INCYTE CORPINCY
INCYTE CORP Fair Value Disclosure
Note 3. Fair Value of Financial Instruments
The following is a summary of our marketable security portfolio for the periods presented (in thousands):
| Amortized Cost | Unrealized Gains | Unrealized (Losses) | Estimated Fair Value | |||||||||||||||||
December 31, 2025 | ||||||||||||||||||||
| Debt securities (government) | $ | 480,793 | $ | 2,028 | $ | (34) | $ | 482,787 | ||||||||||||
December 31, 2024 | ||||||||||||||||||||
| Debt securities (government) | $ | 469,917 | $ | 971 | $ | (625) | $ | 470,263 | ||||||||||||
The table below summarizes the contractual maturities of our available-for-sale debt securities as of December 31, 2025 (in thousands):
| Total | Less than 1 Year | 1-5 Years | |||||||||||||||
| Fair value of debt securities (government) | $ | 482,787 | $ | 189,298 | $ | 293,489 | |||||||||||
Debt security assets were assessed for risk of expected credit losses per our accounting policy as described in Note 1. As of December 31, 2025 and 2024, the available-for-sale debt securities were held in U.S.-government backed securities and in Treasury bonds and were assessed on an individual security basis to have a de minimis risk of credit loss.
Fair Value Measurements
FASB accounting guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability (“the exit price”) in an orderly transaction between market participants at the measurement date. The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. In determining fair value, we use quoted prices and observable inputs. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of us. The fair value hierarchy is broken down into three levels based on the source of inputs as follows:
Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2—Valuations based on observable inputs and quoted prices in active markets for similar assets and liabilities.
Level 3—Valuations based on inputs that are unobservable and models that are significant to the overall fair value measurement.
Recurring Fair Value Measurements
Our marketable securities consist of investments in U.S. government debt securities that are classified as available-for-sale.
At December 31, 2025 and 2024, our Level 2 U.S. government debt securities were valued using readily available pricing sources which utilize market observable inputs, including the current interest rate and other characteristics for similar types of investments. Our long term equity investments classified as Level 1 were valued using their respective closing stock prices on The Nasdaq Stock Market. We did not experience any transfers of financial instruments between the fair value hierarchy levels during the years ended December 31, 2025 and 2024.
The following fair value hierarchy table presents information about each major category of our financial assets measured at fair value on a recurring basis (in thousands):
| Fair Value Measurement at Reporting Date Using: | |||||||||||||||||||||||
| Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance as of December 31, 2025 | ||||||||||||||||||||
| Cash and cash equivalents | $ | 3,097,817 | $ | — | $ | — | $ | 3,097,817 | |||||||||||||||
| Debt securities (government) | — | 482,787 | — | 482,787 | |||||||||||||||||||
Long term equity investments (Note 7) | 47,991 | — | — | 47,991 | |||||||||||||||||||
| Total assets | $ | 3,145,808 | $ | 482,787 | $ | — | $ | 3,628,595 | |||||||||||||||
| Fair Value Measurement at Reporting Date Using: | |||||||||||||||||||||||
| Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance as of December 31, 2024 | ||||||||||||||||||||
| Cash and cash equivalents | $ | 1,687,829 | $ | — | $ | — | $ | 1,687,829 | |||||||||||||||
| Debt securities (government) | — | 470,263 | — | 470,263 | |||||||||||||||||||
Long term equity investments (Note 7) | 18,814 | — | — | 18,814 | |||||||||||||||||||
| Total assets | $ | 1,706,643 | $ | 470,263 | $ | — | $ | 2,176,906 | |||||||||||||||
The following fair value hierarchy table presents information about each major category of our financial liabilities measured at fair value on a recurring basis (in thousands):
| Fair Value Measurement at Reporting Date Using: | |||||||||||||||||||||||
| Quoted Prices in Active Markets for Identical Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance as of December 31, 2025 | ||||||||||||||||||||
| Acquisition-related contingent consideration | $ | — | $ | — | $ | 121,000 | $ | 121,000 | |||||||||||||||
| Total liabilities | $ | — | $ | — | $ | 121,000 | $ | 121,000 | |||||||||||||||
| Fair Value Measurement at Reporting Date Using: | |||||||||||||||||||||||
| Quoted Prices in Active Markets for Identical Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance as of December 31, 2024 | ||||||||||||||||||||
| Acquisition-related contingent consideration | $ | — | $ | — | $ | 193,000 | $ | 193,000 | |||||||||||||||
| Total liabilities | $ | — | $ | — | $ | 193,000 | $ | 193,000 | |||||||||||||||
The following is a roll forward of our Level 3 liabilities (in thousands):
| 2025 | 2024 | ||||||||||
| Balance at January 1, | $ | 193,000 | $ | 212,000 | |||||||
| Contingent consideration earned during the period but not yet paid | (12,149) | (9,956) | |||||||||
| Payments made during the period | (31,129) | (28,847) | |||||||||
| (28,722) | 19,803 | ||||||||||
Balance at December 31, | $ | 121,000 | $ | 193,000 | |||||||
The initial fair value of the contingent consideration was determined on the date of acquisition, June 1, 2016, using an income approach based on projected future net revenues of ICLUSIG in the European Union and other countries for the approved third line treatment over 18 years, and discounted to present value at a rate of 10%. The fair value of the contingent consideration is remeasured each reporting period, with changes in fair value recorded in the consolidated statements of operations. The valuation inputs utilized to estimate the fair value of the contingent consideration as of December 31, 2025 and 2024 included a discount rate of 10%, updated projections of future net revenues of ICLUSIG in the European Union and other countries for the approved third line treatment, and related applicable royalty rates. The change in fair value of the contingent consideration during the years ended December 31, 2025 and 2024 was due primarily to updated projections of future net revenues and royalties of ICLUSIG, including the impacts from fluctuations in foreign currency exchange rates, and the passage of time.
We generally make payments to Takeda quarterly based on the royalties earned in the previous quarter. As of December 31, 2025 and 2024, contingent consideration earned but not yet paid was $12.1 million and $10.0 million, respectively, and was included in accrued and other current liabilities.
Non-Recurring Fair Value Measurements
During the year ended December 31, 2025, we recorded an asset impairment charge of $76.3 million on our consolidated statement of operations relating to our downtown Wilmington, Delaware properties in order to reflect the properties at the lower of their carrying amount or estimated fair value less cost to sell as of December 31, 2025. Refer to Note 8 for further information on the asset impairment.
During the year ended December 31, 2024 there were no measurements required for any assets or liabilities at fair value on a non-recurring basis.Free Sentinel
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 10, 2026 | Showing above |
| 2024 | Feb 10, 2025 | |
| 2023 | Feb 13, 2024 | |
| 2022 | Feb 7, 2023 | |
| 2021 | Feb 8, 2022 | |
| 2020 | Feb 9, 2021 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.