Incyte (INCY) 10-Q 4 May 17 2017 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2017	Apr. 27, 2017
Document and Entity Information
Entity Registrant Name	INCYTE CORP
Entity Central Index Key	879,169
Document Type	10-Q
Document Period End Date	Mar. 31, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		204,774,409
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q1

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016	[1]
Current assets:
Cash and cash equivalents	$ 361,823	$ 652,343
Marketable securities-available-for-sale	150,132	156,203
Accounts receivable	244,975	148,758
Inventory	3,961	4,106
Prepaid expenses and other current assets	58,284	32,768
Total current assets	819,175	994,178
Restricted cash and investments	902	886
Long term investment	158,322	31,987
Inventory	14,548	15,193
Property and equipment, net	193,211	167,679
Other intangible assets, net	253,053	258,437
In-process research and development	12,000	12,000
Goodwill	155,593	155,593
Other assets, net	543	2,644
Total assets	1,607,347	1,638,597
Current liabilities:
Accounts payable	86,327	75,599
Accrued compensation	54,622	50,904
Interest payable	135	762
Accrued and other current liabilities	142,104	126,697
Acquisition-related contingent consideration	21,528	19,539
Total current liabilities	304,716	273,501
Convertible senior notes	41,604	651,481
Acquisition-related contingent consideration	282,472	281,461
Other liabilities	12,621	12,687
Total liabilities	641,413	1,219,130
Stockholders' equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized; none issued or outstanding as of December 31, 2016 and December 31, 2015
Common stock, $0.001 par value; 400,000,000 shares authorized; 204,563,710 and 188,848,752 shares issued and outstanding as of March 31, 2017 and December 31, 2016, respectively	205	189
Additional paid-in capital	2,824,298	2,096,929
Accumulated other comprehensive income (loss)	5,377	(2,886)
Accumulated deficit	(1,863,946)	(1,674,765)
Total stockholders' equity	965,934	419,467
Total liabilities and stockholders' equity	$ 1,607,347	$ 1,638,597
[1]	The condensed consolidated balance sheet at December 31, 2016 has been derived from the audited financial statements at that date.

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2017	Dec. 31, 2016
CONDENSED 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	204,563,710	188,848,752
Common stock, shares outstanding	204,563,710	188,848,752

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Revenues:
Product revenues, net	$ 264,807	$ 183,267
Product royalty revenues	29,221	21,903
Contract revenues	90,000	58,214
Other revenues	54	80
Total revenues	384,082	263,464
Costs and expenses:
Cost of product revenues (including definite-lived intangible amortization)	14,824	6,005
Research and development	407,972	156,824
Selling, general and administrative	87,234	64,596
Change in fair value of acquisition-related contingent consideration	7,356
Total costs and expenses	517,386	227,425
Income (loss) from operations	(133,304)	36,039
Interest and other income, net	1,204	1,492
Interest expense	(5,939)	(10,134)
Unrealized loss on long term investments	(5,814)	(2,950)
Expense related to senior note conversions	(54,130)
Income (loss) before provision (benefit) for income taxes	(197,983)	24,447
Provision (benefit) for income taxes	(10,900)	400
Net income (loss)	$ (187,083)	$ 24,047
Net income (loss) per share:
Basic	$ (0.96)	$ 0.13
Diluted	$ (0.96)	$ 0.12
Shares used in computing net income (loss) per share:
Basic	195,260	187,184
Diluted	195,260	192,625

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Net income (loss)	$ (187,083)	$ 24,047
Other comprehensive income:
Foreign currency translation	(7)
Unrealized gains on marketable securities and long term investment, net of tax	8,224	1,028
Reclassification adjustment for realized loss on marketable securities		178
Defined benefit pension obligations, net of tax	46
Other comprehensive income	8,263	1,206
Comprehensive income (loss)	$ (178,820)	$ 25,253

CONDENSED CONSOLIDATED STATEME6

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017		Mar. 31, 2016
Cash flows from operating activities:
Net income (loss)	$ (187,083)		$ 24,047
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization	15,027		11,058
Stock-based compensation	30,613		20,769
Expense related to senior note conversions	54,130
Other, net	71		178
Unrealized loss on long term investment	5,814		2,950
Change in fair value of acquisition-related contingent consideration	7,356
Changes in operating assets and liabilities:
Accounts receivable	(96,217)		13,170
Prepaid expenses and other assets	(25,094)		(3,667)
Inventory	790		752
Accounts payable	10,728		1,814
Accrued and other liabilities	10,227		29,679
Deferred revenue-collaborative agreements			(3,215)
Net cash provided by (used in) operating activities	(173,638)		97,535
Cash flows from investing activities:
Purchase of long term investments	(123,891)
Capital expenditures	(20,967)		(5,562)
Purchases of marketable securities	(106,271)		(16,795)
Sale and maturities of marketable securities	112,310		51,114
Net cash provided by (used in) investing activities	(138,819)		28,757
Cash flows from financing activities:
Restricted investments, net	(16)		110
Proceeds from issuance of common stock under stock plans	33,736		10,219
Cash paid in connection with senior note conversions	(8,097)
Direct financing arrangements repayments			(445)
Payment of contingent consideration	(3,679)
Net cash provided by financing activities	21,944		9,884
Effect of exchange rates on cash and cash equivalents	(7)
Net increase (decrease) in cash and cash equivalents	(290,520)		136,176
Cash and cash equivalents at beginning of period	652,343	[1]	521,439
Cash and cash equivalents at end of period	361,823		657,615
Supplemental Schedule of Cash Flow Information
Interest paid			846
Income taxes paid	2,244		14
Unpaid purchases of property and equipment	9,139
0.375% Convertible Senior Notes due 2018
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Expense related to senior note conversions	1,500
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	334,162
1.25% Convertible Senior Notes due 2020
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Expense related to senior note conversions	5,100
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	$ 328,382		$ 4
[1]	The condensed consolidated balance sheet at December 31, 2016 has been derived from the audited financial statements at that date.

CONDENSED CONSOLIDATED STATEME7

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

Organization and Summary of Sig

Organization and Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2017
Organization and Summary of Significant Accounting Policies
Organization and Summary of Significant Accounting Policies	1. Organization and business Incyte Corporation (including its subsidiaries, “Incyte,” “we,” “us,” or “our”) is a biopharmaceutical company focused on developing and commercializing proprietary therapeutics. Our portfolio includes compounds in various stages, ranging from preclinical to late stage development, and commercialized products JAKAFI® (ruxolitinib) and ICLUSIG® (ponatinib). Our operations are treated as one operating segment.

Summary of significant accounti

Summary of significant accounting policies	3 Months Ended
	Mar. 31, 2017
Summary of significant accounting policies
Summary of significant accounting policies	2. Summary of significant accounting policies Basis of presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The condensed consolidated balance sheet as of March 31, 2017 and the condensed consolidated statements of operations, and comprehensive income (loss) for the three months ended March 31, 2017 and 2016, and the condensed consolidated statement of cash flows for the three months ended March 31, 2017 and 2016 are unaudited, but include all adjustments, consisting only of normal recurring adjustments, which we consider necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. The condensed consolidated balance sheet at December 31, 2016 has been derived from audited financial statements. 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. Although we believe that the disclosures in these financial statements are adequate to make the information presented not misleading, certain information and footnote information normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. Results for any interim period are not necessarily indicative of results for any future interim period or for the entire year. The accompanying financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2016. Principles of Consolidation. The condensed consolidated financial statements include the accounts of Incyte Corporation and our wholly owned subsidiaries. All inter-company accounts, transactions, and profits have been eliminated in consolidation. 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 interest and other income, net in the condensed consolidated statements of operations. To date, both the translation gains or losses in other comprehensive income (loss) and the transaction gains or losses in foreign exchange gain (loss) have been immaterial. Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Concentrations of Credit Risk. Cash, cash equivalents, marketable securities, trade receivables and restricted investments are financial instruments which potentially subject us to concentrations of credit risk. The estimated fair value of financial instruments approximates the carrying value based on available market information. We primarily invest our excess available funds in 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, trade receivables or restricted investments to date and do not require collateral on receivables. Cash and Cash Equivalents. Cash and cash equivalents are held in 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. 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 condensed consolidated balance sheets. Realized gains and losses and declines in value judged to be other than temporary for available-for-sale securities are included in “Interest and other income, net.” The cost of securities sold is based on the specific identification method. Accounts Receivable. As of March 31, 2017 and December 31, 2016, we had no allowance for doubtful accounts. We provide an allowance for doubtful accounts based on experience and specifically identified risks. Accounts receivable are carried at fair value and charged off against the allowance for doubtful accounts when we determine that recovery is unlikely and we cease collection efforts. Inventory. Inventories are determined at the lower of cost and net realizable value with cost determined under the specific identification method and may consist of raw materials, work in process and finished goods. We began capitalizing inventory in mid-November 2011 once the U.S. Food and Drug Administration (“FDA”) approved JAKAFI as the related costs were expected to be recoverable through the commercialization of the product. Costs incurred prior to approval of JAKAFI have been recorded as research and development expense in our statements of operations. As a result, cost of JAKAFI revenues for the next 3 months will reflect a lower average per unit cost of materials. The ICLUSIG inventories were recorded at fair value less costs to sell in connection with the Acquisition, and will result in a higher cost of ICLUSIG product revenues over the period in which this inventory is sold, which is expected to be over a one year period from the acquisition date. 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 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 condensed consolidated balance sheets when we expect inventory to be consumed for commercial use within the next twelve months. Variable Interest Entities . We perform an initial and on-going evaluation of the entities with which we have variable interests, such as equity ownership, in order to identify entities (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 March 31, 2017, 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 investments in common stock of publicly held companies with whom we have entered into collaboration and license agreements. The investments in companies over which we have significant influence, but not controlling interest, are accounted for using the equity method (fair value option). The investments in companies over which we do not have significant influence are accounted for as available-for-sale securities. We classify all of our investments in common stock of publicly held companies with whom we have entered into collaboration and license agreements as long term investments, given we intend to hold these investments for the foreseeable future. Equity Method Investments. In circumstances where we have the ability to exercise significant influence over the operating and financial policies of a company in which we have an investment, the investment is accounted for either (i) under the equity method of accounting or (ii) at fair value by electing the fair value option under U.S. GAAP. In assessing whether we exercise significant influence, we consider the nature and magnitude of our investment, any voting and protective rights we hold, any participation in the governance of the other company, and other relevant factors such as the presence of a collaboration or other business relationship. Under the equity method of accounting, we record within our results of operations our share of income or loss of the investee company. Under the fair value option, our investment is carried at fair value on our condensed consolidated balance sheets as a long term investment and all changes in fair value are reported in our condensed consolidated statements of operations as an unrealized gain (loss) on long term investments. 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. Management continually reviews the estimated useful lives of technologically sensitive equipment and believes that those estimates appropriately reflect the current useful life of our assets. In the event that a currently unknown significantly advanced technology became commercially available, we would re-evaluate the value and estimated useful lives of our existing equipment, possibly having a material impact on the financial statements. Lease Accounting. We account for operating leases by recording rent expense on a straight-line basis over the expected life of the lease, commencing on the date we gain possession of leased property. We include tenant improvement allowances and rent holidays received from landlords and the effect of any rent escalation clauses as adjustments to straight-line rent expense over the expected life of the lease. Capital leases are reflected as a liability at the inception of the lease based on the present value of the minimum lease payments or, if lower, the fair value of the property. Assets under capital leases are recorded in property and equipment, net on the condensed consolidated balance sheets and depreciated in a manner similar to other property and equipment. Other Intangible Assets, net. Other intangible assets, net consist of licensed intellectual property rights acquired in business combinations, which are reported at 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. We completed our most recent impairment assessment as of October 1, 2016, which resulted in no impairment. 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 impairment assessment as of October 1, 2016 and determined that the carrying value of our reporting unit 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. In addition, we follow the guidance related to accounting for uncertainty in income taxes. This guidance creates a single model to address uncertainty in tax positions and clarifies the accounting for income taxes by prescribing the minimum recognition threshold a tax position is required to meet before it is recognized in the financial statements. Financing Costs Related to Long-term Debt. Costs associated with obtaining long-term debt are deferred and amortized over the term of the related debt using the effective interest method. Such costs are 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 interest and other income, net over the useful life of the related capital assets. Such amounts are recorded in other liabilities on the condensed consolidated balance sheets. Net 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 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, a long-term investment classified as available-for-sale, foreign currency translation gains or losses and defined benefit pension obligations. Revenue Recognition. Revenues are recognized when (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3) the price is fixed or determinable and (4) collectability is reasonably assured. Revenues are deferred for fees received before earned or until no further obligations exist. We exercise judgment in determining that collectability is reasonably assured or that services have been delivered in accordance with the arrangement. We assess whether the fee is fixed or determinable based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. We assess collectability based primarily on the customer’s payment history and on the creditworthiness of the customer. Product Revenues Our product revenues consist of U.S. sales of JAKAFI and European sales of ICLUSIG. Product revenues are recognized once we meet all four revenue recognition criteria 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 (Note 3), 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. 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. 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 will result in a higher cost of ICLUSIG product revenues over the period in which this inventory is sold, which is expected to be 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. Contract and License Revenues Under agreements involving multiple deliverables, services and/or rights to use assets that we entered into prior to January 1, 2011, the multiple elements are divided into separate units of accounting when certain criteria are met, including whether the delivered items have stand-alone value to the customer and whether there is objective and reliable evidence of the fair value of the undelivered items. When separate units of accounting exist, consideration is allocated among the separate elements based on their respective fair values. The determination of fair value of each element is based on objective evidence from historical sales of the individual elements by us to other customers. If such evidence of fair value for each undelivered element of the arrangement does not exist, all revenue from the arrangement is deferred until such time that evidence of fair value for each undelivered element does exist or until all elements of the arrangement are delivered. When elements are specifically tied to a separate earnings process, revenue is recognized when the specific performance obligation tied to the element is completed. When revenues for an element are not specifically tied to a separate earnings process, they are recognized ratably over the term of the agreement. We assess whether a substantive milestone exists at the inception of our agreements. For all milestones within our arrangements that are considered substantive, we recognize revenue upon the achievement of the associated milestone. If a milestone is not considered substantive, we would recognize the applicable milestone payment over the remaining period of performance under the arrangement. As of March 31, 2017, all remaining potential milestones under our collaborative arrangements are considered substantive. On January 1, 2011, updated guidance on the recognition of revenues for agreements with multiple deliverables became effective and applies to any agreements we may enter into on or after January 1, 2011. This updated guidance (i) relates to whether multiple deliverables exist, how the deliverables in a revenue arrangement should be separated and how the consideration should be allocated; (ii) requires companies to allocate revenues in an arrangement using estimated selling prices of deliverables if a vendor does not have vendor-specific objective evidence or third-party evidence of selling price; and (iii) eliminates the use of the residual method and requires companies to allocate revenues using the relative selling price method. During the three months ended March 31, 2017 and 2016, we did not enter into any agreements that are subject to this updated guidance. If we enter into an agreement with multiple deliverables after January 1, 2011 or amend existing agreements, this updated guidance could have a material effect on our financial statements. Our collaborations often include contractual milestones, which typically relate to the achievement of pre-specified development, regulatory and commercialization events. These three categories of milestone events reflect the three stages of the life-cycle of our drugs, which we describe in more detail in the following paragraphs. The regulatory review and approval process, which includes preclinical testing and clinical trials of each drug candidate, is lengthy, expensive and uncertain. Securing approval by the FDA requires the submission of extensive preclinical and clinical data and supporting information to the FDA for each indication to establish a drug candidate’s safety and efficacy. The approval process takes many years, requires the expenditure of substantial resources, involves post-marketing surveillance and may involve ongoing requirements for post-marketing studies. Before commencing clinical investigations of a drug candidate in humans, we must submit an Investigational New Drug application (“IND”), which must be reviewed by the FDA. The steps generally required before a drug may be marketed in the United States include preclinical laboratory tests, animal studies and formulation studies, submission to the FDA of an IND for human clinical testing, performance of adequate and well-controlled clinical trials in three phases, as described below, to establish the safety and efficacy of the drug for each indication, submission of a new drug application (“NDA”) or biologics license application (“BLA”) to the FDA for review and FDA approval of the NDA or BLA. Similar requirements exist within foreign regulatory agencies as well. The time required satisfying the FDA requirements or similar requirements of foreign regulatory agencies may vary substantially based on the type, complexity and novelty of the product or the targeted disease. Preclinical testing includes laboratory evaluation of product pharmacology, drug metabolism, and toxicity, which includes animal studies, to assess potential safety and efficacy as well as product chemistry, stability, formulation, development, and testing. The results of the preclinical tests, together with manufacturing information and analytical data, are submitted to the FDA as part of an IND. The FDA may raise safety concerns or questions about the conduct of the clinical trials included in the IND, and any of these concerns or questions must be resolved before clinical trials can proceed. We cannot be sure that submission of an IND will result in the FDA allowing clinical trials to commence. Clinical trials involve the administration of the investigational drug or the marketed drug to human subjects under the supervision of qualified investigators and in accordance with good clinical practices regulations covering the protection of human subjects. Clinical trials typically are conducted in three sequential phases, but the phases may overlap or be combined. Phase I usually involves the initial introduction of the investigational drug into healthy volunteers to evaluate its safety, dosage tolerance, absorption, metabolism, distribution and excretion. Phase II usually involves clinical trials in a limited patient population to evaluate dosage tolerance and optimal dosage, identify possible adverse effects and safety risks, and evaluate and gain preliminary evidence of the efficacy of the drug for specific indications. Phase III clinical trials usually further evaluate clinical efficacy and safety by testing the drug in its final form in an expanded patient population, providing statistical evidence of efficacy and safety, and providing an adequate basis for labeling. We cannot guarantee that Phase I, Phase II or Phase III testing will be completed successfully within any specified period of time, if at all. Furthermore, we, the institutional review board for a trial, or the FDA may suspend clinical trials at any time on various grounds, including a finding that the subjects or patients are being exposed to an unacceptable health risk. Generally, the milestone events contained in our collaboration agreements coincide with the progression of our drugs from development, to regulatory approval and then to commercialization. The process of successfully discovering a new development candidate, having it approved and successfully commercialized is highly uncertain. As such, the milestone payments we may earn from our partners involve a significant degree of risk to achieve. Therefore, as a drug candidate progresses through the stages of its life-cycle, the value of the drug candidate generally increases. Research and Development Costs. Our policy is to expense research and development costs as incurred. We often contract with clinical research organizations (“CROs”) to facilitate, coordinate and perform agreed upon research and development of a new 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 prep

