Operating Expenses

Research and development expenses for the quarter ended December 31, 2012, were $59.8 million, as compared to $51.9 million for the same period in 2011. Research and development expenses for the full year 2012 were $210.4 million, as compared to $178.7 million for 2011.

The increase in research and development expenses for the quarter and full year ended December 31, 2012, compared to the comparable prior year periods was due to the advancement of the Company’s pipeline and increased non-cash employee stock option expense. The Company expects its research and development expenses to vary from period to period, primarily due to the timing of its clinical development activities.

Selling, general and administrative expenses for the quarter ended December 31, 2012, were $23.7 million, as compared to $21.2 million for the same period in 2011. Selling, general and administrative expenses for the full year 2012 were $85.4 million, as compared to $58.2 million for 2011.

Increased selling, general and administrative expenses for the quarter and full year ended December 31, 2012, compared to the comparable prior year periods reflected the additional costs related to the commercialization of Jakafi.

Interest Expense

Interest expense for the quarter and full year ended December 31, 2012, was $11.8 million and $46.1 million, respectively, as compared to $11.2 million and $43.8 million for the comparable periods in 2011. Included in interest expense for the quarter and the year ended December 31, 2012, was $7.0 million and $27.1 million, respectively, of non-cash charges to amortize the discount on the Company’s 4.75% Convertible Senior Notes due 2015, as compared to $6.4 million and $24.8 million for the same periods in 2011. Increased interest expense for the full year 2012 is primarily attributable to the accretion of the discount related to the 4.75% Convertible Senior Notes.

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