5.7	€ 23.0	€ 15.8
Net income (loss) \| €					(10.7)	€ (13.4)	(23.7)	€ (52.7)
Current assets \| €					202.6		202.6					€ 188.1
Noncurrent assets \| €					22.1		22.1					8.7
Current liabilities \| €					38.2		38.2					27.7
Noncurrent liabilities \| €					€ 101.5		€ 101.5					€ 112.6
Merus \| Stock purchase agreement
License agreements
Purchase of common stock under Stock Purchase Agreement (in shares ) \| shares				3.2
Purchase price of common stock				$ 80,000							$ 80,000
Per share price \| $ / shares	$ 24.50			$ 25.00							$ 25.00
Lock-up period	18 months
Standstill period	3 years
Percentage of total shares allowed to sell during any 12-month period (as a percent)	33.00%
Percentage of total shares allowed to sell during any three-month period (as a percent)	10.00%
Discount for lack of marketability	$ 5,600
Fair value of shares on the issuance date	72,800
Total consideration paid	$ 80,000
Long term investment													72,800
Research and development expense										7,200
Fair market value of our long term investments									$ 44,800				$ 62,100
Ownership percentage (as a percent)									14.00%
Unrealized gain (loss) on long term investments									$ (17,300)	$ (10,700)

License Agreements - Calithera (Details) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions			1 Months Ended		3 Months Ended								12 Months Ended
	Jan. 01, 2018	Jan. 30, 2017	Mar. 31, 2017	Jan. 31, 2017	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Jan. 01, 2017
License agreements
Long term investment					$ 99,199				$ 134,356				$ 99,199	$ 134,356
Research and development expense													1,197,957	1,326,134	$ 581,861
Net income					69,063	$ 29,176	$ 52,394	$ (41,140)	(149,629)	$ 36,054	$ (12,484)	$ (187,083)	109,493	(313,142)	104,222
Unrealized gain (loss) on long term investments													(44,093)	(24,275)	$ (3,261)
Calithera
License agreements
Funding of future development costs (as a percent)				70.00%
Upfront payment made under license agreement				$ 45,000
Potential milestone payments to be made with profit sharing in effect				430,000
Potential milestone payments to be made with profit sharing terminated				$ 750,000
Milestone payment made under license agreement			$ 12,000
Research and development expense													12,000	23,400
Calithera \| Accrued and other liabilities
License agreements
Accrued and other liabilities					2,600				900				2,600	900
Calithera \| U.S.
License agreements
Percentage of profit (losses)				60.00%
Calithera
License agreements
Total consideration paid		$ 53,000
Calithera \| Stock purchase agreement
License agreements
Purchase of common stock under Stock Purchase Agreement (in shares )				1.7
Purchase price of common stock																$ 8,000
Per share price		$ 6.75														$ 4.65
Fair market value of our long term investments		$ 11,600
Fair value of shares on the issuance date					$ 6,900				14,400				$ 6,900	14,400
Total consideration paid		53,000
Upfront license fees		45,000
Stock purchase price		$ 8,000
Long term investment									$ 11,600					11,600
Research and development expense														41,400
Ownership percentage (as a percent)					4.50%								4.50%
Unrealized gain (loss) on long term investments													$ (7,500)	$ 2,800
Calithera \| ASU 2016-01
License agreements
Net income	$ 2,800

License Agreements - MacroGenics (Details) - USD ($) $ in Thousands	1 Months Ended			12 Months Ended
	Nov. 30, 2018	Sep. 30, 2018	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
License agreements
Research and development				$ 1,197,957	$ 1,326,134	$ 581,861
MacroGenics
License agreements
Upfront payment under license agreement			$ 150,000
Research and development	$ 5,000	$ 10,000		35,400	1,100
MacroGenics \| Accrued and other liabilities
License agreements
Accrued and other liabilities			$ 1,100	$ 3,200	1,100
Minimum \| MacroGenics
License agreements
Royalty payments on future global net sales (as a percent)			15.00%
Maximum \| MacroGenics
License agreements
Royalty payments on future global net sales (as a percent)			24.00%
Development and Regulatory Milestones \| Maximum \| MacroGenics
License agreements
Additional milestone payments under the license agreement			$ 420,000		420,000
Commercialization Milestones \| Maximum \| MacroGenics
License agreements
Additional milestone payments under the license agreement			$ 330,000		$ 330,000

License Agreements - Syros (Details) $ / shares in Units, $ in Thousands, shares in Millions	1 Months Ended	12 Months Ended
	Jan. 31, 2018 USD ($) item $ / shares shares	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Jan. 08, 2018 $ / shares
License agreements
Long term investment		$ 99,199	$ 134,356
Research and development expense		1,197,957	1,326,134	$ 581,861
Unrealized gain (loss) on long term investments		(44,093)	$ (24,275)	$ (3,261)
Syros Pharmaceuticals, Inc.
License agreements
Number of program targets \| item	7
Upfront payment under license agreement	$ 10,000
Fair value of shares on the issuance date		$ 5,200
Ownership percentage (as a percent)		3.00%
Unrealized gain (loss) on long term investments		$ (3,700)
Syros Pharmaceuticals, Inc. \| Stock purchase agreement
License agreements
Purchase of common stock under Stock Purchase Agreement (in shares ) \| shares	0.8
Purchase price of common stock	$ 10,000
Per share price \| $ / shares	$ 12.61				$ 9.77
Lock-up period	12 months
Discount for lack of marketability	$ 100
Fair value of shares on the issuance date	7,600
Long term investment	7,600
Research and development expense	$ 2,400
Syros Pharmaceuticals, Inc. \| Amended stock purchase agreement
License agreements
Purchase of common stock under Stock Purchase Agreement (in shares ) \| shares	0.1
Purchase price of common stock	$ 1,400
Per share price \| $ / shares	$ 9.55
Syros Pharmaceuticals, Inc. \| Maximum
License agreements
Target selection and option exercise fee payment	$ 54,000
Syros Pharmaceuticals, Inc. \| Development and Regulatory Milestones \| Maximum
License agreements
Additional milestone payments under the license agreement	50,000
Syros Pharmaceuticals, Inc. \| Commercialization Milestones \| Maximum
License agreements
Additional milestone payments under the license agreement	$ 65,000