Business Combination

Business Combination	3 Months Ended
	Mar. 31, 2017
Business combinations
Business combination	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 (“EU”) 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 (the “Upfront Payment”). 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. includes 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 (the “Milestones”), 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 OPTIC and OPTIC 2L, which are being conducted by ARIAD, by paying up to $7.0 million in both 2016 and 2017 (the “Development Costs”). The terms of the License Agreement also include a limited option for a potential future acquirer of ARIAD to purchase the European development and commercialization rights to ICLUSIG from us (the “Buy-Back Provision”). Under these purchase terms, we would retain all EU infrastructure and be financially compensated. Our financial compensation would include the repayment of the Upfront Payment and any Milestone or Development Costs payments made by us to ARIAD and an additional payment based upon the last 12 months of ICLUSIG sales booked by us. We would also be eligible to receive royalties of between 20% to 25% from an ARIAD acquirer on future sales of ICLUSIG in the Territory. The Buy-Back Provision cannot be exercised after the sixth year from the effective date of the License Agreement. Following exercise of the Buy-Back Provision, there is a further transition period before the provision can be made effective, such that it will not become effective until the later of June 1, 2019 and one year after the date of the exercise of the Buy-Back Provision. We concluded the Buy-Back Provision is not a derivative as it does not provide for explicit or implicit net settlement, cannot be readily settled net by a means outside of the contract, and does not provide for delivery of an asset that puts the recipient in a position that is not substantially different from net settlement. We also consider the probability of a potential future buyer exercising the Buy-Back Provision to be near zero and have concluded that any fair value assigned to this provision is de minimis. 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 (1) the expiration date of the composition patent in the relevant country, (2) 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 (3) 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 preliminary 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 preliminary fair value of contingent consideration 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 is currently under development and is therefore contingent on future clinical results and European Medicines Agency (“EMA”) approval. The probability of technical success (“PTS”) 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 present value of the contingent consideration was $293.0 million as of the Acquisition date. Assets Acquired and Liabilities Assumed The Acquisition has been accounted for as a business combination under the acquisition method of accounting. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date. Due to the timing of the Acquisition, certain amounts are provisional and subject to change. The provisional amounts consist primarily of the estimates relating to income taxes. We will finalize these amounts as we obtain the information necessary to complete the measurement process. Any changes resulting from facts and circumstances that existed as of the acquisition date may result in adjustments to the provisional amounts recognized at the acquisition date. These changes could be significant. We will finalize these amounts no later than one year from the acquisition date. Amounts Measurement Amounts Recognized as of Period Recognized as of (estimated in thousands) Acquisition Date(a) Adjustments(b) March 31, 2017 Current assets $ 21,413 $ (50) $ 21,363 Property and equipment 850 — 850 Restricted cash 432 — 432 Intangible assets (c) 283,000 — 283,000 Total identifiable assets 305,695 (50) 305,645 Current liabilities (15,720) 182 (15,538) Other long term liabilities (5,226) — (5,226) Total liabilities assumed (20,946) 182 (20,764) Goodwill (d) 155,725 (132) 155,593 Total fair value of consideration transferred $ 440,474 $ — $ 440,474 (a) As previously reported in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2016. (b) The measurement period adjustments primarily reflect a change in working capital as previously reported in our Annual Report on Form 10-K for the year ended December 31, 2016. (c) As of the effective date of the Acquisition, identifiable intangible assets are required to be measured at fair value. The fair value measurement is based on significant inputs that are unobservable in the market and thus represents a Level 3 measurement. We used an income approach to estimate the preliminary fair value of the intangibles which includes licensed intellectual property and IPR&D. The assumptions used to estimate the cash flows of the licensed intellectual property included a discount rate of 15%, estimated gross margins of 98%, income tax rates ranging from 7.8% in periods in which we have established tax holidays to 13.8% thereafter, and operating expenses consisting of direct costs based on the anticipated level of revenues as well as the $7.0 million of research and development cost sharing payments we owe in 2016 and 2017. The assumptions used to estimate the cash flows of the IPR&D (which relates to the potential approval of ICLUSIG as a second line treatment) included a PTS of 25%, discount rate of 16%, estimated gross margins of 98%, income tax rates ranging from 7.8% in periods in which we have established tax holidays to 13.8% thereafter, and operating expenses consisting of direct costs based on the anticipated level of revenues as well as probability weighted milestone payments estimated for 2020 related to the clinical results and potential approval of ICLUSIG as a second line treatment. The licensed intellectual property has a weighted-average useful life of approximately 12.5 years and will be amortized using the straight-line method. Amortization expense of the licensed intellectual property is recorded in cost of product revenues on the condensed consolidated statement of operations. The IPR&D is an indefinite-lived intangible and will not be amortized until the completion or abandonment of the related research and development activities. (d) Goodwill is calculated as the difference between the estimated acquisition date fair value of the consideration transferred and the estimated fair values of the assets acquired and liabilities assumed. The Goodwill is related to the existing platform, infrastructure, and workforce which is expected to generate synergies and further our strategic plan in Europe. Goodwill is not amortized and none of the goodwill is expected to be deductible for tax purposes. Pro Forma Impact of Business Combination The following unaudited pro forma information presents condensed consolidated results of operations for the three months ended March 31, 2016, as if the Acquisition had occurred as of January 1, 2016 (in thousands). For the Three Months Ended March 31, 2016 Pro forma revenues $ 272,256 Pro forma net income $ 5,704 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 (1) directly attributable to the Acquisition, (2) factually supportable, and (3) 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 the beginning of the period presented or that may occur in the future, and does not reflect future synergies, integration costs, or other such costs or savings.

Fair Value of financial instrum

Fair Value of financial instruments	3 Months Ended
	Mar. 31, 2017
Fair value of financial instruments.
Fair value of financial instruments	4. Fair value of financial instruments FASB accounting guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability (“the exit price”) in an orderly transaction between market participants at the measurement date. The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. In determining fair value we use quoted prices and observable inputs. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of us. The fair value hierarchy is broken down into three levels based on the source of inputs as follows: Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities. 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 March 31, 2017 and December 31, 2016, our Level 2 corporate debt securities were valued using readily available pricing sources which utilize market observable inputs, including the current interest rate and other characteristics for similar types of investments. Our long term investments classified as Level 1 were valued using the unadjusted closing stock price on The NASDAQ Stock Market. Our long term investments classified as Level 2 were valued by adjusting the closing stock price on The NASDAQ Stock Market for discounts for lack of marketability as these shares are not yet registered under the Securities Act of 1933. The following fair value hierarchy table presents information about each major category of our financial assets measured at fair value on a recurring basis as of March 31, 2017 (in thousands): Fair Value Measurement at Reporting Date Using: Quoted Prices in Significant Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs Balance as of (Level 1) (Level 2) (Level 3) March 31, 2017 Cash and cash equivalents $ 361,823 $ — $ — $ 361,823 Debt securities (corporate and government) — 150,132 — 150,132 Long term investments (Note 9) 19,871 138,451 — 158,322 Total assets $ 381,694 $ 288,583 $ — $ 670,277 The following fair value hierarchy table presents information about each major category of our financial liabilities measured at fair value on a recurring basis as of March 31, 2017 (in thousands): Fair Value Measurement at Reporting Date Using: Quoted Prices in Significant Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs Balance as of (Level 1) (Level 2) (Level 3) March 31, 2017 Contingent consideration (Note 3) $ — $ — $ 304,000 $ 304,000 Total liabilities $ — $ — $ 304,000 $ 304,000 The following is a rollforward of our Level 3 liabilities (in thousands): Level 3 Balance at January 1, 2017 $ 301,000 Contingent consideration earned during the period but not yet paid (4,356) Change in fair value of contingent consideration 7,356 Balance at March 31, 2017 $ 304,000 The fair value of the contingent consideration 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 is currently under development and is therefore contingent on future clinical results and EMA approval. The fair value of the contingent consideration is remeasured each reporting period, with changes in fair value recorded in the condensed consolidated statements of operations. The change in fair value of the contingent consideration during the three months ended March 31, 2017 is due primarily to the passage of time as there were no other significant changes in the key assumptions used in the fair value calculation at the date of acquisition, including the discount rate utilized and the estimated future projections of ICLUSIG revenues. We make payments to ARIAD quarterly based on the royalties or any additional milestone payments earned in the previous quarter. During the three months ended March 31, 2017, we paid ARIAD $4.1 million for royalties earned in the fourth quarter of 2016 that were included in accrued and other current liabilities at December 31, 2016. The following fair value hierarchy table presents information about each major category of our financial assets measured at fair value on a recurring basis as of December 31, 2016 (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, 2016 Cash and cash equivalents $ 652,343 $ — $ — $ 652,343 Debt securities (corporate and government) — 156,203 — 156,203 Long term investment (Note 9) 31,987 — — 31,987 Total assets $ 684,330 $ 156,203 $ — $ 840,533 The following fair value hierarchy table presents information about each major category of our financial liabilities measured at fair value on a recurring basis as of December 31, 2016 (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, 2016 Contingent consideration (Note 3) $ — $ — $ 301,000 $ 301,000 Total liabilities $ — $ — $ 301,000 $ 301,000 The following is a summary of our marketable security portfolio as of March 31, 2017 and December 31, 2016, respectively. Net Net Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value (in thousands) March 31, 2017 Debt securities (corporate and government) $ 150,293 $ — $ (161) $ 150,132 December 31, 2016 Debt securities (corporate and government) $ 156,330 $ — $ (127) $ 156,203 Our debt securities generally have contractual maturity dates of between 12 to 18 months.

Concentration of Credit Risk

Concentration of Credit Risk	3 Months Ended
	Mar. 31, 2017
Concentration of Credit Risk
Concentrations of Credit Risk	5. Concentration of credit risk In December 2009, we entered into a license, development and commercialization agreement with Eli Lilly and Company (“Lilly”). In November 2009, we entered into a collaboration and license agreement with Novartis. The concentration of credit risk related to our collaborative partners is as follows: Percentage of Total Contract Revenues for the Three Months Ended March 31, 2017 2016 Collaboration Partner A 28 % — % Collaboration Partner B 72 % 100 % Collaboration Partner A and Collaboration Partner B comprised in the aggregate 49% and 23% of the accounts receivable balance as of March 31, 2017 and December 31, 2016, 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 Three Months Ended March 31, 2017 2016 Customer A 27 % 27 % Customer B 16 % 18 % Customer C 13 % 12 % Customer D 8 % 8 % 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 27% and 41% of the accounts receivable balance as of March 31, 2017 and December 31, 2016, respectively. The concentration of credit risk relating to ICLUSIG product revenues or accounts receivable is not significant.

