Incyte Corporation (INCY, NASDAQ)
Industry: Biotechnology
Annual report, fiscal year 2012


## MAKING
a
difference

INCYTE 2012 ANNUAL REPORT
TO STOCKHOLDERS



“You must be an advocate for yourself or your loved one. You have to learn as much as you can and be willing to investigate and take an active role in managing your disease.”

Finding Support page 7

Bonnie, a patient advocate who leads a support group for patients with myeloproliferative neoplasms, and her husband, Joe

Treating Myelofibrosis

Building a Community

Changing the Focus

Investing in the Future






## To Our Stockholders:

A decade ago, a core team of experienced scientists joined me with the vision to build a leading drug discovery, development and commercial company capable of making a compelling difference in patients' lives. With this strong scientific team, we transformed the concept of JAK inhibition into a drug which, in just six years, became our first FDA-approved product in late 2011 – leading to Incyte's evolution into a commercial company in 2012.

## The Year of Jakafi \( ^{®} \) 

The FDA approval of Jakafi \( ^{®} \)  (ruxolitinib) was a significant milestone for patients with intermediate or high-risk myelofibrosis (MF), their families and their physicians, as well as for Incyte. As the first JAK inhibitor approved for any indication, Jakafi attests to our leadership position in this important class of drugs. In 2012 — our first year on the market with Jakafi — we built a strong foundation for sustained long-term growth.

## 2013 KEY BUSINESS GOALS

> Solidify the role of Jakafi \( ^{®} \)  (ruxolitinib) as the standard-of-care treatment for intermediate or high-risk myelofibrosis by improving persistency and driving new patient starts

Complete the Phase III clinical trials of ruxolitinib in polycythemia vera and prepare to file for regulatory approval in 2014

Report Phase II trial results of ruxolitinib in pancreatic cancer and determine next steps in development

Continue to invest in the ongoing development of baricitinib for rheumatoid arthritis and potentially other inflammatory conditions, in partnership with Lilly

Complete proof-of-concept studies of JAK1 inhibitor INCB39110 in myelofibrosis, rheumatoid arthritis and psoriasis to determine appropriate future development programs

Evaluate the potential of IDO inhibitor INCB24360 in metastatic melanoma and ovarian cancer

Expand the depth and breadth of the R&D pipeline through focused discovery efforts in the areas of oncology and inflammatory diseases



Physicians have gained more experience with the medicine, and we are seeing an increasing number prescribe Jakafi for more than one patient. At the same time, important data have been published in medical journals and presented at major scientific meetings highlighting the significant benefits received by patients taking Jakafi. Additionally, our collaboration partner Novartis has commercial rights to Jakafi outside the United States and received product approval from the European Commission, which will lead to tiered royalties for Incyte ranging from the upper teens to the mid-twenties.



Paul A. Friedman, M.D.
President and Chief Executive Officer

By partnering with and supporting the MPN Coalition, we initiated the first Myelofibrosis Awareness Day in September 2012, which included webinars, symposia, continuing medical education programs, and publications for patients, health care professionals and caregivers. Additionally, the MPN Coalition launched a
website, www.myelofibrosisawareness.org, to provide a centralized source of information about MF.

We’re dedicating the following pages to patients with MF and the people making a difference in their lives. I hope you read their stories to understand more about this debilitating disease, to learn how Jakafi is offering patients hope, and to see how the entire Incyte team is dedicated to helping build a community of support and knowledge so that, together, we can make a difference.

## A Robust Pipeline

As proud as we are of what we have accomplished with Jakafi, Incyte is about more than one product. Thanks to our extensive R&D efforts, we have a robust pipeline that includes additional potential indications for Jakafi, such as polycythemia vera and pancreatic cancer.

