Net Income/Loss

Quarter Ended December 31, 2012

Net income for the quarter ended December 31, 2012, was $18.8 million, or $0.14 per basic and diluted share, as compared to a net loss of $55.1 million, or $0.44 per basic and diluted share, for the same period in 2011. The change from a net loss in the fourth quarter of 2011 to net income in the fourth quarter of 2012 is primarily due to a full quarter of Jakafi product revenues and a $50.0 million milestone payment earned under our collaboration with Lilly related to baricitinib.

Year Ended December 31, 2012

Net loss for the full year 2012 was $44.3 million, or $0.34 per basic and diluted share as compared to a net loss of $186.5 million, or $1.49 per basic and diluted share, for the full year 2011. The decrease in net loss from 2011 to 2012 is primarily due to a full year of Jakafi product revenue and $90.0 million in milestone payments earned under our collaborations with Lilly and Novartis.

Non-Cash Stock Option Expense

Included in net income for the quarter ended December 31, 2012, was $9.1 million of non-cash expense related to employee stock options, of which $6.0 million was included in research and development expenses and $3.1 million was included in selling, general and administrative expenses. Included in net loss for the quarter ended December 31, 2011, was $7.4 million of non-cash expense related to employee stock options, of which $4.6 million was included in research and development expenses and $2.8 million was included in selling, general and administrative expenses.

Included in net loss for the year ended December 31, 2012, was $38.5 million of non-cash expense related to employee stock options, of which $25.5 million was included in research and development expenses and $13.0 million was included in selling, general and administrative expenses. Included in net loss for the year ended December 31, 2011, was $29.0 million of non-cash expense related to employee stock options, of which $18.6 million was included in research and development expenses and $10.4 million was included in selling, general and administrative expenses.

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