Inventory

Inventory	3 Months Ended
	Mar. 31, 2017
Inventory
Inventory	6. Inventory Our inventory balance consists of the following: March 31, December 31, 2017 2016 (in thousands) Raw materials $ 109 $ 109 Work-in-process 14,439 15,084 Finished goods 3,961 4,106 18,509 19,299 Inventories-current 3,961 4,106 Inventories-non-current $ 14,548 $ 15,193 Inventories, stated at the lower of cost and net realizable value, consist of raw materials, work in process and finished goods. The ICLUSIG inventories acquired on June 1, 2016 totaling $4.0 million were recorded at fair value less costs to sell, and therefore, will result in a higher cost of ICLUSIG revenues over the period in which this inventory is sold, which is expected to be over a one year period from the acquisition date. At March 31, 2017, $4.0 million of inventory was classified as current on the condensed consolidated balance sheet as we expect this inventory to be consumed for commercial use within the next twelve months. At March 31, 2017, $14.5 million of inventory was classified as non-current on the condensed 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 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.

Property and Equipment

Property and Equipment	3 Months Ended
	Mar. 31, 2017
Property and Equipment
Property and Equipment	7. Property and equipment, net Property and equipment, net consists of the following: March 31, December 31, 2017 2016 (in thousands) Office equipment $ 10,306 $ 9,243 Laboratory equipment 40,619 37,203 Computer equipment 39,912 38,184 Land 4,125 4,125 Building and leasehold improvements 154,584 130,734 249,546 219,489 Less accumulated depreciation and amortization (56,335) (51,810) Property and equipment, net $ 193,211 $ 167,679 In April 2016, we completed our purchase of the previously leased land and building comprising approximately 190,000 square feet of laboratory and office space located in Wilmington, Delaware. On the purchase date, we recorded a total of $35.4 million of assets consisting of $3.8 million of land and $31.6 million of buildings and leasehold improvements, which we estimated using the assistance of a third party valuation specialist. The land is not being amortized and we are depreciating the building over its estimated useful life of 40 years. In September 2016, we entered into two agreements to purchase two buildings at 1701 Augustine Cut-off in Wilmington, Delaware. The purchase closed in March 2017 for a total purchase price of approximately $8.0 million.

Intangible assets and goodwill

Intangible assets and goodwill	3 Months Ended
	Mar. 31, 2017
Intangible assets and goodwill
Intangible assets and goodwill	8. Intangible assets and goodwill Intangible Assets, Net The components of intangible assets as of March 31, 2017 were as follows (in thousands, except for useful life): Weighted- Gross Net Average Useful Carrying Accumulated Carrying Lives (Years) Amount Amortization Amount Finite-lived intangible assets: Licensed IP (1) 12.5 $ 271,000 $ 17,947 $ 253,053 Indefinite-lived intangible assets: Acquired IPR&D (1) N/A 12,000 — 12,000 $ 283,000 $ 17,947 $ 265,053 (1) We acquired certain intangible assets as part of the Acquisition, as described further in Note 3. Estimated aggregate amortization expense based on the current carrying value of amortizable intangible assets, excluding any possible future amortization associated with acquired IPR&D, for which development has not yet been completed, is as follows (in thousands): Remainder of 2017 2018 2019 2020 2021 Thereafter Amortization expense $ 16,152 $ 21,536 $ 21,536 $ 21,536 $ 21,536 $ 150,757 Goodwill There were no changes to the carrying amount of goodwill for the three months ended March 31, 2017. As described in Note 3, the allocations of the goodwill balance associated with the Acquisition and certain other adjustments are provisional and subject to the completion of the valuation of the assets acquired and liabilities assumed.

License Agreements

License Agreements	3 Months Ended
	Mar. 31, 2017
License agreements
License Agreements	9. License agreements Novartis In November 2009, we entered into a Collaboration and License Agreement with Novartis. Under the terms of the agreement, Novartis received exclusive development and commercialization rights outside of the United States to our JAK inhibitor ruxolitinib and certain back-up compounds for hematologic and oncology indications, including all hematological malignancies, solid tumors and myeloproliferative diseases. We retained exclusive development and commercialization rights to JAKAFI (ruxolitinib) in the United States and in certain other indications. Novartis also received worldwide exclusive development and commercialization rights to our c-MET inhibitor compound capmatinib and certain back-up compounds in all indications. We retained options to co-develop and to co-promote capmatinib in the United States. Under this agreement, we received an upfront payment and immediate milestone payment totaling $210.0 million and were initially eligible to receive up to $1.2 billion in milestone payments across multiple indications upon the achievement of pre-specified events, including up to $174.0 million for the achievement of development milestones, up to $495.0 million for the achievement of regulatory milestones and up to $500.0 million for the achievement of commercialization milestones. 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 and $215.0 million for the achievement of regulatory milestones and $20.0 million for the achievement of sales milestones through March 31, 2017. During the three months ended March 31, 2017, under this agreement, we recognized a $25.0 million development milestone payment 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 payment 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 three months ended March 31, 2017 and 2016, such royalties payable to Novartis on net sales within the United States totaled $7.8 million and $5.2 million, respectively, and are reflected in cost of product revenues on the condensed consolidated statements of operations. Each company is responsible for costs relating to the development and commercialization of ruxolitinib in its respective territories, with costs of collaborative studies shared equally. Novartis is 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 (1) the expiration of the last valid claim of the licensed patent rights covering the licensed product in the relevant country, (2) the expiration of regulatory exclusivity for the licensed product in such country and (3) a specified period from first commercial sale in such country of the licensed product by Novartis or its affiliates or sublicensees. The agreement may be terminated in its entirety or on a program-by-program basis by Novartis for convenience. The agreement may also be terminated by either party under certain other circumstances, including material breach. 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 March 31, 2017 and December 31, 2016, $0.6 million and $0.6 million, respectively, of reimbursable costs were included in accounts receivable on the condensed consolidated balance sheets. Research and development expenses for the three months ended March 31, 2017 and 2016 were net of $0.7 million and $0.3 million, respectively, of costs reimbursed by Novartis. Contract revenue under the Novartis agreement was $25.0 million and $0.0 million for the three months ended March 31, 2017 and 2016, respectively. Product royalty revenue related to Novartis net sales of JAKAVI outside of the United States was $28.8 million and $21.9 million for the three months ended March 31, 2017 and 2016, respectively. At March 31, 2017 and December 31, 2016, $28.8 million and $33.3 million, respectively, of product royalties were included in accounts receivable on the condensed 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 the aggregate $99.0 million for the achievement of development milestones and $120.0 million for the achievement of regulatory milestones through March 31, 2017. In April 2017, we and Lilly announced that the FDA had issued a complete response letter for the New Drug Application of baricitinib as a once-daily oral medication for the treatment of moderate-to-severe rheumatoid arthritis. The letter indicates that the FDA is unable to approve the application in its current form. Specifically, the FDA indicated that additional clinical data are needed to determine the most appropriate doses. The FDA also stated that additional data are necessary to further characterize safety concerns across treatment arms. The companies disagree with the FDA’s conclusions. The timing of a resubmission will be based on further discussions with the FDA. During the three months ended March 31, 2017, under this agreement, we recognized a $65.0 million regulatory milestone payment 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. In January 2017, we exercised our co-development option in psoriatic arthritis to fund 30% of future global development costs through regulatory approval, including post-launch studies required by a regulatory authority. We also exercised our co-development options in both atopic dermatitis and axial spondyloarthritis, should Lilly decide to progress into a pivotal program in these indications. 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. In February 2017, the European Commission approved baricitinib, which is marketed as OLUMIANT, for the treatment of moderate-to-severe rheumatoid arthritis in adult patients. 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 and atopic dermatitis were $9.4 million and $5.1 million for the three months ended March 31, 2017 and 2016, respectively. We have retained certain mechanisms to give us cost protection as baricitinib advances in clinical development. We can defer our portion of co-development study costs by indication if they exceed a predetermined level. This deferment would be credited against future milestones or royalties and we would still be eligible for the full incremental royalties related to the co-development option. In addition, even if we have started co-development funding for any indication, we can at any time opt out and stop future co-development cost sharing. If we elect to do this we would still be eligible for our base royalties plus an incremental pro-rated royalty commensurate with our contribution to the total co-development cost for those indications for which we co-funded. The Lilly agreement will continue until Lilly no longer has any royalty payment obligations or, if earlier, the termination of the agreement in accordance with its terms. Royalties are payable by Lilly on a product-by-product and country-by-country basis until the latest to occur of (1) the expiration of the last valid claim of the licensed patent rights covering the licensed product in the relevant country, (2) the expiration of regulatory exclusivity for the licensed product in such country and (3) a specified period from first commercial sale in such country of the licensed product by Lilly or its affiliates or sublicensees. The agreement may be terminated by Lilly for convenience, and may also be terminated under certain other circumstances, including material breach. We determined that there were two deliverables under the agreement: (i) the worldwide license and (ii) our obligations in connection with a co-development option. We concluded that these deliverables should be accounted for as a single unit of accounting and the $90.0 million upfront payment should be recognized on a straight line basis as revenue through December 2016, our estimated performance period under the agreement. We completed our substantive performance obligation related to this arrangement in December 2016. Contract revenue under the Lilly agreement was $65.0 million and $58.2 million for the three months ended March 31, 2017 and 2016, respectively. Product royalty revenue related to Lilly global net sales of OLUMIANT was $0.4 million for the three months ended March 31, 2017. At March 31, 2017, $0.4 million of product royalties were included in accounts receivable on the condensed consolidated balance sheet. 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 three months ended March 31, 2016, the $35.0 million upfront payment was recorded in research and development expense on the condensed consolidated statements of operations. Agenus In January 2015, we entered into a License, Development and Commercialization Agreement with Agenus Inc. and its wholly-owned subsidiary, 4-Antibody AG, (now known as Agenus Switzerland Inc.), which we collectively refer to as Agenus. Under this agreement, 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. In February 2017, we and Agenus amended this agreement (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 February 2017 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 February 2017 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 condensed consolidated statement of operations during the three months ended March 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 connection with the February 2017 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 are 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 total 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 condensed consolidated balance sheets and $20.5 million was allocated to research and development expense on the condensed consolidated statement of operations during the three months ended March 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 own approximately 18% of the outstanding shares of Agenus Inc. common stock as of March 31, 2017. 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 three months ended March 31, 2017 and 2016, we recorded an unrealized loss of $7.7 million and $3.0 million, respectively, based on the change fair value of our investment in Agenus common stock during these periods. The fair market value of our long term investment in Agenus was $63.8 million at March 31, 2017. For the year ended December 31, 2016, Agenus Inc. reported total revenues of $22.6 million and a net loss of $127.0 million within their consolidated financial statements. Research and development expenses for the three months ended March 31, 2017 and 2016, also included $7.7 million and $4.1 million, respectively, of additional development costs incurred pursuant to the Agenus arrangement. At March 31, 2017, a total of $8.3 million of such costs were included in accrued and other liabilities on the condensed 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. INCSHR1210 is currently in clinical development. Under the terms of this agreement, we paid Hengrui an upfront payment of $25.0 million in 2015 which was recorded in research and development expense on the condensed consolidated statement of operations. Hengrui is also eligible to receive potential milestone payments of up to $770.0 million, consisting of $90.0 million for regulatory approval milestones, $530.0 million for commercial performance milestones, and $150.0 million for a clinical superiority milestone. Also, Hengrui may be eligible to receive tiered royalties in the high-single digits to mid-double digits based on net sales in our territories. Each company will be responsible for costs relating to the development and commercialization of the PD-1 monoclonal antibody in their respective territories. The agreement will continue on a country-by-country basis until we have no royalty payment obligations with respect to such country or, if earlier, the termination of the agreement in accordance with its terms. The agreement may be terminated in its entirety by us for convenience, and may also be terminated under certain other circumstances, including material breach. Research and development expenses for the three months ended March 31, 2017 and 2016, included $0.0 million and $0.7 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, including two of Merus’ current preclinical immuno-oncology discovery programs. We received exclusive development and commercialization rights outside of the United States to products and product candidates resulting from one of Merus’ current preclinical discovery programs, referred to as “Program 1.” We also received worldwide exclusive development and commercialization rights to products and product candidates resulting from the other current Merus preclinical discovery program that is subject to the collaboration and to up to nine additional programs. Merus retained exclusive development and commercialization rights in the United States to products and product candidates resulting from Program 1 and options, subject to certain conditions, to co-fund development of products resulting from two other programs in exchange for a share of profits in the United States. Should Program 1 fail to successfully complete IND-enabling toxicology studies, Merus would be granted an additional option to co-fund development of a program in exchange for a share of profits in the United States. All costs related to the collaboration are subject to joint research and development plans. Each party will share equally the costs of mutually agreed global development activities for Program 1, and fund itself any independent development activities in its territory. We will be responsible for all research, development and commercialization costs relating to all other programs, subject to Merus’ election to co-fund development and co-detail described above. 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. In February 2017, we paid Merus an upfront non-refundable payment of $120.0 million, which is recorded in research and development expense on the condensed consolidated statement of operations. For each program as to which Merus does not have commercialization or co-development 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 non-co-developed programs and, depending on the stage at which Merus chose to cease co-funding development costs, additional royalties ranging up to 4% of net sales in the United States. For Program 1, 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. 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 are 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 total 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 t

Stock Compensation

Stock Compensation	3 Months Ended
	Mar. 31, 2017
Stock Compensation
Stock Compensation	10. Stock compensation We recorded $30.6 million and $20.8 million of stock compensation expense on our condensed consolidated statements of operations for the three months ended March 31, 2017 and 2016, respectively. Stock compensation expense included within our condensed consolidated statements of operations included research and development expense of $21.5 million and $13.0 million for the three months ended March 31, 2017 and 2016, respectively. Stock compensation expense included within our condensed consolidated statements of operations also included selling, general and administrative expense of $9.1 million and $7.8 million for the three months ended March 31, 2017 and 2016, respectively. We utilized the Black-Scholes valuation model for estimating the fair value of the stock compensation granted, with the following weighted-average assumptions: Employee Stock Options For the Three Months Ended Employee Stock Purchase Plan For the Three Months Ended March 31, March 31, 2017     2016    2017    2016    Average risk-free interest rates %   %   %   %   Average expected life (in years) Volatility % % % % Weighted-average fair value (in dollars) The risk-free interest rate is derived from the U.S. Federal Reserve rate in effect at the time of grant. The expected life calculation is based on the observed and expected time to the exercise of options by our employees based on historical exercise patterns for similar type options. Expected volatility is based on the historical volatility of our common stock over the period commensurate with the expected life of the options. A dividend yield of zero is assumed based on the fact that we have never paid cash dividends and have no present intention to pay cash dividends. Option activity under the 2010 Stock Plan was as follows: Shares Subject to Outstanding Options Shares Available Weighted Average for Grant Shares Exercise Price Balance at December 31, 2016 6,327,138 11,504,572 $ 48.40 Options granted (1,471,156) 1,471,156 $ 114.41 Options exercised — (1,688,337) $ 26.42 Options cancelled 48,932 (48,932) $ 93.65 Balance at March 31, 2017 4,904,914 11,238,459 $ 60.15 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. 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, 2016 1,146,152 1,246,570 — RSUs granted (68,782) 68,782 $ 117.54 RSUs cancelled 15,341 (15,341) $ 83.64 RSUs released — (163,354) $ 118.45 PSUs released — (43,376) $ 122.29 Balance at March 31, 2017 1,092,711 1,093,281 — 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 March 31, 2017, a total of 200,000 RSUs granted to Mr. Hoppenot vested and were released, leaving 200,000 RSUs outstanding. Based on our historical experience of employee turnover, we have assumed an annualized forfeiture rate of 5% for our options and RSUs. Under the true-up provisions of the stock compensation guidance, we will record additional expense if the actual forfeiture rate is lower than we estimated, and will record a recovery of prior expense if the actual forfeiture is higher than we estimated. Total compensation cost of options granted but not yet vested, as of March 31, 2017, was $107.6 million, which is expected to be recognized over the weighted average period of approximately 1.6 years. Total compensation cost of RSUs granted but not yet vested, as of March 31, 2017, was $49.0 million, which is expected to be recognized over the weighted average period of approximately 1.5 years.