Our second JAK1 and JAK2 inhibitor, baricitinib, is licensed to Eli Lilly and Company and is currently in Phase III trials in patients with rheumatoid arthritis. In exchange for our funding 30 percent of the associated development costs in rheumatoid arthritis, we would receive tiered royalties ranging up to the high twenties on potential future worldwide sales once the product is approved. Additionally, like Jakafi in oncology, the prospects for baricitinib in other inflammatory diseases are substantial, including psoriasis and diabetic nephropathy.

Our knowledge of, and commitment to, the JAK inhibitor space extends well beyond Jakafi and baricitinib. We look forward to advancing our earlier stage selective inhibitors of the JAK1 enzyme, such as INCB39110, with which we are currently conducting proof-of-concept studies in a range of conditions. These efforts will continue to solidify our industry-leading position in the discovery, development and commercialization of the JAK inhibitor class of drugs.

In addition to our JAK programs, we have other compounds in early stage clinical development, including our inhibitor of the c-MET kinase, licensed to Novartis, for solid tumors, and our proprietary highly novel indoleamine dioxygenase (IDO) inhibitor for melanoma and ovarian cancer.



In closing, I want to thank our employees for their relentless focus on achieving our vision. The Incyte team has demonstrated it truly has the drive to discover and the experience to deliver. We are making a difference in the lives of patients with MF, and we expect our continued efforts in R&D to help deliver benefits to an even greater spectrum of patients with other complex conditions and continue to build significant, sustainable shareholder value.
Sincerely,



Paul A. Friedman, M.D.
President and Chief Executive Officer
April 2013

## Product Pipeline

<table><tr><td>DISEASE — COMPOUND — TARGET</td><td>DISCOVERY/ PRECLINICAL</td><td>PHASE I</td><td>PHASE II</td><td>PHASE III</td><td>APPROVED</td></tr><tr><td colspan="6">ONCOLOGY</td></tr><tr><td>Myelofibrosis — Jakafi® ruxolitinib[a,b] — JAK1 and JAK2</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Polycythemia vera — ruxolitinib[a,b] — JAK1 and JAK2</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Essential thrombocythemia — ruxolitinib[a,b] — JAK1 and JAK2</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Pancreatic Cancer — ruxolitinib[a,b] — JAK1 and JAK2</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Solid/hematologic tumors[c] — ruxolitinib[a,b] — JAK1 and JAK2</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Solid tumors — INCB28060[d] — c-MET</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Metastatic melanoma — INCB24360 — IDO</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Ovarian cancer — INCB24360 — IDO</td><td></td><td></td><td></td><td></td><td></td>}
 <tr><td>Myelofibrosis — INCB39110 — JAK1</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Other Programs</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td colspan="6">INFLAMMATION</td></tr><tr><td>Rheumatoid arthritis — baricitinib[e,f] — JAK1 and JAK2</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Psoriasis — baricitinib[e,f] — JAK1 and JAK2</td><td></td><td></td><td></td><td></td><td></td>
The image is too blurry to be recognized.
 <tr><td>Diabetic Nephropathy — baricitinib[e,f] — JAK1 and JAK2</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Rheumatoid Arthritis — INCB39110 — JAK1</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Psoriasis — INCB39110 — JAK1</td><td></td><td></td><td></td><td></td><td></td>
The image is too blurry to be recognized.
 <tr><td>Other programs</td><td></td><td></td><td></td><td></td><td></td></tr></table>

a. Formerly INCB18424 b. Incyte: U.S. rights; Novartis: ex U.S. rights c. Investigator-sponsored trials d. Novartis worldwide rights e. Formerly LY3009104 (INCB28050) f. Lilly: worldwide rights



Dan, a patient with myelofibrosis who has participated in a clinical trial for Jakafi \( ^{®} \)  (ruxolitinib) since March 2010



“Jakafi brought me hope. Since I’ve been taking Jakafi, my life is more like it used to be. I am now able to see a future in front of me that I couldn’t before.”

