Incyte Announces First Quarter Financial Results and Provides Update on Drug Discovery and Development Programs; Conference Call and Webcast Scheduled for 8:30 a.m. ET Today.WILMINGTON, Del. -- Incyte Corporation (Nasdaq:INCY) today announced its financial results for the first quarter 2006 and reported on the company's most advanced drug discovery and development programs. Recent developments include: --The decision to discontinue development of our lead HIV HIV (Human Immunodeficiency Virus), either of two closely related retroviruses that invade T-helper lymphocytes and are responsible for AIDS. There are two types of HIV: HIV-1 and HIV-2. HIV-1 is responsible for the vast majority of AIDS in the United States. compound, DFC DFC - A dataflow language. ["Data Flow Language DFC: Design and Implementation", S. Toshio et al, Systems and Computers in Japan, 20(6):1- 10 (Jun 1989)]. (dexelvucitabine, formerly Reverset) because of an unacceptably high increase in the frequency of grade 4 hyperlipasemia in patients receiving 200 mg DFC without 3TC or FTC FTC See Federal Trade Commission (FTC). . --The filing of an investigational new drug application (IND) for our lead internally developed oral CCR 1. CCR - condition code register. 2. CCR - (Database) concurrency control and recovery. 5 antagonist antagonist /an·tag·o·nist/ (an-tag´o-nist) 1. a substance that tends to nullify the action of another, as a drug that binds to a cell receptor without eliciting a biological response, blocking binding of substances that could , INCB INCB International Narcotics Control Board 9471, for development as a treatment for HIV. --The filing of an IND for an internally developed oral inhibitor of 11-beta hydroxysteroid dehydrogenase Hydroxysteroid dehydrogenase is a type of alcohol oxidoreductases which acts as a dehydrogenase upon a hydroxysteroid. There are four types, classified by the number of the carbon acted upon: Carbon From To 3 pregnenolone progesterone type 1 (11betaHSD1) for development as a new therapy for Type 2 diabetes type 2 diabetes n. See diabetes mellitus. . --Continued advancement of a lead follow on oral CCR2 antagonist, INCB8696, which we expect to advance into clinical development later this year. We intend to develop INCB8696 as a treatment for multiple sclerosis, and possibly for the second undisclosed indication we retained under our recent collaboration with Pfizer. --Continued advancement of two additional compounds, one in inflammation and a second in oncology, with the goal of completing IND-enabling studies for both by year-end. Financial Results Cash Position: As of March 31, 2006, cash, short-term and long-term marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has totaled $372.4 million, compared to $345.0 million as of December 31, 2005. During the first quarter of 2006, the company used $24.3 million in cash and marketable securities, excluding the following: --$40 million upfront payment received from our collaborative research and license agreement with Pfizer; --$10 million received through the purchase of a convertible subordinated note by Pfizer in connection with our collaborative research and license agreement; and --$1.7 million resulting from the increased market value of a strategic investment included in marketable securities. Revenues Revenues for the quarter ended March 31, 2006 were $6.5 million as compared to $2.9 million for the same period in 2005. The increase was the result of revenues recognized under our collaborative research and license agreement with Pfizer. Net Loss The net loss for the quarter ended March 31, 2006 was $17.3 million, or $0.21 per share, as compared to $20.1 million, or $0.24 per share, for the same period in 2005. Included in the net loss for the quarter ended March 31, 2006 was the following: --$5.5 million gain from the sale of a portion of a strategic investment, recorded in interest and other income, net; --$1.4 million of research and development expense related to termination costs of our DFC program; and --$2.3 million of non-cash expense Noun 1. non-cash expense - an expense (such as depreciation) that is not paid for in cash disbursal, disbursement, expense - amounts paid for goods and services that may be currently tax deductible (as opposed to capital expenditures) related to the impact of expensing share-based payments, including employee stock options. Operating Expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. Research and development expenses for the quarter ended March 31, 2006 were $24.8 million as compared to $17.8 million for the same period last year. Included in research and development expenses was a non-cash expense of $1.5 million