Debt

Debt	3 Months Ended
	Mar. 31, 2017
Debt
Debt	11. Debt The components of the convertible notes are as follows (in thousands): Carrying Amount, Interest Rates March 31, December 31, Debt March 31, 2017 Maturities 2017 2016 0.375% Convertible Senior Notes due 2018 0.375 % $ 23,987 $ 1.25% Convertible Senior Notes due 2020 1.25 % 17,617 41,604 651,481 Less current portion — — $ 41,604 $ 651,481 The carrying amount and fair value of our convertible notes are as follows (in thousands): March 31, 2017 December 31, 2016 Carrying Carrying Amount Fair Value Amount Fair Value 0.375% Convertible Senior Notes due 2018 $ 23,987 $ 67,589 $ 340,916 $ 1.25% Convertible Senior Notes due 2020 17,617 55,227 310,565 $ 41,604 $ 122,816 $ 651,481 $ 1,511,288 The fair values of the 0.375% Convertible Senior Notes due 2018 (the “2018 Notes”) and the 1.25% Convertible Senior Notes due 2020 (the “2020 Notes”) are based on data from readily available pricing sources which utilize market observable inputs and other characteristics for similar types of instruments, and, therefore, these convertible senior notes are classified within Level 2 in the fair value hierarchy. Prior to May 14, 2014, the 2018 and 2020 Notes were not convertible except in connection with a make whole fundamental change, as defined in the respective indentures. Beginning on, and including, May 15, 2014, the 2018 and 2020 Notes are convertible prior to the close of business on the business day immediately preceding May 15, 2018, in the case of the 2018 Notes, and May 15, 2020, in the case of the 2020 Notes, only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on March 31, 2014 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price for the 2018 Notes or 2020 Notes, as applicable, on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of 2018 Notes or 2020 Notes, as applicable, for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate for the 2018 Notes or 2020 Notes, as applicable, on each such trading day; or (3) upon the occurrence of specified corporate events. On or after May 15, 2018, in the case of the 2018 Notes, and May 15, 2020, in the case of the 2020 Notes, until the close of business on the second scheduled trading day immediately preceding the relevant maturity date, the Notes are convertible at any time, regardless of the foregoing circumstances. Upon conversion we will pay or deliver, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock, at our election. On April 1, 2017, the 2018 Notes and 2020 Notes became convertible through at least June 30, 2017, based on meeting the conversion criteria related to the sale price of our common stock during the calendar quarter ended March 31, 2017 as described in (1) above. Management’s intent is to settle any conversions of 2018 Notes or 2020 Notes during this period in shares of our common stock and, therefore, the 2018 Notes and 2020 Notes are reflected in long term liabilities on the condensed consolidated balance sheet at March 31, 2017. During the three months ended March 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 $348.9 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 6.7 million shares, an additional 0.1 million of premium shares (equivalent to $12.6 million in value) and $1.3 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 $353.7 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 6.8 million shares, an additional 0.2 million of premium shares (equivalent to $26.8 million in value) and $6.8 million in cash. Included in the agreements were those with entities affiliated with Julian C. Baker, 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 Notes which resulted in recording expense related to senior note conversions of $1.5 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 $47.5 million and is also included within expense related to senior note conversions on the condensed consolidated statement of operations during the three months ended March 31, 2017.

Defined benefit pension obligat

Defined benefit pension obligation	3 Months Ended
	Mar. 31, 2017
Defined benefit pension obligation
Defined benefit pension obligation	12. Defined benefit pension obligation In connection with the Acquisition, we assumed a defined benefit pension plan for the former ARIAD employees. In addition, we established another defined benefit pension plan for other Incyte employees in Europe. The pension plans provide benefits to employees upon retirement, death or disability. The net periodic benefit cost for the three months ended March 31, 2017 was as follows (in thousands): Three Months Ended March 31, 2017 Service cost $ 616 Interest cost 46 Expected return on plan assets (35) Amortization of prior service cost 12 Amortization of actuarial losses 34 Net periodic benefit cost $ 673 We expect to contribute a total of $2.0 million to the plans in 2017 inclusive of the amounts contributed to the plan during the current period. As of March 31, 2017, $7.2 million of accrued pension obligation is recorded in other long term liabilities on the condensed consolidated balance sheets.

Income Taxes

Income Taxes	3 Months Ended
	Mar. 31, 2017
Income Taxes
Income Taxes	13. Income taxes For the three months ended March 31, 2017, we recorded an income tax benefit of approximately $10.9 million compared to income tax expense of approximately $0.4 million for the three months ended March 31, 2016. The change in tax expense or benefit for the three months ended March 31, 2017 and 2016 was primarily driven by the difference in projected annual operating income or loss compared to our actual results for the first quarter as well as the recognition of certain discrete items in the current period. As a result, our year-to-date recorded effective tax rate may differ significantly from our full year effective tax rate. As of March 31, 2017, a full valuation allowance continues to be recorded against our U.S. and Swiss net deferred tax assets, based on an analysis of positive and negative evidence, including analyzing three-year cumulative pre-tax income or loss, projections of future taxable income as well as other quantitative and qualitative information. Our liability for unrecognized tax benefits (including penalties and interest) increased by approximately $0.7 million during the three months ended March 31, 2017, of which only $0.1 million was recorded as an increase to noncurrent other liabilities on the condensed consolidated balance sheet. The increase is primarily driven by unrecognized tax benefits related to current year operations.

Net Income (Loss) Per Share

Net Income (Loss) Per Share	3 Months Ended
	Mar. 31, 2017
Net Income (Loss) Per Share
Net Income (Loss) Per Share	14. Net income (loss) per share Net income (loss) per share was calculated as follows for the periods indicated: Three Months Ended March 31, (in thousands, except per share data) 2017 2016 Basic Net Income (Loss) Per Share Basic net income (loss) $ (187,083) $ 24,047 Weighted average common shares outstanding 195,260 187,184 Basic net income (loss) per share $ (0.96) $ 0.13 Diluted Net Income (Loss) Per Share Diluted net income (loss) $ (187,083) $ 24,047 Weighted average common shares outstanding 195,260 187,184 Dilutive stock options and RSU’s — 5,441 Weighted average shares used to compute diluted net income (loss) per share 195,260 192,625 Diluted net income (loss) per share $ (0.96) $ 0.12 The following potential common shares were excluded from the calculations as their effect would be anti-dilutive: Three Months Ended March 31, 2017 2016 Outstanding stock options and awards 12,598,407 2,652,265 Common shares issuable upon conversion of the 2018 Notes 505,004 7,245,244 Common shares issuable upon conversion of the 2020 Notes 407,000 7,241,284 Total potential common shares excluded from diluted net loss per share computation 13,510,411 17,138,793

Contingencies

Contingencies	3 Months Ended
	Mar. 31, 2017
Contingencies
Contingencies	15. Contingencies In February 2016, we received a Paragraph IV certification notice (the “Notice Letter”) regarding an Abbreviated New Drug Application submitted to the U.S. Food and Drug Administration requesting approval to market a generic version of Jakafi (ruxolitinib). The Notice Letter purports to challenge patents covering ruxolitinib phosphate and its use that expire in 2028. The Notice Letter does not challenge the ruxolitinib composition of matter patent, which expires on December 24, 2027. We do not believe there is any kind of loss that is probable or estimable related to this matter at this time.

Subsequent Events

Subsequent Events	3 Months Ended
	Mar. 31, 2017
Subsequent Events
Subsequent Events	16. Subsequent Events In connection with its acquisition of ARIAD that closed in February 2017, Takeda Pharmaceutical Company Limited notified us that they do not intend to exercise the Buy-Back Provision (described in Note 3) under the terms of the ARIAD License Agreement, and the Buy-Back Provision has now lapsed. In April 2017, we and Lilly announced that the FDA had issued a complete response letter for the New Drug Application of baricitinib as a once-daily oral medication for the treatment of moderate-to-severe rheumatoid arthritis. The letter indicates that the FDA is unable to approve the application in its current form. Specifically, the FDA indicated that additional clinical data are needed to determine the most appropriate doses. The FDA also stated that additional data are necessary to further characterize safety concerns across treatment arms. The companies disagree with the FDA’s conclusions. The timing of a resubmission will be based on further discussions with the FDA.