## Treating Myelofibrosis

Myelofibrosis (MF) is a life-threatening blood cancer characterized by bone marrow failure, enlarged spleen (splenomegaly) and debilitating symptoms. MF is typically diagnosed in people between 50 to 80 years of age, but can occur at any age. It is a progressive disease that worsens over time. The average survival of people with primary MF is about five years, but life expectancy varies by individual. By developing the first FDA-approved treatment for intermediate or high-risk myelofibrosis, Incyte expects to make a meaningful difference in the lives of patients affected by the disease and anticipates improving their outcome over time.

For more information about myelofibrosis, visit www.jakafi.com/consumer.



“Myelofibrosis is a disease that impacts everyone differently. Since this type of cancer is very rare, it is important for us to collaborate with other groups and provide educational resources that could help demystify this disease and help patients establish a meaningful dialogue with their health care team.”
Building a Community
Incyte supports the multiple advocacy organizations that form the MPN Coalition, including CancerCare, Cancer Support Community, Leukemia & Lymphoma Society, MPN Advocacy & Education International, MPN Education Foundation, MPN Research Foundation, and National Organization for Rare Diseases. These organizations came together to provide a forum for discussion of and action on needs and challenges faced by those living with and affected by myeloproliferative neoplasms (MPNs), including myelofibrosis.

In September 2012, Incyte and the MPN Coalition launched the first MPN Awareness Day, an annual event to focus on the need for increased awareness and education for physicians, patients and caregivers about myelofibrosis and other MPNs.

For more information, visit www.myelofibrosisawareness.org.



Kim Thiboldeaux, President and CEO of the Cancer Support Community, a founding member of the MPN Coalition



“The long-term data for Jakafi continue to demonstrate tangible benefits for patients with intermediate or high-risk myelofibrosis, including a potential improvement in overall survival. And the medicine looks promising to treat other oncologic conditions in the future.”

Srdan Verstovsek, MD, PhD, Professor, Department of Leukemia, Division of Cancer Medicine, The University of Texas MD Anderson Cancer Center in Houston

## Changing the Focus

Historically, when managing patients with myelofibrosis, physicians had limited options. The development and introduction of Jakafi \( ^{®} \)  (ruxolitinib), the first medicine to be approved by the FDA for the treatment of intermediate or high-risk myelofibrosis, offered a new focus and hope for physicians and their patients. The novel use of patient-reported outcomes (PROs) in the Phase III COMFORT-I trial allowed Incyte to include improvement of symptoms in the FDA-approved label, in addition to the reduction in spleen volume seen in Jakafi-treated patients, and this information has brought a greater appreciation of the symptomatic burden experienced by these patients.







Joe, a patient with myelofibrosis who has participated in a clinical trial for Jakafi \( ^{®} \)  (ruxolitinib) since September 2008

“When I was diagnosed with myelofibrosis, there were only two resources available for patients —the MPN Research Foundation and the MPN Education Foundation. It’s good to see more patient groups committed to helping MPN patients and their families.”
Finding Support
Incyte learned about unmet needs from respected patient groups. Our collaboration resulted in expanded programs to help both patients and their loved ones. Patients can learn ways to cope with myelofibrosis, improve communication with their health care team, find reliable information, and help manage financial difficulties.

For more information, visit the following websites:

www.myelofibrosisawareness.org/find-support

www.incyte.com/jakafi/incytecares




Bob Niblack, patient advocate whose wife, Joyce, co-founded the MPN Education Foundation in 2004

“Do your homework. Put yourself into competent medical care. Take control of your disease. And, most of all, don’t lose hope.”
Investing in the Future
Patient-led organizations, such as the MPN Research Foundation and the MPN Education Foundation, were established, in part, to encourage and support research into new treatments for myeloproliferative neoplasms (MPNs).