related to the impact of expensing share-based payments, including employee stock options, and $1.4 million of costs related to our decision to discontinue DFC. The remaining increase in research and development expense results from the company's expanded drug discovery and development activities. The company expects its research and development expenses to vary from quarter to quarter, primarily due to the timing of our clinical development activities. Selling, general and administrative expenses for the quarter ended March 31, 2006 were $3.9 million as compared to $2.8 million for the same period last year. Included in selling, general and administrative expenses was a non-cash expense of $0.8 million related to the impact of expensing share-based payments, including employee stock options. Update on Drug Discovery and Development Oncology Portfolio Sheddase Inhibitor Our lead oral sheddase inhibitor, INCB7839, is in a Phase I/II dose-rising trial in refractory cancer refractory cancer Oncology Cancer that is unresponsive to treatment. See Radioinsensitive. patients with solid tumors such as breast, non-small cell lung, prostate, colorectal and head and neck cancers, all of which may be associated with excessive signaling of epidermal growth factor receptors This article is about a cell suface receptor. For estimated measure of kidney function (eGFR), see Glomerular filtration rate. The epidermal growth factor receptor including HER1, HER2, HER3 and HER4. In addition to safety, this study will assess the ability of INCB7839 to reduce circulating HER2 extracellular extracellular /ex·tra·cel·lu·lar/ (-sel´u-lar) outside a cell or cells. ex·tra·cel·lu·lar adj. Located or occurring outside a cell or cells. domain levels (ECD ECD Early Childhood Development ECD Electron Capture Detector ECD Energy Citations Database ECD Executive Creative Director (advertising) ECD Ethyl Cysteinate Dimer ECD Electron Capture Dissociation ECD Electronic Civil Disobedience ) in breast cancer patients. Elevated levels of ECD are often associated with poor clinical outcomes in these patients and reduction of ECD levels has the potential to provide clear evidence of the impact of INCB7839 on its intended target. Results from this study are expected in the second half of 2006. Provided the compound is safe and well-tolerated, we plan to advance the compound into Phase II trials in specific solid tumor tumor: see neoplasm. types. New Program We have identified a lead development candidate for one of our novel oncology programs. We expect to complete IND-enabling studies for this compound by year-end. Inflammation Portfolio CCR2 Antagonist Program Under our collaborative research and license agreement with Pfizer, we have retained exclusive worldwide rights to certain CCR2 antagonist compounds for two indications, MS and a second indication which, for competitive reasons, we have not disclosed. We have no obligations to Pfizer on preclinical preclinical /pre·clin·i·cal/ (-klin´i-k'l) before a disease becomes clinically recognizable. pre·clin·i·cal adj. 1. development candidates we may pursue in these indications. We expect to complete IND-enabling studies and to begin a Phase I trial in healthy volunteers for our lead compound, INCB8696, in the second half of 2006. New Program We also have a lead compound in preclinical development from a novel anti-inflammatory program. We expect to complete IND-enabling studies for this compound by year-end. HIV Portfolio CCR5 Antagonist The IND for our oral once-a-day CCR5 antagonist compound, INCB9471, has been filed and we are scheduled to begin Phase I clinical testing in healthy volunteers in May. INCB9471 is an internally developed proprietary compound that in preclinical studies preclinical studies, n.pl a term used to describe research done before a clinical study. May be laboratory or epidemiologic research. has shown potent anti-HIV activity as well as excellent pharmacokinetic properties. We expect to complete Phase I testing in healthy volunteers in the second half of 2006 and initiate a Phase IIa trial in treatment-experienced HIV patients. Diabetes Opportunity 11betaHSD1 Program We filed the IND for INCB13739 in April and expect to begin single- and multiple-dose Phase I trials in June. INCB13739 is a highly selective oral small molecule that we believe may offer a new approach to treating Type 2 diabetes as well as related diseases such as dyslipidemia, atherosclerosis atherosclerosis (ăth'ərōsklərō`sĭs): see arteriosclerosis. atherosclerosis or hardening of the arteries , and coronary heart disease coronary heart disease: see coronary artery disease. coronary heart disease or ischemic heart disease Progressive reduction of blood supply to the heart muscle due to narrowing or blocking of a coronary artery (see atherosclerosis). . In addition to safety and tolerability tol·er·a·ble adj. 1. Capable of being tolerated; endurable. 