Summary of Significant Accoun24

Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2017
Summary of significant accounting policies
Basis of presentation	Basis of presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The condensed consolidated balance sheet as of March 31, 2017 and the condensed consolidated statements of operations, and comprehensive income (loss) for the three months ended March 31, 2017 and 2016, and the condensed consolidated statement of cash flows for the three months ended March 31, 2017 and 2016 are unaudited, but include all adjustments, consisting only of normal recurring adjustments, which we consider necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. The condensed consolidated balance sheet at December 31, 2016 has been derived from audited financial statements. 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. Although we believe that the disclosures in these financial statements are adequate to make the information presented not misleading, certain information and footnote information normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. Results for any interim period are not necessarily indicative of results for any future interim period or for the entire year. The accompanying financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2016.
Principles of Consolidation	Principles of Consolidation. The condensed consolidated financial statements include the accounts of Incyte Corporation and our wholly owned subsidiaries. All inter-company accounts, transactions, and profits have been eliminated in consolidation.
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 interest and other income, net in the condensed consolidated statements of operations. To date, both the translation gains or losses in other comprehensive income (loss) and the transaction gains or losses in foreign exchange gain (loss) have been immaterial.
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, trade receivables and restricted investments are financial instruments which potentially subject us to concentrations of credit risk. The estimated fair value of financial instruments approximates the carrying value based on available market information. We primarily invest our excess available funds in 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, trade receivables or restricted investments 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. 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 condensed consolidated balance sheets. Realized gains and losses and declines in value judged to be other than temporary for available-for-sale securities are included in “Interest and other income, net.” The cost of securities sold is based on the specific identification method.
Accounts Receivable	Accounts Receivable. As of March 31, 2017 and December 31, 2016, we had no allowance for doubtful accounts. We provide an allowance for doubtful accounts based on experience and specifically identified risks. Accounts receivable are carried at fair value and charged off against the allowance for doubtful accounts when we determine that recovery is unlikely and we cease collection efforts.
Inventory	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. We began capitalizing inventory in mid-November 2011 once the U.S. Food and Drug Administration (“FDA”) approved JAKAFI as the related costs were expected to be recoverable through the commercialization of the product. Costs incurred prior to approval of JAKAFI have been recorded as research and development expense in our statements of operations. As a result, cost of JAKAFI revenues for the next 3 months will reflect a lower average per unit cost of materials. The ICLUSIG inventories were recorded at fair value less costs to sell in connection with the Acquisition, and will result in a higher cost of ICLUSIG product revenues over the period in which this inventory is sold, which is expected to be over a one year period from the acquisition date. 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 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 condensed consolidated balance sheets when we expect inventory to be consumed for commercial use within the next twelve months.
Variable Interest Entities	Variable Interest Entities . We perform an initial and on-going evaluation of the entities with which we have variable interests, such as equity ownership, in order to identify entities (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 March 31, 2017, there were no entities in which we held a variable interest which we determined to be VIEs.
Long Term Investments	Long Term Investments. Our long term investments consist of investments in common stock of publicly held companies with whom we have entered into collaboration and license agreements. The investments in companies over which we have significant influence, but not controlling interest, are accounted for using the equity method (fair value option). The investments in companies over which we do not have significant influence are accounted for as available-for-sale securities. We classify all of our investments in common stock of publicly held companies with whom we have entered into collaboration and license agreements as long term investments, given we intend to hold these investments for the foreseeable future.
Equity Method Investments	Equity Method Investments. In circumstances where we have the ability to exercise significant influence over the operating and financial policies of a company in which we have an investment, the investment is accounted for either (i) under the equity method of accounting or (ii) at fair value by electing the fair value option under U.S. GAAP. In assessing whether we exercise significant influence, we consider the nature and magnitude of our investment, any voting and protective rights we hold, any participation in the governance of the other company, and other relevant factors such as the presence of a collaboration or other business relationship. Under the equity method of accounting, we record within our results of operations our share of income or loss of the investee company. Under the fair value option, our investment is carried at fair value on our condensed consolidated balance sheets as a long term investment and all changes in fair value are reported in our condensed consolidated statements of operations as an unrealized gain (loss) on long term investments.
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. Management continually reviews the estimated useful lives of technologically sensitive equipment and believes that those estimates appropriately reflect the current useful life of our assets. In the event that a currently unknown significantly advanced technology became commercially available, we would re-evaluate the value and estimated useful lives of our existing equipment, possibly having a material impact on the financial statements.
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 as adjustments to straight-line rent expense over the expected life of the lease. Capital leases are reflected as a liability at the inception of the lease based on the present value of the minimum lease payments or, if lower, the fair value of the property. Assets under capital leases are recorded in property and equipment, net on the condensed consolidated balance sheets and depreciated in a manner similar to other property and equipment.
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 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. We completed our most recent impairment assessment as of October 1, 2016, which resulted in no impairment.
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 impairment assessment as of October 1, 2016 and determined that the carrying value of our reporting unit 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. In addition, we follow the guidance related to accounting for uncertainty in income taxes. This guidance creates a single model to address uncertainty in tax positions and clarifies the accounting for income taxes by prescribing the minimum recognition threshold a tax position is required to meet before it is recognized in the financial statements.
Financing Costs Related to Long-term Debt	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 interest and other income, net over the useful life of the related capital assets. Such amounts are recorded in other liabilities on the condensed consolidated balance sheets.
Net 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 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, a long-term investment classified as available-for-sale, foreign currency translation gains or losses and defined benefit pension obligations.
Revenue Recognition	Revenue Recognition. Revenues are recognized when (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3) the price is fixed or determinable and (4) collectability is reasonably assured. Revenues are deferred for fees received before earned or until no further obligations exist. We exercise judgment in determining that collectability is reasonably assured or that services have been delivered in accordance with the arrangement. We assess whether the fee is fixed or determinable based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. We assess collectability based primarily on the customer’s payment history and on the creditworthiness of the customer. Product Revenues Our product revenues consist of U.S. sales of JAKAFI and European sales of ICLUSIG. Product revenues are recognized once we meet all four revenue recognition criteria 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 (Note 3), 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. 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. 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 will result in a higher cost of ICLUSIG product revenues over the period in which this inventory is sold, which is expected to be 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. Contract and License Revenues Under agreements involving multiple deliverables, services and/or rights to use assets that we entered into prior to January 1, 2011, the multiple elements are divided into separate units of accounting when certain criteria are met, including whether the delivered items have stand-alone value to the customer and whether there is objective and reliable evidence of the fair value of the undelivered items. When separate units of accounting exist, consideration is allocated among the separate elements based on their respective fair values. The determination of fair value of each element is based on objective evidence from historical sales of the individual elements by us to other customers. If such evidence of fair value for each undelivered element of the arrangement does not exist, all revenue from the arrangement is deferred until such time that evidence of fair value for each undelivered element does exist or until all elements of the arrangement are delivered. When elements are specifically tied to a separate earnings process, revenue is recognized when the specific performance obligation tied to the element is completed. When revenues for an element are not specifically tied to a separate earnings process, they are recognized ratably over the term of the agreement. We assess whether a substantive milestone exists at the inception of our agreements. For all milestones within our arrangements that are considered substantive, we recognize revenue upon the achievement of the associated milestone. If a milestone is not considered substantive, we would recognize the applicable milestone payment over the remaining period of performance under the arrangement. As of March 31, 2017, all remaining potential milestones under our collaborative arrangements are considered substantive. On January 1, 2011, updated guidance on the recognition of revenues for agreements with multiple deliverables became effective and applies to any agreements we may enter into on or after January 1, 2011. This updated guidance (i) relates to whether multiple deliverables exist, how the deliverables in a revenue arrangement should be separated and how the consideration should be allocated; (ii) requires companies to allocate revenues in an arrangement using estimated selling prices of deliverables if a vendor does not have vendor-specific objective evidence or third-party evidence of selling price; and (iii) eliminates the use of the residual method and requires companies to allocate revenues using the relative selling price method. During the three months ended March 31, 2017 and 2016, we did not enter into any agreements that are subject to this updated guidance. If we enter into an agreement with multiple deliverables after January 1, 2011 or amend existing agreements, this updated guidance could have a material effect on our financial statements. Our collaborations often include contractual milestones, which typically relate to the achievement of pre-specified development, regulatory and commercialization events. These three categories of milestone events reflect the three stages of the life-cycle of our drugs, which we describe in more detail in the following paragraphs. The regulatory review and approval process, which includes preclinical testing and clinical trials of each drug candidate, is lengthy, expensive and uncertain. Securing approval by the FDA requires the submission of extensive preclinical and clinical data and supporting information to the FDA for each indication to establish a drug candidate’s safety and efficacy. The approval process takes many years, requires the expenditure of substantial resources, involves post-marketing surveillance and may involve ongoing requirements for post-marketing studies. Before commencing clinical investigations of a drug candidate in humans, we must submit an Investigational New Drug application (“IND”), which must be reviewed by the FDA. The steps generally required before a drug may be marketed in the United States include preclinical laboratory tests, animal studies and formulation studies, submission to the FDA of an IND for human clinical testing, performance of adequate and well-controlled clinical trials in three phases, as described below, to establish the safety and efficacy of the drug for each indication, submission of a new drug application (“NDA”) or biologics license application (“BLA”) to the FDA for review and FDA approval of the NDA or BLA. Similar requirements exist within foreign regulatory agencies as well. The time required satisfying the FDA requirements or similar requirements of foreign regulatory agencies may vary substantially based on the type, complexity and novelty of the product or the targeted disease. Preclinical testing includes laboratory evaluation of product pharmacology, drug metabolism, and toxicity, which includes animal studies, to assess potential safety and efficacy as well as product chemistry, stability, formulation, development, and testing. The results of the preclinical tests, together with manufacturing information and analytical data, are submitted to the FDA as part of an IND. The FDA may raise safety concerns or questions about the conduct of the clinical trials included in the IND, and any of these concerns or questions must be resolved before clinical trials can proceed. We cannot be sure that submission of an IND will result in the FDA allowing clinical trials to commence. Clinical trials involve the administration of the investigational drug or the marketed drug to human subjects under the supervision of qualified investigators and in accordance with good clinical practices regulations covering the protection of human subjects. Clinical trials typically are conducted in three sequential phases, but the phases may overlap or be combined. Phase I usually involves the initial introduction of the investigational drug into healthy volunteers to evaluate its safety, dosage tolerance, absorption, metabolism, distribution and excretion. Phase II usually involves clinical trials in a limited patient population to evaluate dosage tolerance and optimal dosage, identify possible adverse effects and safety risks, and evaluate and gain preliminary evidence of the efficacy of the drug for specific indications. Phase III clinical trials usually further evaluate clinical efficacy and safety by testing the drug in its final form in an expanded patient population, providing statistical evidence of efficacy and safety, and providing an adequate basis for labeling. We cannot guarantee that Phase I, Phase II or Phase III testing will be completed successfully within any specified period of time, if at all. Furthermore, we, the institutional review board for a trial, or the FDA may suspend clinical trials at any time on various grounds, including a finding that the subjects or patients are being exposed to an unacceptable health risk. Generally, the milestone events contained in our collaboration agreements coincide with the progression of our drugs from development, to regulatory approval and then to commercialization. The process of successfully discovering a new development candidate, having it approved and successfully commercialized is highly uncertain. As such, the milestone payments we may earn from our partners involve a significant degree of risk to achieve. Therefore, as a drug candidate progresses through the stages of its life-cycle, the value of the drug candidate generally increases.
Research and Development Costs	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.
Stock Compensation	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, over the remaining requisite service period. We recorded $30.6 million and $20.8 million of stock compensation expense on our condensed consolidated statements of operations for the three months ended March 31, 2017 and 2016, respectively.
Acquisition-Related Contingent Consideration	Acquisition-Related Contingent Consideration. Acquisition-related contingent consideration, which consists of our future royalty and certain potential milestone obligations to ARIAD, 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 condensed 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”, which will replace 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. ASC No. 2014-09 requires extensive quantitative and qualitative disclosures covering the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including disclosures on significant judgments made when applying the guidance. This guidance is effective for annual reporting periods beginning after December 15, 2017 and interim periods therein. Early adoption is permitted for reporting periods and interim periods therein, beginning after December 15, 2016. An entity can elect to apply the guidance under one of the following two methods: (i) retrospectively to each prior reporting period presented – referred to as the full retrospective method or (ii) retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial application in retained earning – referred to as the modified retrospective method. We have substantially completed an initial impact assessment of the potential changes from adopting ASU 2014-09. The impact assessment consisted of a review of a representative sample of contracts, discussions with key stakeholders, and a cataloging of potential impacts on our financial statements, accounting policies, financial controls, and operations. We currently do not anticipate a material impact on our revenue recognition practices for product and royalty revenues. We do anticipate that the adoption of ASU 2014-09 will have primarily two impacts on our contract revenues generated by our collaborative research and license agreements: (i) (ii) We have not yet completed our final review of the impact of this guidance including the new disclosure requirements, as we are continuing to evaluate the impacts of adoption and the implementation approach to be used. We plan to adopt the new standard effective January 1, 2018. We continue to monitor additional changes, modifications, clarifications or interpretations being undertaken by the FASB, which may impact our current conclusions. In February 2016, the FASB issued ASU No. 2016-02, “Leases,” that requires lessees to recognize assets and liabilities on the balance sheet for most leases including operating leases. Lessees now classify leases as either finance or operating leases 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 Accounting Standards Codification (“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 single lease cost recognized on a straight-line basis. This guidance is to be applied using a modified retrospective approach at the beginning of the earliest comparative period presented in the financial statements and is effective for annual periods beginning after December 15, 2018 and interim periods therein. Early adoption is permitted. We are currently analyzing the impact of ASU No. 2016-02 and, at this time, are unable to determine the impact of the new standard, if any, on our condensed consolidated financial statements. In October 2016, the FASB issued ASU No. 2016-16, “Intra-Entity Transfers of Assets Other Than Inventory,” which requires companies to account for the income tax effects of intercompany sales and transfers of assets other than inventory in the period in which the transfer occurs. The new standard is effective for public business entities for annual periods beginning after December 15, 2017 (i.e. 2018 for a calendar-year entity). Early adoption is permitted for all entities as of the beginning of an annual period. The guidance is to be applied using a modified retrospective approach with a cumulative catch-up adjustment to opening retained earnings in the period of adoption. We have elected to early adopt ASU No. 2016-16 as of the first quarter of 2017, which requires us to reflect any adjustments as of January 1, 2017, the beginning of the annual period that includes the interim period of adoption. The primary impact of adoption was the recognition of a deferred tax asset of $34.9 million related to the excess of the tax basis over the consolidated book value basis in the intellectual property rights that were licensed from the U.S. parent company to our wholly-owned subsidiary in Switzerland during 2015 and a $2.1 million reversal of long-term prepaid taxes. Under previous guidance, companies were prohibited from recognizing an increase in tax basis and any income taxes incurred as a result of a sale or transfer of assets to companies that are part of a consolidated reporting entity. Given the full valuation allowance placed on the additional $34.9 million of deferred tax assets, the recognition upon adoption only required a $2.1 million adjustment to our retained earnings as of January 1, 2017 due to the adjustment of the prepaid tax asset. In November 2016, the FASB issued ASU No. 2016-18, “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. The new standard is effective for public business entities for fiscal years beginning after December 15, 2017 and interim periods therein and is to be applied retrospectively. Early adoption is permitted. We are currently analyzing the impact of ASU No. 2016-18 on our condensed consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-04, “Intangibles–Goodwill and Other,” 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. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The standard is to be applied on a prospective basis. We are currently analyzing the impact of ASU No. 2017-04 on our condensed consolidated financial statements. In March 2017, the FASB issued ASU No. 2017-07, “Compensation–Retirement Benefits,” which requires the presentation of the service cost component of the net periodic benefit cost in the same income statement line as other employee compensation costs arising from services rendered during the period. In addition, only the service cost component will be eligible for capitalization in assets. Disclosure of the line(s) used to present the other components of net periodic benefit cost, if the components are not presented separately in the income statement, is also required. The new standard is effective for public business entities for fiscal years beginning after December 15, 2017 and interim periods therein. Early adoption is permitted as of the beginning of an annual period for which financial statements have not been issued. The guidance on the presentation of the components of net periodic benefit cost in the income statement is to be applied retrospectively. The guidance limiting the capitalization of net periodic benefit cost in assets to the service cost component is to be applied prospectively. We are currently analyzing the impact of ASU No. 2017-07 on our condensed consolidated financial statements. In July 2015, the FASB issued ASU No. 2015-11, “Simplifying the Measurement of Inventory,” which requires inventory to be measured at the lower of cost and net realizable value rather than at the lower of cost or market value. The new standard is effective for public business entities for fiscal years beginning after December 15, 2016 and interim periods therein. The guidance is to be applied prospectively. We adopted ASU No. 2015-11 as of the first quarter of 2017 and the adoption had no impact on our condensed consolidated financial statements.