The MPN Research Foundation has awarded more than $8 million for MPN research since 1999, and the MPN Education Foundation has established an online support group of approximately 3,000 members, who are a resource for MPN researchers. Both organizations are also committed to providing education and support to patients.
For more information about the MPN Research Foundation, visit www.mpnresearchfoundation.org

For more information about the MPN Education Foundation and Joyce Niblack's story, visit www.mpdfinfo.org/joycesstory.php



## BOARD OF DIRECTORS

Richard U. De Schutter
Chairman of the Board
Formerly Chairman and
Chief Executive Officer
DuPont Pharmaceuticals
Company

Paul A. Friedman, M.D.
President and
Chief Executive Officer
Incyte Corporation

Barry M. Ariko
Formerly President, Chief
Executive Officer and Chairman
Mirapoint Inc.

Julian C. Baker
Managing Partner
Baker Brothers Investments

Paul A. Brooke
Founder and Managing Director
venBio LLC

Wendy L. Dixon, Ph.D.
Formerly Chief Marketing
Officer and President,
Global Marketing
Bristol-Myers Squibb Company

## FORWARD-LOOKING STATEMENTS

Except for the historical information set forth herein, the matters set forth in this annual report, including statements regarding our plans and expectations with respect to Jakafi \( ^{®} \)  (ruxolitinib) including its potential efficacy and therapeutic and commercial value, anticipated future accomplishments in drug discovery, development and product commercialization, plans and expected timelines regarding our pipeline and advancing our drug candidates through clinical trials and regulatory submissions, potential therapeutic and commercial value, including attributes and indications, of our drug candidates, and our business goals for 2013 contain predictions, estimates and other forward-looking statements.

These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including unanticipated developments in and risks related to the efficacy or safety of Jakafi, the acceptance of Jakafi in the marketplace, risks related to market competition, the results of further research and development, the high degree of risk and uncertainty associated with drug development, clinical trials and the regulatory approval processes, risks related to the timing of and patient enrollment in clinical trials, the risk that results of clinical trials may be unsuccessful or insufficient to meet applicable regulatory standards, unanticipated developments in and risks related to the efficacy or safety of our compounds in clinical trials, risks associated with our dependence on our relationships with our collaboration partners, and other risks detailed from time to time in our reports filed with the Securities and Exchange Commission, including our Form 10-K for the year ended December 31, 2012. Incyte disclaims any intent or obligation to update these forward-looking statements.

Jakafi is a registered trademark of Incyte Corporation.

Eric H. Siegel
Executive Vice President and
General Counsel

Paula J. Swain
Executive Vice President,
Human Resources

Wenqing Yao, Ph.D.
Senior Vice President,
Discovery Chemistry

STOCKHOLDER INFORMATION

Transfer Agent and Registrar
Computershare
PO Box 43078
Providence, RI 02940-3078
or

250 Royal Street

Canton, MA 02021

Phone: 877/272-1536

TDD for Hearing Impaired: 800/231-5469

Foreign Shareowners: 201/680-6578

TDD Foreign Shareowners: 201/680-6610

www.computershare.com/investor

Annual Meeting
The Annual Meeting of
Stockholders will be held
May 30, 2013, at 10:00 a.m.,
Eastern Daylight Time, at the
Hotel du Pont, 11th and
Market Streets, Wilmington,
Delaware 19801

Outside Counsel
Pillsbury Winthrop Shaw
Pittman LLP

Independent Registered
Public Accounting Firm
Ernst & Young LLP

Market Information
Incyte Common Stock
trades on The Nasdaq
Global Select Market
under the symbol INCY.

## Investor Relations

You can obtain recent press releases and other publicly available information on Incyte by visiting our website at www.incyte.com.

## Contact

Pamela Murphy
Vice President, Investor
Relations and Corporate
Communications
Email: pmurphy@incyte.com

Corporate Headquarters
Incyte Corporation
Experimental Station
Route 141 & Henry Clay Road
Building E336
Wilmington, Delaware 19880
855/446-2983



## Incyte

The Drive to Discover. The Experience to Deliver.

Experimental Station • Route 141 & Henry Clay Road • Building E336 • Wilmington, DE 19880
Tel: 1.855.4.INCYTE (1.855.446.2983) • Tel: 302.498.6700 • www.incyte.com