License Agreements - Innovent (Details) - Innovent $ in Millions	1 Months Ended
	Jan. 31, 2019 USD ($)	Dec. 31, 2018 USD ($) item
License agreements
Product candidates \| item		3
Subsequent Event
License agreements
Upfront and immediate milestone payment to be received under license agreement	$ 40.0
Regulatory Milestones \| Maximum
License agreements
Upfront and immediate milestone payment to be received under license agreement		$ 20.0
Development and Regulatory Milestones \| Maximum
License agreements
Upfront and immediate milestone payment to be received under license agreement		129.0
Commercialization Milestones \| Maximum
License agreements
Upfront and immediate milestone payment to be received under license agreement		$ 202.5

Property and Equipment - Property and equipment, net (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Property and equipment, net
Property and Equipment, gross	$ 422,982	$ 334,427
Less accumulated depreciation and amortization	(103,231)	(74,664)
Property and Equipment, net	319,751	259,763
Depreciation expense including amortization expense of leasehold improvements	32,300	24,600	$ 14,200
Office equipment
Property and equipment, net
Property and Equipment, gross	16,955	14,665
Laboratory equipment
Property and equipment, net
Property and Equipment, gross	61,697	45,048
Computer equipment
Property and equipment, net
Property and Equipment, gross	55,436	48,733
Land
Property and equipment, net
Property and Equipment, gross	10,122	5,350
Building and leasehold improvements
Property and equipment, net
Property and Equipment, gross	213,196	209,260
Construction in Progress
Property and equipment, net
Property and Equipment, gross	$ 65,576	$ 11,371

Property and Equipment - Narrative (Details) $ in Thousands		1 Months Ended
Property and Equipment - Narrative (Details) $ in Thousands	Feb. 28, 2018 ft²	Jul. 31, 2018 USD ($)	Feb. 28, 2018 ft²	Oct. 31, 2017 USD ($) ft²	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Property and equipment, net
Costs for architectural and engineering studies and initial ground preparation					$ 422,982	$ 334,427
Land
Property and equipment, net
Costs for architectural and engineering studies and initial ground preparation					10,122	5,350
Construction in Progress
Property and equipment, net
Costs for architectural and engineering studies and initial ground preparation					65,576	11,371
Building and leasehold improvements
Property and equipment, net
Costs for architectural and engineering studies and initial ground preparation					213,196	$ 209,260
Office Building in Wilmington, Delaware \| Building
Property and equipment, net
Square footage \| ft²				154,000
Office building				$ 91,300
Estimated useful life				P40Y
Office Building in Morges, Switzerland \| Building and leasehold improvements
Property and equipment, net
Initial term of agreement to rent	15 years		15 years
Renewal term of agreement to rent	20 years		20 years
Pending Land and Building Acquisition \| Office Building in Morges, Switzerland
Property and equipment, net
Square footage \| ft²	100,000		100,000
Pending Land and Building Acquisition \| Office Building in Morges, Switzerland \| Construction in Progress
Property and equipment, net
Capital assets					2,900
Pending Land and Building Acquisition \| Office Building in Morges, Switzerland \| Building and leasehold improvements
Property and equipment, net
Capital assets					15,800
Pending Land and Building Acquisition \| Land in Y-PARC, Switzerland's largest technology park, Yverdon \| Land
Property and equipment, net
Purchase price		$ 4,800
Pending Land and Building Acquisition \| Land in Y-PARC, Switzerland's largest technology park, Yverdon \| Construction in Progress
Property and equipment, net
Office building					$ 37,500

Intangible Assets and Goodwill (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Intangible Assets, Net
Amortization expense	$ 21,500	$ 21,500	$ 12,600
Amortization Expense
2019	21,536
2020	21,536
2021	21,536
2022	21,536
2023	21,536
Thereafter	107,684
Changes to carrying amount of goodwill
Changes to the carry amount of goodwill	$ 0	0
Licensed IP
Intangible assets
Weighted Average Useful Lives (Years)	12 years 6 months
Finite-lived intangible assets:
Gross Carrying Amount	$ 271,000	271,000
Accumulated Amortization	55,636	34,099
Net Carrying Amount	$ 215,364	$ 236,901

Accrued and Other Current Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Accrued and Other Current Liabilities
Royalties	$ 25,087	$ 21,433
Clinical related costs	98,607	110,037
Sales allowances	44,770	34,679
Construction in progress	7,673	9,945
Financing lease liability	18,696
Other current liabilities	34,568	22,807
Total accrued and other current liabilities	$ 229,401	$ 198,901
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List]	Total accrued and other current liabilities	Total accrued and other current liabilities

Convertible Notes - Components and Maturities (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Convertible Notes
Less current portion		$ 7,393
Convertible senior notes noncurrent	$ 17,434	16,608
Annual maturities of Convertible Notes
2020	19,094,000
Total debt	19,094,000
Carrying Amount
Convertible Notes
Convertible senior notes	17,434	24,001
Less current portion		7,393
Convertible senior notes noncurrent	$ 17,434	$ 16,608
Convertible Senior Notes 0.375 Percent Due 2018
Convertible Notes
Interest rate of debt (as a percent)	0.375%	0.375%	0.375%
Convertible senior notes		$ 7,400
Convertible Senior Notes 0.375 Percent Due 2018 \| Carrying Amount
Convertible Notes
Convertible senior notes		$ 7,393
Convertible Senior Notes 1.25 Percent Due 2020
Convertible Notes
Interest rate of debt (as a percent)	1.25%	1.25%	1.25%
Convertible senior notes	$ 17,400	$ 16,600
Convertible Senior Notes 1.25 Percent Due 2020 \| Carrying Amount
Convertible Notes
Convertible senior notes	$ 17,434	$ 16,608