Business combination (Tables)

Business combination (Tables)	3 Months Ended
	Mar. 31, 2017
Business combinations
Schedule of assets acquired and liabilities assumed	Amounts Measurement Amounts Recognized as of Period Recognized as of (estimated in thousands) Acquisition Date(a) Adjustments(b) March 31, 2017 Current assets $ 21,413 $ (50) $ 21,363 Property and equipment 850 — 850 Restricted cash 432 — 432 Intangible assets (c) 283,000 — 283,000 Total identifiable assets 305,695 (50) 305,645 Current liabilities (15,720) 182 (15,538) Other long term liabilities (5,226) — (5,226) Total liabilities assumed (20,946) 182 (20,764) Goodwill (d) 155,725 (132) 155,593 Total fair value of consideration transferred $ 440,474 $ — $ 440,474 (a) As previously reported in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2016. (b) The measurement period adjustments primarily reflect a change in working capital as previously reported in our Annual Report on Form 10-K for the year ended December 31, 2016. (c) As of the effective date of the Acquisition, identifiable intangible assets are required to be measured at fair value. The fair value measurement is based on significant inputs that are unobservable in the market and thus represents a Level 3 measurement. We used an income approach to estimate the preliminary fair value of the intangibles which includes licensed intellectual property and IPR&D. The assumptions used to estimate the cash flows of the licensed intellectual property included a discount rate of 15%, estimated gross margins of 98%, income tax rates ranging from 7.8% in periods in which we have established tax holidays to 13.8% thereafter, and operating expenses consisting of direct costs based on the anticipated level of revenues as well as the $7.0 million of research and development cost sharing payments we owe in 2016 and 2017. The assumptions used to estimate the cash flows of the IPR&D (which relates to the potential approval of ICLUSIG as a second line treatment) included a PTS of 25%, discount rate of 16%, estimated gross margins of 98%, income tax rates ranging from 7.8% in periods in which we have established tax holidays to 13.8% thereafter, and operating expenses consisting of direct costs based on the anticipated level of revenues as well as probability weighted milestone payments estimated for 2020 related to the clinical results and potential approval of ICLUSIG as a second line treatment. The licensed intellectual property has a weighted-average useful life of approximately 12.5 years and will be amortized using the straight-line method. Amortization expense of the licensed intellectual property is recorded in cost of product revenues on the condensed consolidated statement of operations. The IPR&D is an indefinite-lived intangible and will not be amortized until the completion or abandonment of the related research and development activities. (d) Goodwill is calculated as the difference between the estimated acquisition date fair value of the consideration transferred and the estimated fair values of the assets acquired and liabilities assumed. The Goodwill is related to the existing platform, infrastructure, and workforce which is expected to generate synergies and further our strategic plan in Europe. Goodwill is not amortized and none of the goodwill is expected to be deductible for tax purposes.
Schedule of unaudited pro forma information	The following unaudited pro forma information presents condensed consolidated results of operations for the three months ended March 31, 2016, as if the Acquisition had occurred as of January 1, 2016 (in thousands). For the Three Months Ended March 31, 2016 Pro forma revenues $ 272,256 Pro forma net income $ 5,704

Fair value of financial instr26

Fair value of financial instruments (Tables)	3 Months Ended
	Mar. 31, 2017
Marketable Securities
Schedule of fair value of assets and liabilities 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 as of March 31, 2017 (in thousands): Fair Value Measurement at Reporting Date Using: Quoted Prices in Significant Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs Balance as of (Level 1) (Level 2) (Level 3) March 31, 2017 Cash and cash equivalents $ 361,823 $ — $ — $ 361,823 Debt securities (corporate and government) — 150,132 — 150,132 Long term investments (Note 9) 19,871 138,451 — 158,322 Total assets $ 381,694 $ 288,583 $ — $ 670,277
Schedule of rollforward of Level 3 liabilities	Fair Value Measurement at Reporting Date Using: Quoted Prices in Significant Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs Balance as of (Level 1) (Level 2) (Level 3) March 31, 2017 Contingent consideration (Note 3) $ — $ — $ 304,000 $ 304,000 Total liabilities $ — $ — $ 304,000 $ 304,000 The following is a rollforward of our Level 3 liabilities (in thousands): Level 3 Balance at January 1, 2017 $ 301,000 Contingent consideration earned during the period but not yet paid (4,356) Change in fair value of contingent consideration 7,356 Balance at March 31, 2017 $ 304,000
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 as of December 31, 2016 (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, 2016 Cash and cash equivalents $ 652,343 $ — $ — $ 652,343 Debt securities (corporate and government) — 156,203 — 156,203 Long term investment (Note 9) 31,987 — — 31,987 Total assets $ 684,330 $ 156,203 $ — $ 840,533
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 as of December 31, 2016 (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, 2016 Contingent consideration (Note 3) $ — $ — $ 301,000 $ 301,000 Total liabilities $ — $ — $ 301,000 $ 301,000
Fair Value, Liabilities Measured on Recurring Basis [Table Text Block]	The following fair value hierarchy table presents information about each major category of our financial liabilities measured at fair value on a recurring basis as of December 31, 2016 (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, 2016 Contingent consideration (Note 3) $ — $ — $ 301,000 $ 301,000 Total liabilities $ — $ — $ 301,000 $ 301,000
Summary of marketable securities portfolio	The following fair value hierarchy table presents information about each major category of our financial liabilities measured at fair value on a recurring basis as of December 31, 2016 (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, 2016 Contingent consideration (Note 3) $ — $ — $ 301,000 $ 301,000 Total liabilities $ — $ — $ 301,000 $ 301,000 The following is a summary of our marketable security portfolio as of March 31, 2017 and December 31, 2016, respectively. Net Net Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value (in thousands) March 31, 2017 Debt securities (corporate and government) $ 150,293 $ — $ (161) $ 150,132 December 31, 2016 Debt securities (corporate and government) $ 156,330 $ — $ (127) $ 156,203

Concentration of Credit Risk (T

Concentration of Credit Risk (Tables)	3 Months Ended
	Mar. 31, 2017
Concentration of Credit Risk
Schedule of concentration of credit risk related to collaborative partners	Percentage of Total Contract Revenues for the Three Months Ended March 31, 2017 2016 Collaboration Partner A 28 % — % Collaboration Partner B 72 % 100 %
Schedule of concentration of credit risk related to specialty pharmacy customers	Percentage of Total Net Product Revenues for the Three Months Ended March 31, 2017 2016 Customer A 27 % 27 % Customer B 16 % 18 % Customer C 13 % 12 % Customer D 8 % 8 %

Inventory (Tables)

Inventory (Tables)	3 Months Ended
	Mar. 31, 2017
Inventory
Schedule of inventory	March 31, December 31, 2017 2016 (in thousands) Raw materials $ 109 $ 109 Work-in-process 14,439 15,084 Finished goods 3,961 4,106 18,509 19,299 Inventories-current 3,961 4,106 Inventories-non-current $ 14,548 $ 15,193

Property and Equipment (Tables)

Property and Equipment (Tables)	3 Months Ended
	Mar. 31, 2017
Property and Equipment
Schedule of property and equipment	March 31, December 31, 2017 2016 (in thousands) Office equipment $ 10,306 $ 9,243 Laboratory equipment 40,619 37,203 Computer equipment 39,912 38,184 Land 4,125 4,125 Building and leasehold improvements 154,584 130,734 249,546 219,489 Less accumulated depreciation and amortization (56,335) (51,810) Property and equipment, net $ 193,211 $ 167,679

Intangible assets and goodwill

Intangible assets and goodwill (Tables)	3 Months Ended
	Mar. 31, 2017
Intangible assets and goodwill
Schedule of intangible assets, net	The components of intangible assets as of March 31, 2017 were as follows (in thousands, except for useful life): Weighted- Gross Net Average Useful Carrying Accumulated Carrying Lives (Years) Amount Amortization Amount Finite-lived intangible assets: Licensed IP (1) 12.5 $ 271,000 $ 17,947 $ 253,053 Indefinite-lived intangible assets: Acquired IPR&D (1) N/A 12,000 — 12,000 $ 283,000 $ 17,947 $ 265,053 (1) We acquired certain intangible assets as part of the Acquisition, as described further in Note 3.
Schedule of estimated aggregate amortization expense	Estimated aggregate amortization expense based on the current carrying value of amortizable intangible assets, excluding any possible future amortization associated with acquired IPR&D, for which development has not yet been completed, is as follows (in thousands): Remainder of 2017 2018 2019 2020 2021 Thereafter Amortization expense $ 16,152 $ 21,536 $ 21,536 $ 21,536 $ 21,536 $ 150,757

Stock compensation (Tables)

Stock compensation (Tables)	3 Months Ended
	Mar. 31, 2017
Stock Compensation
Schedule of valuation assumptions used for valuation of fair value of stock compensation granted	Employee Stock Options For the Three Months Ended Employee Stock Purchase Plan For the Three Months Ended March 31, March 31, 2017     2016    2017    2016    Average risk-free interest rates %   %   %   %   Average expected life (in years) Volatility % % % % Weighted-average fair value (in dollars)
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, 2016 6,327,138 11,504,572 $ 48.40 Options granted (1,471,156) 1,471,156 $ 114.41 Options exercised — (1,688,337) $ 26.42 Options cancelled 48,932 (48,932) $ 93.65 Balance at March 31, 2017 4,904,914 11,238,459 $ 60.15
Schedule of RSU and PSU award activity under the 2010 Stock Plan	Shares Subject to Shares Available Outstanding Awards for Grant Shares Grant Date Value Balance at December 31, 2016 1,146,152 1,246,570 — RSUs granted (68,782) 68,782 $ 117.54 RSUs cancelled 15,341 (15,341) $ 83.64 RSUs released — (163,354) $ 118.45 PSUs released — (43,376) $ 122.29 Balance at March 31, 2017 1,092,711 1,093,281 —

Debt (Tables)

Debt (Tables)	3 Months Ended
	Mar. 31, 2017
Debt
Schedule of components of convertible notes	The components of the convertible notes are as follows (in thousands): Carrying Amount, Interest Rates March 31, December 31, Debt March 31, 2017 Maturities 2017 2016 0.375% Convertible Senior Notes due 2018 0.375 % $ 23,987 $ 1.25% Convertible Senior Notes due 2020 1.25 % 17,617 41,604 651,481 Less current portion — — $ 41,604 $ 651,481
Schedule of carrying amount and fair value of convertible notes	The carrying amount and fair value of our convertible notes are as follows (in thousands): March 31, 2017 December 31, 2016 Carrying Carrying Amount Fair Value Amount Fair Value 0.375% Convertible Senior Notes due 2018 $ 23,987 $ 67,589 $ 340,916 $ 1.25% Convertible Senior Notes due 2020 17,617 55,227 310,565 $ 41,604 $ 122,816 $ 651,481 $ 1,511,288

Defined benefit pension oblig33

Defined benefit pension obligation (Tables)	3 Months Ended
	Mar. 31, 2016
Defined benefit pension obligation
Schedule of net periodic benefit cost	The net periodic benefit cost for the three months ended March 31, 2017 was as follows (in thousands): Three Months Ended March 31, 2017 Service cost $ 616 Interest cost 46 Expected return on plan assets (35) Amortization of prior service cost 12 Amortization of actuarial losses 34 Net periodic benefit cost $ 673

Net loss per share (Tables)

Net loss per share (Tables)	3 Months Ended
	Mar. 31, 2017
Net Income (Loss) Per Share
Schedule of calculation of net income (loss) per share	Three Months Ended March 31, (in thousands, except per share data) 2017 2016 Basic Net Income (Loss) Per Share Basic net income (loss) $ (187,083) $ 24,047 Weighted average common shares outstanding 195,260 187,184 Basic net income (loss) per share $ (0.96) $ 0.13 Diluted Net Income (Loss) Per Share Diluted net income (loss) $ (187,083) $ 24,047 Weighted average common shares outstanding 195,260 187,184 Dilutive stock options and RSU’s — 5,441 Weighted average shares used to compute diluted net income (loss) per share 195,260 192,625 Diluted net income (loss) per share $ (0.96) $ 0.12
Schedule of antidilutive securities excluded from the computation of earnings per share	Three Months Ended March 31, 2017 2016 Outstanding stock options and awards 12,598,407 2,652,265 Common shares issuable upon conversion of the 2018 Notes 505,004 7,245,244 Common shares issuable upon conversion of the 2020 Notes 407,000 7,241,284 Total potential common shares excluded from diluted net loss per share computation 13,510,411 17,138,793

Organization and business (Deta

Organization and business (Details)	3 Months Ended
	Mar. 31, 2017segment
Organization and Business
Number of operating segments	1

Summary of significant accoun36

Summary of significant accounting policies - Narrative 1 (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2017USD ($)itemissuerinstrument	Dec. 31, 2016USD ($)
Concentrations of Credit Risk
Number of issuer to which company limits the amount of credit exposure other than US Government guaranteed securities | issuer	1
Number of financial investment to which company limits the amount of credit exposure other than US Government guaranteed securities | instrument	1
Accounts Receivable
Allowance for doubtful accounts | $	$ 0	$ 0
Variable Interest Entities
Number of entities in which variable interest held | item	0
JAKAFI
Inventory
Shelf life for finished goods inventory, maximum	36 months
JAKAFI | Minimum
Inventory
Period of lower average per unit cost of materials	3 months
ICLUSIG
Inventory
Shelf life for finished goods inventory, maximum	24 months

Summary of significant accoun37

Summary of significant accounting policies - Narrative 2 (Details) $ in Thousands	Jan. 01, 2017USD ($)	Mar. 31, 2017USD ($)itemcategory	Mar. 31, 2016USD ($)
Revenue Recognition
Percentage of Medicare Part D insurance coverage gap mandate to be funded by manufacturers		50.00%
Categories of milestone events, number | category		3
Number of stages of life-cycle drugs | item		3
Stock-Based Compensation
Stock-based compensation expense		$ 30,600	$ 20,800
Recent Accounting Pronouncements
Provision (benefit) for income taxes		(10,900)	$ 400
Accounting Standards Update 2016-16
Recent Accounting Pronouncements
Deferred tax assets	$ 34,900	$ 34,900
Reversal of long-term prepaid taxes	(2,100)
Provision (benefit) for income taxes	$ 2,100
ICLUSIG
Revenue Recognition
Amortization period		12 years 6 months

Business combination - Narrativ

Business combination - Narratives (Details) - ARIAD Pharmaceuticals $ in Millions	Jun. 01, 2016USD ($)
Business combinations
Upfront Payment	$ 147.5
Period for additional payment on sales booked	12 months
Fair value of consideration transferred
Fair value of consideration transferred	$ 440.5
Cash	147.5
Contingent consideration	$ 293
Contingent Consideration
Fair value of consideration transferred
Probability of technical success (“PTS”) (as a percent)	25.00%
Projected cash flows period	18 years
Discount rate (as a percent)	10.00%
Minimum
Business combinations
Royalties paid (as a percentage)	32.00%
Royalties received (as a percentage)	20.00%
Maximum
Business combinations
Royalties paid (as a percentage)	50.00%
Potential future oncology development and regulatory approval milestone payments	$ 135
Development costs	$ 7
Royalties received (as a percentage)	25.00%
Period for buy back provision	6 years

Business combination - Assets A

Business combination - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands	Jun. 01, 2016	Mar. 31, 2017	Mar. 31, 2017	Dec. 31, 2016	[1]
Amounts Recognized
Goodwill		$ 155,593	$ 155,593	$ 155,593
Licensed IP
Amounts Recognized
Weighted average useful life		12 years 6 months
ARIAD Pharmaceuticals
Amounts Recognized
Current assets	$ 21,413	$ 21,363	21,363
Property and equipment	850	850	850
Restricted cash	432	432	432
Intangible assets	283,000	283,000	283,000
Total identifiable assets	305,695	305,645	305,645
Current liabilities	(15,720)	(15,538)	(15,538)
Other long term liabilities	(5,226)	(5,226)	(5,226)
Total liabilities assumed	(20,946)	(20,764)	(20,764)
Goodwill	155,725	155,593	155,593
Total fair value of consideration transferred	440,474	$ 440,474	440,474
Measurement Period Adjustments
Current assets			(50)
Total identifiable assets			(50)
Current liabilities			182
Total liabilities assumed			182
Goodwill			$ (132)
ARIAD Pharmaceuticals | Maximum
Amounts Recognized
Development costs	$ 7,000
ARIAD Pharmaceuticals | Licensed IP
Amounts Recognized
Discount rate (as a percent)	15.00%
Gross margins (as a percent)	98.00%
Weighted average useful life	12 years 6 months
ARIAD Pharmaceuticals | Licensed IP | Minimum
Amounts Recognized
Tax rates (as a percent)	7.80%
ARIAD Pharmaceuticals | Licensed IP | Maximum
Amounts Recognized
Tax rates (as a percent)	13.80%
Development costs	$ 7,000
ARIAD Pharmaceuticals | IPR&D
Amounts Recognized
Probability of technical success (“PTS”) (as a percent)	25.00%
Discount rate (as a percent)	16.00%
Gross margins (as a percent)	98.00%
ARIAD Pharmaceuticals | IPR&D | Minimum
Amounts Recognized
Tax rates (as a percent)	7.80%
ARIAD Pharmaceuticals | IPR&D | Maximum
Amounts Recognized
Tax rates (as a percent)	13.80%
[1]	The condensed consolidated balance sheet at December 31, 2016 has been derived from the audited financial statements at that date.