Convertible Notes - Carrying Amount and Fair Value (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Carrying Amount
Convertible Notes
Convertible senior notes	$ 17,434	$ 24,001
Fair Value
Convertible Notes
Convertible senior notes	$ 25,073	$ 49,560
Convertible Senior Notes 0.375 Percent Due 2018
Convertible Notes
Interest rate of debt (as a percent)	0.375%	0.375%	0.375%
Convertible senior notes		$ 7,400
Convertible Senior Notes 0.375 Percent Due 2018 \| Carrying Amount
Convertible Notes
Convertible senior notes		7,393
Convertible Senior Notes 0.375 Percent Due 2018 \| Fair Value
Convertible Notes
Convertible senior notes		$ 14,129
Convertible Senior Notes 1.25 Percent Due 2020
Convertible Notes
Interest rate of debt (as a percent)	1.25%	1.25%	1.25%
Convertible senior notes	$ 17,400	$ 16,600
Convertible Senior Notes 1.25 Percent Due 2020 \| Carrying Amount
Convertible Notes
Convertible senior notes	17,434	16,608
Convertible Senior Notes 1.25 Percent Due 2020 \| Fair Value
Convertible Notes
Convertible senior notes	$ 25,073	$ 35,431

Convertible Notes - Narrative (Details) $ / shares in Units, $ in Millions		12 Months Ended
	Nov. 14, 2013 USD ($) item	Dec. 31, 2018 USD ($) $ / shares shares	Dec. 31, 2017 USD ($) shares	Dec. 31, 2016 USD ($) shares
Convertible Senior Notes 0.375 Percent Due 2018 and Convertible Senior Notes 1.25 Percent Due 2020
Convertible Notes
Number of days within 30 consecutive trading days in which the price of the entity's common stock must exceed the conversion price for the notes to be converted	20 days
Number of consecutive trading days during which the closing price of the entity's common stock must exceed the conversion price for at least 20 days in order for the notes to be convertible	30 days
Percentage of the closing sales price of common stock that the conversion price must exceed in order for the notes to be convertible (as a percent)	130.00%
Number of consecutive business days immediately after any five consecutive trading day period during the note measurement period \| item	5
Number of consecutive trading days before five consecutive business days during the note measurement period \| item	5
Conversion ratio, principal amount, denominator	1,000
Percentage of the trading price to the product of the last reported sale price of the common stock and the conversion rate, maximum (as a percent)	98.00%
Fair value of premium stock issued and cash paid			$ 48.4
Convertible Senior Notes 0.375 Percent Due 2018 and Convertible Senior Notes 1.25 Percent Due 2020 \| Director
Convertible Notes
Common stock issued in exchange of notes (in shares) \| shares			10,600,000
Convertible Senior Notes 0.375 Percent Due 2018
Convertible Notes
Aggregate principal amount of notes	$ 375.0
Carrying value of notes			$ 7.4
Interest rate of debt (as a percent)		0.375%	0.375%	0.375%
Conversion ratio, number of shares per principal amount		0.1932070
Conversion ratio, principal amount, denominator		1,000
Conversion price per share (in dollars per share) \| $ / shares		$ 51.76
Liability on notes on the date of issuance	299.4
Equity component in convertible notes	75.6
Debt discount and issuance costs			$ 0.3
Aggregate principal amount of notes converted			$ 367.2
Common stock issued in exchange of notes (in shares) \| shares		148,761	7,201,058	114
Premium stock issued in exchange of notes (in shares) \| shares			100,000
Value of premium shares issued			$ 12.6
Cash used to fund redemption of notes			2.0
Debt exchange expense		$ 1.4
Convertible Senior Notes 0.375 Percent Due 2018 \| Director
Convertible Notes
Aggregate principal amount of notes	250.0
Carrying value of notes				$ 259.0
Aggregate principal amount of notes converted			259.0
Convertible Senior Notes 1.25 Percent Due 2020
Convertible Notes
Aggregate principal amount of notes	375.0
Carrying value of notes		$ 17.4	$ 16.6
Interest rate of debt (as a percent)		1.25%	1.25%	1.25%
Conversion ratio, number of shares per principal amount		0.1932070
Conversion ratio, principal amount, denominator		1,000
Conversion price per share (in dollars per share) \| $ / shares		$ 51.76
Repurchase price as a percentage of principal		100.00%
Liability on notes on the date of issuance	274.8
Equity component in convertible notes	100.2
Debt discount and issuance costs		$ 1.7	$ 2.5
Aggregate principal amount of notes converted			$ 355.6
Common stock issued in exchange of notes (in shares) \| shares			7,095,350	77
Premium stock issued in exchange of notes (in shares) \| shares			200,000
Value of premium shares issued			$ 26.8
Cash used to fund redemption of notes			7.0
Debt exchange expense		$ 5.1
Convertible Senior Notes 1.25 Percent Due 2020 \| Director
Convertible Notes
Aggregate principal amount of notes	$ 250.0
Carrying value of notes				$ 274.5
Aggregate principal amount of notes converted			$ 274.5

Stockholders’ Equity - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands		12 Months Ended
	Sep. 07, 2017	Dec. 31, 2017	Dec. 31, 2018
Preferred stock, shares authorized		5,000,000	5,000,000
Preferred stock, shares outstanding		0	0
Common stock, shares authorized		400,000,000	400,000,000
Public issuance of common stock		4,945,000
Net proceeds from sale of stock		$ 649,387
Public Offering
Public issuance of common stock	4,945,000
Per share price	$ 131.46
Net proceeds from sale of stock	$ 649,400
Over-Allotment Option \| Maximum
Underwriter purchase option period	30 days
Shares available for purchase by underwriter (in shares)	741,750

Stockholders’ Equity - Narartive 2 (Details) - shares	1 Months Ended	6 Months Ended	12 Months Ended
Stockholders’ Equity - Narartive 2 (Details) - shares	Jul. 31, 2016	Jun. 30, 2016	Dec. 31, 2018	May 31, 2018	May 31, 2016	May 31, 2014	May 31, 2013	May 31, 2012	May 31, 2011
Stock Compensation Plans
Shares reserved for future issuance related to stock plans			7,716,849
Stock Incentive Plan 2010
Stock Compensation Plans
Shares authorized for issuance				36,753,475	30,753,475	24,753,475	21,753,475	16,553,475	12,553,475
Stock Options
Stock Compensation Plans
Expiration period	10 years	7 years
Stock Options \| Stock Incentive Plan 2010 \| Non-employee Director
Stock Compensation Plans
Expiration period			10 years

Stockholders’ Equity - Option activity (Details) - Stock Options - USD ($) $ / shares in Units, $ in Millions	1 Months Ended	6 Months Ended	12 Months Ended
	Jul. 31, 2016	Jun. 30, 2016	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Shares Available For Grant
Outstanding at the beginning of the period (in shares)			3,909,701
Additional authorization (in shares)			5,000,000
Options granted (in shares)			(3,245,314)
Options cancelled (in shares)			813,190
Outstanding at the end of the period (in shares)			6,477,577	3,909,701
Shares Subject to Outstanding Options, Shares
Outstanding at the beginning of the period (in shares)			11,206,553
Options granted (in shares)			3,245,314
Options exercised (in shares)			(1,353,518)
Options cancelled (in shares)			(813,190)
Outstanding at the end of the period (in shares)			12,285,159	11,206,553
Shares Subject to Outstanding Options, Weighted Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)			$ 68.36
Options granted (in dollars per share)			78.64
Options exercised (in dollars per share)			22.42
Options cancelled (in dollars per share)			94.82
Outstanding at the end of the period (in dollars per share)			$ 74.39	$ 68.36
Termination period	10 years	7 years
Vesting period	4 years	3 years
Stock option, other disclosures
Options exercisable and vested (in shares)			7,194,171	7,250,283	7,995,735
Intrinsic value of options exercised			$ 73.9	$ 264.2	$ 137.0
Intrinsic value of vested options			$ 118.5
Vesting after one year
Shares Subject to Outstanding Options, Weighted Average Exercise Price
Vesting period	1 year	1 year
Vesting Percentage	25.00%	33.00%
Remainder vesting
Shares Subject to Outstanding Options, Weighted Average Exercise Price
Vesting period	36 months	24 months

Stockholders’ Equity - Stock options outstanding (Details)	12 Months Ended
	Dec. 31, 2018 $ / shares shares
Options Outstanding
Number Outstanding (in shares) \| shares	12,285,159
Options Exercisable
Number Exercisable (in shares) \| shares	7,194,171
Range of Exercise Prices $2.80 - $17.79
Stock options outstanding
Exercise price, lower range limit (in dollars per share)	$ 2.80
Exercise price, upper range limit (in dollars per share)	$ 17.79
Options Outstanding
Number Outstanding (in shares) \| shares	588,741
Weighted Average Remaining Contractual Life	3 months 22 days
Weighted Average Exercise Price (in dollars per share)	$ 16.48
Options Exercisable
Number Exercisable (in shares) \| shares	588,741
Weighted Average Exercise Price (in dollars per share)	$ 16.48
Range of Exercise Prices $17.89 - $18.32
Stock options outstanding
Exercise price, lower range limit (in dollars per share)	17.89
Exercise price, upper range limit (in dollars per share)	$ 18.32
Options Outstanding
Number Outstanding (in shares) \| shares	1,474,120
Weighted Average Remaining Contractual Life	1 year 1 month 2 days
Weighted Average Exercise Price (in dollars per share)	$ 18.31
Options Exercisable
Number Exercisable (in shares) \| shares	1,474,120
Weighted Average Exercise Price (in dollars per share)	$ 18.31
Range of Exercise Prices $18.97 - $64.55
Stock options outstanding
Exercise price, lower range limit (in dollars per share)	18.97
Exercise price, upper range limit (in dollars per share)	$ 64.55
Options Outstanding
Number Outstanding (in shares) \| shares	1,652,452
Weighted Average Remaining Contractual Life	3 years 1 month 13 days
Weighted Average Exercise Price (in dollars per share)	$ 49.41
Options Exercisable
Number Exercisable (in shares) \| shares	1,439,924
Weighted Average Exercise Price (in dollars per share)	$ 47.60
Range of Exercise Prices $65.36 - $68.40
Stock options outstanding
Exercise price, lower range limit (in dollars per share)	65.36
Exercise price, upper range limit (in dollars per share)	$ 68.40
Options Outstanding
Number Outstanding (in shares) \| shares	142,566
Weighted Average Remaining Contractual Life	8 years 8 months 12 days
Weighted Average Exercise Price (in dollars per share)	$ 66.34
Options Exercisable
Number Exercisable (in shares) \| shares	19,555
Weighted Average Exercise Price (in dollars per share)	$ 67.39
Range of Exercise Prices $68.62 - $68.62
Stock options outstanding
Exercise price, lower range limit (in dollars per share)	68.62
Exercise price, upper range limit (in dollars per share)	$ 68.62
Options Outstanding
Number Outstanding (in shares) \| shares	1,426,578
Weighted Average Remaining Contractual Life	9 years 4 months 21 days
Weighted Average Exercise Price (in dollars per share)	$ 68.62
Range of Exercise Prices $68.82 - $81.16
Stock options outstanding
Exercise price, lower range limit (in dollars per share)	68.82
Exercise price, upper range limit (in dollars per share)	$ 81.16
Options Outstanding
Number Outstanding (in shares) \| shares	1,234,047
Weighted Average Remaining Contractual Life	4 years 2 months 27 days
Weighted Average Exercise Price (in dollars per share)	$ 73.59
Options Exercisable
Number Exercisable (in shares) \| shares	892,781
Weighted Average Exercise Price (in dollars per share)	$ 73.69
Range of Exercise Prices $83.83 - $94.63
Stock options outstanding
Exercise price, lower range limit (in dollars per share)	83.83
Exercise price, upper range limit (in dollars per share)	$ 94.63
Options Outstanding
Number Outstanding (in shares) \| shares	1,701,957
Weighted Average Remaining Contractual Life	7 years 8 months 23 days
Weighted Average Exercise Price (in dollars per share)	$ 88.55
Options Exercisable
Number Exercisable (in shares) \| shares	894,810
Weighted Average Exercise Price (in dollars per share)	$ 87.36
Range of Exercise Prices $95.34 - $95.76
Stock options outstanding
Exercise price, lower range limit (in dollars per share)	95.34
Exercise price, upper range limit (in dollars per share)	$ 95.76
Options Outstanding
Number Outstanding (in shares) \| shares	1,578,529
Weighted Average Remaining Contractual Life	6 years 1 month 2 days
Weighted Average Exercise Price (in dollars per share)	$ 95.62
Options Exercisable
Number Exercisable (in shares) \| shares	780,898
Weighted Average Exercise Price (in dollars per share)	$ 95.76
Range of Exercise Prices $100.81 - $113.64
Stock options outstanding
Exercise price, lower range limit (in dollars per share)	100.81
Exercise price, upper range limit (in dollars per share)	$ 113.64
Options Outstanding
Number Outstanding (in shares) \| shares	1,462,739
Weighted Average Remaining Contractual Life	7 years 7 months 17 days
Weighted Average Exercise Price (in dollars per share)	$ 112.39
Options Exercisable
Number Exercisable (in shares) \| shares	636,592
Weighted Average Exercise Price (in dollars per share)	$ 111.63
Range of Exercise Prices $115.19 - $138.52
Stock options outstanding
Exercise price, lower range limit (in dollars per share)	115.19
Exercise price, upper range limit (in dollars per share)	$ 138.52
Options Outstanding
Number Outstanding (in shares) \| shares	1,023,430
Weighted Average Remaining Contractual Life	8 years 1 month 2 days
Weighted Average Exercise Price (in dollars per share)	$ 128.30
Options Exercisable
Number Exercisable (in shares) \| shares	466,750
Weighted Average Exercise Price (in dollars per share)	$ 128.88