Business combination - Pro Form

Business combination - Pro Forma Impact of Business Combination (Details) - ARIAD Pharmaceuticals $ in Thousands	3 Months Ended
	Mar. 31, 2016USD ($)
Unaudited pro forma information
Pro forma revenues	$ 272,256
Pro forma net income	$ 5,704

Fair value of financial instr41

Fair value of financial instruments - Fair value on a recurring basis (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Fair value of financial instruments
Long term investments	$ 158,322	$ 31,987	[1]
Level 3 | Fair Value
Fair value of financial instruments
Total liabilities	304,000	301,000
Recurring | Fair Value
Fair value of financial instruments
Cash and cash equivalents	361,823	652,343
Debt securities (corporate and government)	150,132	156,203
Long term investments	158,322	31,987
Total assets	670,277	840,533
Contingent consideration	304,000	301,000
Total liabilities	304,000	301,000
Recurring | Level 1
Fair value of financial instruments
Cash and cash equivalents	361,823	652,343
Long term investments	19,871	31,987
Total assets	381,694	684,330
Recurring | Level 2
Fair value of financial instruments
Debt securities (corporate and government)	150,132	156,203
Long term investments	138,451
Total assets	288,583	156,203
Recurring | Level 3
Fair value of financial instruments
Contingent consideration	304,000	301,000
Total liabilities	$ 304,000	$ 301,000
[1]	The condensed consolidated balance sheet at December 31, 2016 has been derived from the audited financial statements at that date.

Fair value of financial instr42

Fair value of financial instruments - Rollforward of Level 3 liabilities (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2017USD ($)
Rollforward of Level 3 liabilities
Change in fair value of contingent consideration	$ 7,356
ARIAD Pharmaceuticals
Rollforward of Level 3 liabilities
Royalties paid	4,100
Fair Value | Level 3
Rollforward of Level 3 liabilities
Balance at beginning of period	301,000
Contingent consideration earned during the period but not yet paid	(4,356)
Change in fair value of contingent consideration	7,356
Balance at end of period	$ 304,000

Fair value of financial instr43

Fair value of financial instruments - Marketable securities portfolio (Details) - Debt securities (corporate and government) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Summary of marketable security portfolio
Amortized Cost	$ 150,293	$ 156,330
Net Unrealized Losses	(161)	(127)
Estimated Fair Value	$ 150,132	$ 156,203
Minimum
Summary of marketable security portfolio
Contractual maturity dates	12 months
Maximum
Summary of marketable security portfolio
Contractual maturity dates	18 months

Concentration of Credit Risk (D

Concentration of Credit Risk (Details)	3 Months Ended		12 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Contract Revenues | Customer Concentration Risk | Collaboration Partner A
Concentration of risk
Percentage of concentration risk	28.00%
Contract Revenues | Customer Concentration Risk | Collaboration Partner B
Concentration of risk
Percentage of concentration risk	72.00%	100.00%
Sales Revenue | Customer Concentration Risk | Customer A
Concentration of risk
Percentage of concentration risk	27.00%	27.00%
Sales Revenue | Customer Concentration Risk | Customer B
Concentration of risk
Percentage of concentration risk	16.00%	18.00%
Sales Revenue | Customer Concentration Risk | Customer C
Concentration of risk
Percentage of concentration risk	13.00%	12.00%
Sales Revenue | Customer Concentration Risk | Customer D
Concentration of risk
Percentage of concentration risk	8.00%	8.00%
Accounts Receivable | Credit Concentration Risk | Collaboration Partner A and B
Concentration of risk
Percentage of concentration risk	49.00%		23.00%
Accounts Receivable | Credit Concentration Risk | Customer A B C and D
Concentration of risk
Percentage of concentration risk	27.00%		41.00%

Inventory (Details)

Inventory (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Dec. 31, 2016		Jun. 01, 2016
Raw materials	$ 109	$ 109
Work-in-process	14,439	15,084
Finished goods	3,961	4,106
Total inventories	18,509	19,299
Inventories - current	3,961	4,106	[1]
Inventories - non -current	$ 14,548	$ 15,193	[1]
JAKAFI
Shelf life for finished goods inventory, maximum	36 months
ICLUSIG
Inventories acquired				$ 4,000
Shelf life for finished goods inventory, maximum	24 months
[1]	The condensed consolidated balance sheet at December 31, 2016 has been derived from the audited financial statements at that date.

Property and Equipment, net - P

Property and Equipment, net - Property and equipment, net (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Property and equipment, net
Property and Equipment, gross	$ 249,546	$ 219,489
Less accumulated depreciation and amortization	(56,335)	(51,810)
Property and Equipment, net	193,211	167,679	[1]
Office Equipment
Property and equipment, net
Property and Equipment, gross	10,306	9,243
Laboratory Equipment
Property and equipment, net
Property and Equipment, gross	40,619	37,203
Computer Equipment
Property and equipment, net
Property and Equipment, gross	39,912	38,184
Land
Property and equipment, net
Property and Equipment, gross	4,125	4,125
Building And Leasehold Improvements
Property and equipment, net
Property and Equipment, gross	$ 154,584	$ 130,734
[1]	The condensed consolidated balance sheet at December 31, 2016 has been derived from the audited financial statements at that date.

Property and equipment, net - N

Property and equipment, net - Narrative (Details) $ in Thousands	1 Months Ended		3 Months Ended
	Mar. 31, 2017USD ($)	Apr. 30, 2016USD ($)ft²	Mar. 31, 2017USD ($)	Mar. 31, 2016USD ($)	Sep. 30, 2016buildingagreement
Property and equipment, net
Capital expenditures			$ 20,967	$ 5,562
Laboratory and Office Space in Wilmington, Delaware
Property and equipment, net
Square footage | ft²		190,000
Purchase price of land and office building(s)		$ 35,400
Laboratory and Office Space in Wilmington, Delaware | Land
Property and equipment, net
Purchase price of land and office building(s)		3,800
Laboratory and Office Space in Wilmington, Delaware | Building And Leasehold Improvements
Property and equipment, net
Purchase price of land and office building(s)		$ 31,600
Laboratory and Office Space in Wilmington, Delaware | Building
Property and equipment, net
Estimated useful life		P40Y
Land and Two Buildings in Wilmington, Delaware
Property and equipment, net
Purchase price of land and office building(s)	$ 8,000
Number of agreements | agreement					2
Number of buildings | building					2

Intangible assets and goodwil48

Intangible assets and goodwill (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2017USD ($)
Finite-lived intangible assets:
Accumulated Amortization	$ 17,947
Intangible Assets, Net
Gross Carrying Amount	283,000
Net Carrying Amount	265,053
Amortization Expense
Remainder of 2017	16,152
2,018	21,536
2,019	21,536
2,020	21,536
2,021	21,536
Thereafter	150,757
Changes to carrying amount of goodwill
Changes to the carry amount of goodwill	0
IPR&D
Indefinite-lived intangible assets:
Net Carrying Amount	$ 12,000
Licensed IP
Intangible assets
Weighted Average Useful Lives (Years)	12 years 6 months
Finite-lived intangible assets:
Gross Carrying Amount	$ 271,000
Accumulated Amortization	17,947
Finite-Lived Intangible Assets, Net, Total	$ 253,053

License agreements - Novartis (

License agreements - Novartis (Details) $ in Thousands

1 Months Ended

3 Months Ended

12 Months Ended

89 Months Ended

Apr. 30, 2016USD ($)

Sep. 30, 2014USD ($)

Jan. 31, 2010USD ($)

Dec. 31, 2009USD ($)

Nov. 30, 2009USD ($)item

Mar. 31, 2017USD ($)

Mar. 31, 2016USD ($)

Dec. 31, 2016USD ($)

Dec. 31, 2015USD ($)

Dec. 31, 2014USD ($)

Dec. 31, 2013USD ($)

Dec. 31, 2012USD ($)

Dec. 31, 2011USD ($)

Dec. 31, 2010USD ($)

Mar. 31, 2017USD ($)

License agreements

Contract revenues

$ 90,000

$ 58,214

Product royalty revenues

29,221

21,903

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

Number of deliverables under license agreement | item

2

Reimbursable costs recorded as deferred revenue

$ 10,900

Reimbursable costs included in accounts receivable

600

$ 600

$ 600

Research and development expenses reimbursed

700

300

Contract revenues

25,000

0

Product royalties in accounts receivable

28,800

33,300

28,800

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 | 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 | Europe

License agreements

Amount recognized and received for the achievement of a predefined milestone

40,000

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

$ 20,000

Novartis | Commercialization Milestones | Maximum

License agreements

Upfront and immediate milestone payment to be received under license agreement

$ 500,000

Novartis | GVHD

License agreements

Additional milestone payment received under license agreement

$ 75,000

Novartis | GVHD | Development Milestones

License agreements

Amount recognized and received for the achievement of a predefined milestone

25,000

Novartis | GVHD | Commercialization Milestones | Non-U.S.

License agreements

Amount recognized and received for the achievement of a predefined milestone

$ 5,000

Novartis | JAKAFI | U.S.

License agreements

Royalties payable on net sales

7,800

5,200

Novartis | JAKAFI | Development Milestones

License agreements

Amount recognized and received for the achievement of a predefined milestone

$ 5,000

$ 7,000

$ 25,000

$ 15,000

$ 50,000

Novartis | JAKAFI | Regulatory Milestones | Europe

License agreements

Amount recognized and received for the achievement of a predefined milestone

25,000

60,000

$ 40,000

Novartis | JAKAFI | Regulatory Milestones | JAPAN

License agreements

Amount recognized and received for the achievement of a predefined milestone

$ 25,000

Novartis | JAKAFI | Regulatory Milestones | U.S.

License agreements

Amount recognized and received for the achievement of a predefined milestone

$ 10,000

Novartis | Capmatinib | Minimum

License agreements

Royalty payments on future global net sales (as a percent)

12.00%

Novartis | Capmatinib | Maximum

License agreements

Royalty payments on future global net sales (as a percent)

14.00%

Novartis | JAKAVI

License agreements

Net sales

300,000

Product royalty revenues

$ 28,800

$ 21,900

Novartis | JAKAVI | Regulatory Milestones | Europe

License agreements

Amount recognized and received for the achievement of a predefined milestone

$ 60,000

Novartis | JAKAVI | Regulatory Milestones | JAPAN

License agreements

Amount recognized and received for the achievement of a predefined milestone

15,000

Novartis | JAKAVI | Commercialization Milestones

License agreements

Amount recognized and received for the achievement of a predefined milestone

$ 20,000

License agreements - Lilly (Det

License agreements - Lilly (Details) $ in Thousands	1 Months Ended				3 Months Ended		12 Months Ended			88 Months Ended
	Jan. 31, 2017	Mar. 31, 2016USD ($)	Jul. 31, 2010	Dec. 31, 2009USD ($)item	Mar. 31, 2017USD ($)	Mar. 31, 2016USD ($)	Dec. 31, 2016USD ($)	Dec. 31, 2012USD ($)	Dec. 31, 2010USD ($)	Mar. 31, 2017USD ($)
License agreements
Research and Development Expense					$ 407,972	$ 156,824
Contract revenues					90,000	58,214
Lilly
License agreements
Upfront payment received under license agreement				$ 90,000
Research and Development Expense					9,400	5,100
Number of deliverables under license agreement | item				2
Contract revenues					65,000	58,200
Net sales					400
Product royalties in accounts receivable					$ 400					$ 400
Lilly | Maximum
License agreements
Associated future royalty payments from the initiation of a Phase IIb trial, if elected to not co-develop, percentage					20.00%
Lilly | Phase Two A
License agreements
Funding of future development costs (as a percent)	30.00%
Lilly | Phase Two B
License agreements
Funding of future development costs (as a percent)			30.00%		30.00%
Lilly | Pre-specified Events | Maximum
License agreements
Upfront and immediate milestone payment to be received under license agreement				$ 665,000
Lilly | Development Milestones
License agreements
Amount recognized and received for the achievement of a predefined milestone										99,000
Lilly | Development Milestones | Maximum
License agreements
Upfront and immediate milestone payment to be received under license agreement				150,000
Lilly | Development Milestones | Phase Three
License agreements
Amount recognized and received for the achievement of a predefined milestone								$ 50,000
Lilly | Development Milestones | Phase Two A
License agreements
Amount recognized and received for the achievement of a predefined milestone									$ 30,000
Lilly | Development Milestones | Phase Two B
License agreements
Amount recognized and received for the achievement of a predefined milestone									$ 19,000
Lilly | Regulatory Milestones
License agreements
Amount recognized and received for the achievement of a predefined milestone										$ 120,000
Lilly | Regulatory Milestones | U.S.
License agreements
Amount recognized and received for the achievement of a predefined milestone							$ 35,000
Lilly | Regulatory Milestones | Europe
License agreements
Amount recognized and received for the achievement of a predefined milestone					$ 65,000		$ 20,000
Lilly | Regulatory Milestones | Maximum
License agreements
Upfront and immediate milestone payment to be received under license agreement				365,000
Lilly | Commercialization Milestones | Maximum
License agreements
Upfront and immediate milestone payment to be received under license agreement				$ 150,000
Lilly | GVHD
License agreements
Research and Development Expense						35,000
Upfront payment under license agreement		$ 35,000
Additional milestone payments under the license agreement		$ 40,000				$ 40,000

License agreements - Agenus (De

License agreements - Agenus (Details) $ / shares in Units, $ in Thousands, shares in Millions	Feb. 14, 2017USD ($)$ / shares	Feb. 01, 2017USD ($)$ / sharesshares	Feb. 28, 2017USD ($)	Nov. 30, 2015item	Feb. 28, 2015	Jan. 31, 2015item	Mar. 31, 2017USD ($)	Mar. 31, 2016USD ($)	Dec. 31, 2016USD ($)
License agreements
Research and development expense							$ 407,972	$ 156,824
Unrealized loss on long term investments							(5,814)	(2,950)
Long term investment							$ 158,322		$ 31,987	[1]
Agenus
License agreements
Number of program targets | item				3		4
Royalty payments on future global net sales (as a percent)							15.00%
Period of notice for termination of license agreement			12 months
Agenus | Development, Regulatory and Commercialization Milestones
License agreements
Additional milestone payments under the license agreement			$ 510,000
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%
Agenus | Development Milestones
License agreements
Upfront payment under license agreement							$ 20,000
Agenus
License agreements
Research and development expense							7,700	4,100
Shares owned following stock purchase (as a percent)	11.00%				9.00%
Ownership percentage (as a percent)	18.00%
Unrealized loss on long term investments							(7,700)	$ (3,000)
Long term investment							63,800
Total revenues									22,600
Net income (loss)									$ (127,000)
Agenus | Accrued and other liabilities
License agreements
Accrued and other liabilities							$ 8,300
Agenus | Stock purchase agreement
License agreements
Purchase of common stock under Stock Purchase Agreement (in shares ) | shares		10
Purchase price of common stock		$ 60,000
Per share price | $ / shares	$ 4.40	$ 6
Discount for lack of marketability	$ 4,500
Fair value of shares on the issuance date	39,500
Total consideration paid	60,000
Research and development expense	20,500
Long term investment	$ 39,500
[1]	The condensed consolidated balance sheet at December 31, 2016 has been derived from the audited financial statements at that date.