Stockholders’ Equity - RSU and PSU Narrative (Details) $ in Millions	1 Months Ended				6 Months Ended		12 Months Ended				60 Months Ended
	Jul. 31, 2018 shares	Jun. 30, 2018 shares	Jul. 31, 2016	Jan. 31, 2014 shares	Dec. 31, 2018 shares	Jun. 30, 2016	Dec. 31, 2018 USD ($) shares	Dec. 31, 2017 USD ($) shares	Dec. 31, 2016 USD ($) shares	Dec. 31, 2014 shares	Dec. 31, 2018 shares
Stock Compensation Plans
Allocated Share-based Compensation Expense \| $							$ 148.2	$ 133.1	$ 96.2
Outstanding (in shares)					545,751		545,751	769,202			545,751
Stock Options
Stock Compensation Plans
Vesting period			4 years			3 years
Assumed annualized forfeiture rate (as a percent)							5.00%
Restricted Stock Units (RSUs)
Stock Compensation Plans
Number of shares awarded for each RSU (in shares)							1
Percentage of units vesting at the end of each calendar year (as a percent)							25.00%
Vesting period						3 years	4 years
Granted (in shares)		190,000					898,598
Assumed annualized forfeiture rate (as a percent)							5.00%
Restricted Stock Units (RSUs) \| President And Chief Executive Officer
Stock Compensation Plans
Granted (in shares)				400,000
Number of units vesting at the end of each of the calendar years 2014 through 2019				0.1667
Vested (in shares)											266,667
Outstanding (in shares)					133,333		133,333				133,333
Performance Stock Units (PSUs)
Stock Compensation Plans
Vesting period	4 years
Allocated Share-based Compensation Expense \| $									$ 0.0
Multiplier conversion rate of units into common stock (as a percent)					83.00%				100.00%
Granted (in shares)	77,243	446,500					523,743	0	0	55,326
Assumed annualized forfeiture rate (as a percent)							5.00%
Performance Stock Units (PSUs) \| Minimum
Stock Compensation Plans
Vesting period		3 years
Performance Stock Units (PSUs) \| Maximum
Stock Compensation Plans
Vesting period		4 years
Multiplier conversion rate of units into common stock (as a percent)	150.00%
Performance Stock Units (PSUs) \| Long term incentive plan
Stock Compensation Plans
Granted (in shares)		106,500
Performance Stock Units (PSUs) \| Long term incentive plan \| Maximum
Stock Compensation Plans
Multiplier conversion rate of units into common stock (as a percent)		267.00%

Stockholders’ Equity - RSU and PSU award activity (Details) - $ / shares	1 Months Ended		12 Months Ended
	Jul. 31, 2018	Jun. 30, 2018	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2014
Shares Available For Grant
Shares Available for Grant Beginning Balance (in shares)			769,202
Additional authorization (in shares)			1,000,000
Shares Available for Grant Ending Balance (in shares)			545,751	769,202
Shares Subject to Outstanding Options, Shares
Outstanding at the beginning of the period (in shares)			1,178,660
Outstanding at the end of the period (in shares)			2,043,337	1,178,660
Shares Subject to Outstanding Options, Weighted Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)			$ 98.88
Outstanding at the end of the period (in dollars per share)			$ 80.35	$ 98.88
Restricted Stock Units (RSUs)
Shares Available For Grant
Granted (in shares)			(898,598)
Cancelled (in shares)			120,591
Shares Subject to Outstanding Options, Shares
Granted (in shares)		190,000	898,598
Cancelled (in shares)			(120,591)
Released (in shares)			(358,774)
Shares Subject to Outstanding Options, Weighted Average Exercise Price
Granted (in dollars per share)			$ 70.39
Cancelled (in dollars per share)			95.33
Released (in dollars per share)			$ 93.64
Performance Stock Units (PSUs)
Shares Available For Grant
Granted (in shares)			(523,743)
Cancelled (in shares)			78,299
Shares Subject to Outstanding Options, Shares
Granted (in shares)	77,243	446,500	523,743	0	0	55,326
Cancelled (in shares)			(78,299)
Shares Subject to Outstanding Options, Weighted Average Exercise Price
Granted (in dollars per share)			$ 66.18
Cancelled (in dollars per share)			$ 66.44

Stockholders’ Equity - Employee Stock Purchase Plan (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Stock Compensation Plans
Number of shares issued	233,712	157,277	126,648
Stock compensation expense	$ 148.2	$ 133.1	$ 96.2
Employee Stock
Stock Compensation Plans
Employment period for eligibility to participate in the plan	1 month
Number of shares issued	233,712	157,277	126,648
Stock compensation expense	$ 3.7	$ 3.2	$ 2.4
Remaining shares available	693,521
Employee Stock \| Minimum
Stock Compensation Plans
Number of employee working hours per week for eligibility to participate in the plan	20 hours

Stock Compensation (Details) - USD ($) $ / shares in Units, $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Stock compensation
Stock compensation expense	$ 148.2	$ 133.1	$ 96.2
Stock Compensation Expense Capitalized	$ 0.1
Weighted-average fair value assumptions
Valuation method	Black-Scholes valuation model
Employee Stock
Stock compensation
Stock compensation expense	$ 3.7	$ 3.2	$ 2.4
Weighted-average fair value assumptions
Average risk-free interest rates (as a percent)	2.62%	1.53%	0.90%
Average expected life (in years)	6 months	6 months	6 months
Volatility (as a percent)	46.00%	38.00%	48.00%
Weighted-average fair value (in dollars per share)	$ 15.80	$ 19.42	$ 18.82
Stock Options
Weighted-average fair value assumptions
Average risk-free interest rates (as a percent)	2.61%	1.80%	1.30%
Average expected life (in years)	5 years 3 months 4 days	5 years 3 months	4 years 11 months 27 days
Volatility (as a percent)	45.00%	49.00%	50.00%
Weighted-average fair value (in dollars per share)	$ 34.20	$ 53.41	$ 39.35
Dividend yield (as a percent)	0.00%
Unrecognized compensation
Unrecognized compensation cost for nonvested option (in dollars)	$ 99.7
Vesting period of recognition of the unrecognized compensation cost of nonvested awards	1 year 6 months
Restricted Stock Units (RSUs)
Unrecognized compensation
Unrecognized compensation cost for nonvested option (in dollars)	$ 61.4
Vesting period of recognition of the unrecognized compensation cost of nonvested awards	1 year 6 months
Performance Stock Units (PSUs)
Stock compensation
Stock compensation expense			$ 0.0
Unrecognized compensation
Unrecognized compensation cost for nonvested option (in dollars)	$ 29.1
Vesting period of recognition of the unrecognized compensation cost of nonvested awards	3 years

Income Taxes - Income before provision (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Income (loss) from operations before income taxes
Income (loss) before income taxes	$ 115,347	$ (312,290)	$ 107,404
U.S.
Income (loss) from operations before income taxes
Income (loss) before income taxes	478,050	36,493	272,574
Non-U.S.
Income (loss) from operations before income taxes
Income (loss) before income taxes	$ (362,703)	$ (348,783)	$ (165,170)

Income Taxes - Provision for income taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Current:
State	$ 5,010	$ 486	$ 2,700
Foreign	1,303	1,171	482
Current provision for income taxes	6,313	1,657	3,182
Deferred:
State	111	(805)
Foreign	(570)
Deferred provision for income taxes	(459)	(805)
Provision (benefit) for income taxes	$ 5,854	$ 852	$ 3,182

Income Taxes - Reconciliation of income taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Reconciliation of income taxes at the U.S. federal statutory rate to the provision for income taxes
Provision (benefit) at U.S. federal statutory rate	$ 24,223	$ (109,302)	$ 37,591
Unbenefited net operating losses and tax credits	(51,861)	(99,254)	(47,410)
Excess tax benefits related to share-based compensation	(8,233)	(81,021)	(29,541)
Deferred tax impact of Tax Cuts and Jobs Act of 2017		196,751
Foreign tax rate differential	37,061	86,777	39,975
Non-deductible officer compensation	4,114	6,351	2,061
Other	550	550	506
Provision (benefit) for income taxes	$ 5,854	$ 852	$ 3,182
Federal corporate tax rate (as a percent)	21.00%	35.00%
Deferred tax assets:
Net operating loss carry forwards	$ 148,142	$ 259,189
Federal and state research credits	402,798	333,311
Capitalized research and development	53,871	37,044
Deferred revenue and accruals	9,443	11,721
Non-cash compensation	58,194	44,647
Acquisition-related contingent consideration	43,676	41,831
Intangibles, net	93,730	94,249
Long term investments	23,621	12,244
Other	22,211	12,815
Total gross deferred tax assets	855,686	847,051
Less valuation allowance for deferred tax assets	(836,992)	(834,783)
Net deferred tax assets	18,694	12,268
Deferred tax liabilities:
Property and equipment	(17,424)	(11,463)
Total gross deferred tax liabilities	(17,424)	(11,463)
Net deferred income taxes	$ 1,270	$ 805