License agreements - Hengrui (D

License agreements - Hengrui (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2015	Sep. 01, 2015
License agreements
Research and development expense	$ 407,972	$ 156,824
Hengrui
License agreements
Upfront payment made under license agreement			$ 25,000
Potential milestone payments to be made				$ 770,000
Research and development expense	$ 0	$ 700
Hengrui | Regulatory Milestones
License agreements
Potential milestone payments to be made				90,000
Hengrui | Commercialization Milestones
License agreements
Potential milestone payments to be made				530,000
Hengrui | Clinical Superiority Milestones
License agreements
Potential milestone payments to be made				$ 150,000

License agreements - Mercus (De

License agreements - Mercus (Details) $ / shares in Units, $ in Thousands, shares in Millions	Jan. 27, 2017USD ($)$ / shares	Jan. 23, 2017	Feb. 28, 2017USD ($)	Jan. 31, 2017USD ($)item	Dec. 31, 2016USD ($)$ / sharesshares		Mar. 31, 2017USD ($)	Mar. 31, 2016USD ($)
License agreements
Long term investment					$ 31,987	[1]	$ 158,322
Research and development expense							407,972	$ 156,824
Unrealized Gain (Loss) on Securities							(5,814)	$ (2,950)
Merus
License agreements
Number of independent programs | item				11
Number of preclinical discovery programs | item				2
Number of programs under the resulting products are cofunded for development | item				2
Associated future global development costs , if elected to co-develop (as a percent)				35.00%
Upfront payment under license agreement			$ 120,000
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 | Non-U.S.
License agreements
Royalty payments on future global net sales (as a percent)				6.00%
Merus | Maximum
License agreements
Number of additional preclinical discovery programs | item				9
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 | 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
Per share price of common stock | $ / shares	$ 24.50
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						1,100
Fair market value of our long term investments							$ 74,700
Ownership percentage (as a percent)							17.00%
Unrealized Gain (Loss) on Securities							$ 1,900
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
Per share price | $ / shares					$ 25
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%
[1]	The condensed consolidated balance sheet at December 31, 2016 has been derived from the audited financial statements at that date.

License agreements - Calithera

License agreements - Calithera (Details) - USD ($) $ / shares in Units, $ in Thousands	Jan. 30, 2017	Jan. 01, 2017	Mar. 31, 2017	Jan. 31, 2017	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016	[1]
License agreements
Long term investment			$ 158,322		$ 158,322		$ 31,987
Unrealized Gain (Loss) on Securities					(5,814)	$ (2,950)
Research and development expense					407,972	$ 156,824
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					1,600
Calithera | U.S.
License agreements
Percentage of profit (losses)				60.00%
Calithera
License agreements
Total consideration paid	$ 53,000
Long term investment			$ 19,900		$ 19,900
Ownership percentage (as a percent)			4.90%		4.90%
Calithera | Other Comprehensive Income
License agreements
Unrealized Gain (Loss) on Securities					$ 8,300
Calithera | Stock purchase agreement
License agreements
Purchase of common stock under Stock Purchase Agreement (in shares )		1,720,430
Purchase price of common stock		$ 8,000
Per share price	$ 6.75	$ 4.65
Fair market value of our long term investments	$ 11,600
Stock purchase price				$ 8,000
Long term investment			$ 11,600		11,600
Research and development expense					$ 41,400
Calithera | Collaboration and license agreement
License agreements
Upfront license fees				$ 45,000
[1]	The condensed consolidated balance sheet at December 31, 2016 has been derived from the audited financial statements at that date.

Stock Compensation (Details)

Stock Compensation (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Stock compensation
Stock compensation expense	$ 30.6	$ 20.8
Weighted-average fair value assumptions
Valuation method	Black-Scholes valuation model
Dividend yield (as a percent)	0.00%
Research and Development Expense.
Stock compensation
Stock compensation expense	$ 21.5	13
Selling, General and Administrative Expenses
Stock compensation
Stock compensation expense	$ 9.1	$ 7.8
Employee Stock Purchase Plan
Weighted-average fair value assumptions
Average risk-free interest rates (as a percent)	1.27%	0.73%
Average expected life (in years)	3 months	3 months
Volatility (as a percent)	40.00%	61.00%
Weighted-average fair value (in dollars per share)	$ 17.82	$ 26.67
Stock Options
Weighted-average fair value assumptions
Average risk-free interest rates (as a percent)	1.82%	1.50%
Average expected life (in years)	5 years 4 months 10 days	5 years
Volatility (as a percent)	49.00%	49.00%
Weighted-average fair value (in dollars per share)	$ 51.93	$ 41.56
Unrecognized compensation
Unrecognized compensation cost for nonvested option (in dollars)	$ 107.6
Vesting period of recognition of the unrecognized compensation cost of nonvested awards	1 year 7 months 6 days
Restricted Stock Units (RSUs)
Unrecognized compensation
Unrecognized compensation cost for nonvested option (in dollars)	$ 49
Vesting period of recognition of the unrecognized compensation cost of nonvested awards	1 year 6 months

Stock Compensation - Option act

Stock Compensation - Option activity (Details) - Stock Options - $ / shares	1 Months Ended	3 Months Ended	6 Months Ended
	Jul. 31, 2016	Mar. 31, 2017	Jun. 30, 2016
Shares Available For Grant
Outstanding at the beginning of the period (in shares)		6,327,138
Options granted (in shares)		(1,471,156)
Options cancelled (in shares)		48,932
Outstanding at the end of the period (in shares)		4,904,914
Shares Subject to Outstanding Options, Shares
Outstanding at the beginning of the period (in shares)		11,504,572
Options granted (in shares)		1,471,156
Options exercised (in shares)		(1,688,337)
Options cancelled (in shares)		(48,932)
Outstanding at the end of the period (in shares)		11,238,459
Shares Subject to Outstanding Options, Weighted Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)		$ 48.40
Options granted (in dollars per share)		114.41
Options exercised (in dollars per share)		26.42
Options cancelled (in dollars per share)		93.65
Outstanding at the end of the period (in dollars per share)		$ 60.15
Termination period	10 years		7 years
Vesting period	4 years		3 years
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

Stock Compensation - RSU and PS

Stock Compensation - RSU and PSU award activity (Details)	3 Months Ended
	Mar. 31, 2017$ / sharesshares
Restricted Stock Units (RSUs)
Shares Available For Grant
Shares Available for Grant Beginning Balance (in shares)	1,146,152
Granted (in shares)	(68,782)
Cancelled (in shares)	15,341
Shares Available for Grant Ending Balance (in shares)	1,092,711
Shares Subject to Outstanding Options, Shares
Outstanding at the beginning of the period (in shares)	1,246,570
Granted (in shares)	68,782
Cancelled (in shares)	(15,341)
Released (in shares)	(163,354)
Outstanding at the end of the period (in shares)	1,093,281
Shares Subject to Outstanding Options, Weighted Average Exercise Price
Granted (in dollars per share) | $ / shares	$ 117.54
Cancelled (in dollars per share) | $ / shares	83.64
Released (in dollars per share) | $ / shares	$ 118.45
Performance Stock Units (PSUs)
Shares Subject to Outstanding Options, Shares
Released (in shares)	(43,376)
Shares Subject to Outstanding Options, Weighted Average Exercise Price
Released (in dollars per share) | $ / shares	$ 122.29

Stock Compensation - RSU and 58

Stock Compensation - RSU and PSU Narrative (Details) - shares	1 Months Ended		3 Months Ended	6 Months Ended
	Jul. 31, 2016	Jan. 31, 2014	Mar. 31, 2017	Jun. 30, 2016	Dec. 31, 2016
Stock Compensation Plans
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	4 years			3 years
Granted (in shares)			68,782
Outstanding (in shares)			1,092,711		1,146,152
Restricted Stock Units (RSUs) | President And Chief Executive Officer
Stock Compensation Plans
Percentage of units vesting at the end of each calendar year (as a percent)			16.70%
Granted (in shares)		400,000
Vested (in shares)			200,000
Outstanding (in shares)			200,000

Debt (Details)

Debt (Details) - USD ($) $ in Thousands, shares in Millions	3 Months Ended
	Mar. 31, 2017	Dec. 31, 2016		Mar. 31, 2016
Convertible Notes
Convertible senior notes noncurrent	$ 41,604	$ 651,481	[1]
Recording expense related to senior note conversion	54,130
Fair value of the premium shares issued and cash paid in connection with the agreement	47,500
Carrying Amount
Convertible Notes
Convertible senior notes, total	41,604	651,481
Convertible senior notes noncurrent	41,604	651,481
Fair Value
Convertible Notes
Convertible senior notes, total	$ 122,816	1,511,288
Director
Convertible Notes
Common stock issued in exchange of notes (in shares)	10.6
0.375% Convertible Senior Notes due 2018 and 1.25% Convertible Senior Notes 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	5 days
Number of consecutive trading days before five consecutive business days during the note measurement period	5 days
Conversion ratio, principal amount of note	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%
Number of scheduled trading days preceding relevant maturity date at which Notes are convertible regardless of other circumstances	2 days
0.375% Convertible Senior Notes due 2018
Convertible Notes
Interest rate of debt (as a percent)	0.375%			0.375%
Aggregate principal amount of notes exchanged	$ 348,900
Common stock issued in exchange of notes (in shares)	6.7
Premium	$ 100
Shares Issued as Premium	12.6
Cash used to fund redemption of notes	$ 1,300
Recording expense related to senior note conversion	1,500
0.375% Convertible Senior Notes due 2018 | Carrying Amount
Convertible Notes
Convertible senior notes, total	23,987	340,916
0.375% Convertible Senior Notes due 2018 | Fair Value
Convertible Notes
Convertible senior notes, total	67,589	749,988
0.375% Convertible Senior Notes due 2018 | Director
Convertible Notes
Aggregate principal amount of notes exchanged	$ 259,000
1.25% Convertible Senior Notes due 2020
Convertible Notes
Interest rate of debt (as a percent)	1.25%			1.25%
Aggregate principal amount of notes exchanged	$ 353,700
Common stock issued in exchange of notes (in shares)	6.8
Premium	$ 200
Shares Issued as Premium	26.8
Cash used to fund redemption of notes	$ 6,800
Recording expense related to senior note conversion	5,100
1.25% Convertible Senior Notes due 2020 | Carrying Amount
Convertible Notes
Convertible senior notes, total	17,617	310,565
1.25% Convertible Senior Notes due 2020 | Fair Value
Convertible Notes
Convertible senior notes, total	55,227	$ 761,300
1.25% Convertible Senior Notes due 2020 | Director
Convertible Notes
Aggregate principal amount of notes exchanged	$ 274,500
[1]	The condensed consolidated balance sheet at December 31, 2016 has been derived from the audited financial statements at that date.

Defined benefit pension oblig60

Defined benefit pension obligation (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2017USD ($)
Defined benefit pension obligation
Employer service cost	$ 616
Interest cost	46
Expected return on plan assets	(35)
Amortization of prior service cost	12
Amortization of actuarial losses	34
Net periodic benefit cost	673
Expected contributions	2,000
Accrued pension obligation	$ 7,200

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Income Taxes
Income tax (benefit) expense	$ (10,900)	$ 400
Increase in unrecognized tax benefits	700
Additions related to prior periods tax positions	$ 100

Net Income (Loss) Per Share (De

Net Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Basic Net Income (Loss) Per Share
Net income (loss)	$ (187,083)	$ 24,047
Weighted average common shares outstanding	195,260,000	187,184,000
Basic net income (loss) per share	$ (0.96)	$ 0.13
Diluted Net Income (Loss) Per Share
Diluted net income (loss)	$ (187,083)	$ 24,047
Weighted average common shares outstanding	195,260,000	187,184,000
Dilutive stock options and RSU’s		5,441,000
Weighted average shares used to compute diluted net income (loss) per share	195,260,000	192,625,000
Diluted net income (loss) per share	$ (0.96)	$ 0.12
Anti-dilutive securities
Potential common shares excluded from diluted net loss per share computation	13,510,411	17,138,793
Stock Options
Anti-dilutive securities
Potential common shares excluded from diluted net loss per share computation	12,598,407	2,652,265
0.375% Convertible Senior Notes due 2018
Anti-dilutive securities
Potential common shares excluded from diluted net loss per share computation	505,004	7,245,244
1.25% Convertible Senior Notes due 2020
Anti-dilutive securities
Potential common shares excluded from diluted net loss per share computation	407,000	7,241,284