Income Taxes - NOL (Details) $ in Thousands	Dec. 31, 2018 USD ($)
Federal
Operating Loss Carryforwards
Net operating loss carryforwards	$ 216,970
State
Operating Loss Carryforwards
Net operating loss carryforwards	343,022
Foreign
Operating Loss Carryforwards
Net operating loss carryforwards	$ 757,312

Income Taxes - Tax Credit Carryforwards (Details) $ in Thousands	Dec. 31, 2018 USD ($)
Orphan drug tax credit carryforwards
Tax Credit Carryforward
Tax credit carryforward	$ 210,242
Federal \| Research and development
Tax Credit Carryforward
Tax credit carryforward	197,400
State \| Research and development
Tax Credit Carryforward
Tax credit carryforward	$ 25,247

Income Taxes - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
Income Taxes - Narrative (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Income Taxes
Increase (decrease) in valuation allowance	$ 2,200	$ 14,600	$ 277,300
Deferred tax impact of Tax Cuts and Jobs Act of 2017		196,751
Reconciliation of the beginning and ending amount of unrecognized tax benefits
Balance at beginning of period	18,022	10,798
Additions related to prior periods tax positions	2,098	2,571
Reductions related to prior periods tax positions		(821)
Additions related to current period tax positions	2,466	5,555
Reductions due to lapse of applicable statute of limitations	(130)	(81)
Currency translation adjustment	(61)
Balance at end of period	22,395	18,022	10,798
Interest and penalties as a component of income tax expense	$ 100	$ 300	$ 300

Net Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Basic Net Income (Loss) Per Share
Basic net income (loss)									$ 109,493	$ (313,142)	$ 104,222
Weighted average common shares outstanding	213,013,000	212,627,000	212,210,000	211,681,000	211,125,000	206,796,000	205,141,000	195,260,000	212,383,000	204,580,000	187,873,000
Basic net income (loss) per share	$ 0.32	$ 0.14	$ 0.25	$ (0.19)	$ (0.71)	$ 0.17	$ (0.06)	$ (0.96)	$ 0.52	$ (1.53)	$ 0.55
Diluted Net Income (Loss) Per Share
Diluted net income (loss)									$ 109,493	$ (313,142)	$ 104,222
Weighted average common shares outstanding	213,013,000	212,627,000	212,210,000	211,681,000	211,125,000	206,796,000	205,141,000	195,260,000	212,383,000	204,580,000	187,873,000
Dilutive stock options and RSU’s									3,252,000		6,252,000
Weighted average shares used to compute diluted net income (loss) per share	216,042,000	215,964,000	215,103,000	211,681,000	211,125,000	212,610,000	205,141,000	195,260,000	215,635,000	204,580,000	194,125,000
Diluted net income (loss) per share	$ 0.32	$ 0.14	$ 0.24	$ (0.19)	$ (0.71)	$ 0.17	$ (0.06)	$ (0.96)	$ 0.51	$ (1.53)	$ 0.54
Anti-dilutive securities
Potential common shares excluded from diluted net loss per share computation									8,624,931	13,103,527	17,278,857
Stock Options
Anti-dilutive securities
Potential common shares excluded from diluted net loss per share computation									8,255,992	12,585,213	2,792,424
Convertible Senior Notes 0.375 Percent Due 2018
Anti-dilutive securities
Potential common shares excluded from diluted net loss per share computation										149,375	7,245,149
Convertible Senior Notes 1.25 Percent Due 2020
Anti-dilutive securities
Potential common shares excluded from diluted net loss per share computation									368,939	368,939	7,241,284

Employee Benefit Plans - Defined Contribution Plan (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Defined Contribution Plan
Defined contribution expense	$ 10.5	$ 8.9	$ 6.6
European defined contribution plans
Defined Contribution Plan
Defined contribution expense	$ 1.4	$ 1.0	$ 0.3

Employee Benefit Plans - Defined Benefit Pension Plann (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Benefit obligation assumptions
Discount rate ( as a percentage)	0.75%	0.75%
Rate of compensation increase ( as a percentage)	2.25%	2.00%
Expected return on plan assets (as a percentage)	0.75%	0.75%
Periodic benefit cost assumptions
Discount rate ( as a percentage)		0.75%
Rate of compensation increase ( as a percentage)		1.50%
Expected return on plan assets (as a percentage)	0.75%	0.75%
Changes in the obligations
Benefit obligation, beginning of the year	$ 37,584	$ 23,787
Employer Service cost	4,450	2,836	$ 1,225
Interest cost	278	190	76
Plan participants contributions	1,282	1,101
Actuarial loss	698	4,514
Plan change		1,430
Benefit payments from fund	2,268	2,853
Expenses paid from assets	51	36
Translation (gain) loss	(471)	909
Benefit obligation, end of the year	46,038	37,584	23,787
Changes in plan assets
Fair value of plan assets, beginning of year	24,191	16,699
Actual return on plan assets	95	88
Employer contributions	3,133	2,891
Plan participants contributions	1,282	1,101
Benefit payments from fund	1,910	2,853
Expenses paid from assets	51	36
Translation gain (loss)	(192)	595
Fair value of plan assets, end of year	30,368	24,191	$ 16,699
Unfunded liability, end of year	15,670	13,393
Accumulated benefit obligation	$ 39,800	$ 33,100
Minimum
Periodic benefit cost assumptions
Discount rate ( as a percentage)	0.75%
Rate of compensation increase ( as a percentage)	2.00%
Maximum
Periodic benefit cost assumptions
Discount rate ( as a percentage)	1.00%
Rate of compensation increase ( as a percentage)	2.25%

Employee Benefit Plans - Net Periodic Benefit Cost (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Net periodic benefit cost
Service cost	$ 4,450	$ 2,836	$ 1,225
Interest cost	278	190	76
Expected return on plan assets	(195)	(138)	(59)
Amortization of prior service cost	179	154
Amortization of actuarial losses	265	141
Net periodic benefit cost	$ 4,977	$ 3,183	$ 1,242

Employee Benefit Plans - Other changes in the plan assets and benefit obligation (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Other changes recognized in accumulated other comprehensive income (loss)
Pension liability, beginning of year	$ 8,450	$ 2,750
Plan change		1,276	$ 506
Net prior service cost	(179)	(140)
Net loss	875	4,564	2,244
Pension liability, end of year	9,146	$ 8,450	$ 2,750
Amortization into next prior service cost over the next fiscal year	200
Amortization of actuarial loss over the next fiscal year	$ 300

Employee Benefit Plans - Expected benefit payments (Details) $ in Thousands	Dec. 31, 2018 USD ($)
Expected employer contributions
Expected contributions	$ 3,600
Expected benefit payments
2019	1,647
2020	1,759
2021	2,020
2022	2,131
2023	1,973
2024-2027	11,790
Total	$ 21,320

Commitments and Contingencies (Details) $ in Thousands	12 Months Ended
Commitments and Contingencies (Details) $ in Thousands	Dec. 31, 2018 USD ($) ft²	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)
Rent expense	$ 9,400	$ 8,200	$ 5,400
Future non-cancelable minimum payments under operating leases
2019	12,909
2020	8,589
2021	3,899
2022	2,011
2023	1,155
Total minimum lease payments	28,563
Future non-cancelable minimum payments under capital leases
2019	688
2020	472
Total minimum lease payments	1,160
Future non-cancelable minimum payments under direct financing
2021	466
2022	2,793
2023	2,793
Thereafter	35,850
Total minimum lease payments	$ 41,902
Chadds Ford, Pennsylvania
Office leases
Square footage \| ft²	112,000
Wilmington, Delaware
Office leases
Square footage \| ft²	100,000
Europe and Japan
Office leases
Square footage \| ft²	63,000

Segment Information (Details) $ in Thousands	3 Months Ended								12 Months Ended
Segment Information (Details) $ in Thousands	Dec. 31, 2018 USD ($)	Sep. 30, 2018 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Sep. 30, 2017 USD ($)	Jun. 30, 2017 USD ($)	Mar. 31, 2017 USD ($)	Dec. 31, 2018 USD ($) item	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)
Revenues from External Customers and Long-Lived Assets [Line Items]
Number of operating segments \| item									1
Total revenues	$ 528,402	$ 449,683	$ 521,516	$ 382,282	$ 444,156	$ 381,534	$ 326,444	$ 384,082	$ 1,881,883
Property and equipment, net	319,751				259,763				319,751	$ 259,763
U.S.
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenues									1,800,000	1,500,000	$ 1,100,000
Property and equipment, net	252,500				252,400				252,500	252,400
Europe
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenues									79,900	66,900	$ 29,600
Property and equipment, net	$ 67,300				$ 7,400				$ 67,300	$ 7,400

Interim Consolidated Financial Information (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Interim Consolidated Financial Information (Unaudited)
Revenues	$ 528,402	$ 449,683	$ 521,516	$ 382,282	$ 444,156	$ 381,534	$ 326,444	$ 384,082	$ 1,881,883
Net income (loss)	$ 69,063	$ 29,176	$ 52,394	$ (41,140)	$ (149,629)	$ 36,054	$ (12,484)	$ (187,083)	$ 109,493	$ (313,142)	$ 104,222
Basic net income (loss) per share	$ 0.32	$ 0.14	$ 0.25	$ (0.19)	$ (0.71)	$ 0.17	$ (0.06)	$ (0.96)	$ 0.52	$ (1.53)	$ 0.55
Diluted net income (loss) per share	$ 0.32	$ 0.14	$ 0.24	$ (0.19)	$ (0.71)	$ 0.17	$ (0.06)	$ (0.96)	$ 0.51	$ (1.53)	$ 0.54
Shares used in computation of basic net income (loss) per share	213,013,000	212,627,000	212,210,000	211,681,000	211,125,000	206,796,000	205,141,000	195,260,000	212,383,000	204,580,000	187,873,000
Shares used in computation of diluted net income (loss) per share	216,042,000	215,964,000	215,103,000	211,681,000	211,125,000	212,610,000	205,141,000	195,260,000	215,635,000	204,580,000	194,125,000

Interim Consolidated Financial Information (Unaudited) - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Interim Consolidated Financial Information (Unaudited)
Revenues	$ 528,402	$ 449,683	$ 521,516	$ 382,282	$ 444,156	$ 381,534	$ 326,444	$ 384,082	$ 1,881,883
Product revenues, net
Interim Consolidated Financial Information (Unaudited)
Revenues	399,200	367,700	365,500	334,500	321,800	322,000	291,700	264,800	1,466,900	$ 1,200,312	$ 882,404
Product royalty revenues
Interim Consolidated Financial Information (Unaudited)
Revenues									234,780	160,791	110,711
Product royalty revenues \| Non-U.S.
Interim Consolidated Financial Information (Unaudited)
Revenues	69,200	61,900	56,000	47,700	52,300	44,500	34,800	29,200
Milestone and contract revenues
Interim Consolidated Financial Information (Unaudited)
Revenues	$ 60,000	$ 20,000	$ 100,000	$ 0	$ 70,000	$ 15,000	$ 0	$ 90,000	$ 180,000	$ 175,000	$ 112,512