2. Fairly good; passable. See Synonyms at average. tol , our Phase I trial will include an assessment of the ability of INCB13739 to inhibit 11betaHSD1 activity in adipose tissue adipose tissue (ăd`əpōs'): see connective tissue. adipose tissue or fatty tissue Connective tissue consisting mainly of fat cells, specialized to synthesize and contain large globules of fat, within a . Recently published data suggest that 11betaHSD1-mediated production of cortisol cortisol (kôr`tĭsôl') or hydrocortisone, steroid hormone that in humans is the major circulating hormone of the cortex, or outer layer, of the adrenal gland. within metobolically important tissues such as adipose adipose /ad·i·pose/ (ad´i-pos) 1. fatty. 2. the fat present in the cells of adipose tissue. ad·i·pose adj. Of, relating to, or composed of animal fat; fatty. may play a key role in regulating the body's resistance to insulin in people with Type 2 diabetes. Conference Call Information Incyte will host a conference call on Thursday, May 4, 2006 at 8:30 a.m. ET to discuss the news contained in this release. The domestic dial-in number is 877-692-2592 and the international dial-in number is 973-582-2700. The conference ID number is 7309442. If you are unable to participate, a replay of the conference call will be available for thirty days. The replay dial-in number for the U.S. is 877-519-4471 and the dial-in number for international callers is 973-341-3080. The replay pin number is 7309442. The conference call will also be webcast live and can be accessed at www.incyte.com under Investor Relations Investor relations The process by which the corporation communicates with its investors. , Events and Webcasts. About Incyte Incyte Corporation is a Wilmington, Delaware-based drug discovery and development company with a growing pipeline of novel oral compounds to treat cancer, inflammation, HIV and diabetes. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Except for the historical information contained herein, the matters set forth in this press release, including statements with respect to expectations of advancing its preclinical and clinical compounds, expectations for the timing of the Phase I and Phase IIa clinical trials for Incyte's CCR5 antagonist compound INCB9471, expectations regarding the timing of completion of IND-enabling studies and Phase I clinical trials Noun 1. phase I clinical trial - a clinical trial on a few persons to determine the safety of a new drug or invasive medical device; for drugs, dosage or toxicity limits should be obtained phase I for the CCR2 antagonist for the treatment of multiple sclerosis, expectations regarding the timing of completion of IND-enabling studies for the new inflammation compound in preclinical development, the plans and expectations for our Phase I/II and Phase II trials for Incyte's lead sheddase inhibitor compound, expectations for the timing of completion of IND-enabling studies for Incyte's new development candidate for cancer, the expected utility and plans and timing for Phase I clinical testing of INCB13739, and the positioning of the company for growth from internal programs are all forward-looking statements within the meaning of the "safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the high degree of risk associated with drug development and clinical trials, results of further research and development, the impact of competition and of technological advances and the ability of Incyte to compete against parties with greater financial or other resources, unanticipated delays, unanticipated cash requirements and the ability to raise additional capital, the ability to implement technological improvements, Incyte's ability to enroll a sufficient number of patients for its clinical trials, and other risks detailed from time to time in Incyte's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2005. Incyte disclaims any intent or obligation to update these forward-looking statements.
INCYTE CORPORATION
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
Three Months Ended
March 31,
-------------------
2006 2005
--------- ---------
Revenues
Contract revenues $5,529 $-
License and royalty revenues 936 2,915
--------- ---------
Total revenues 6,465 2,915
Costs and expenses:
Research and development 24,757 17,764
Selling, general and administrative 3,876 2,801
Other expenses 201 343
--------- ---------
Total costs and expenses 28,834 20,908
--------- ---------
Loss from operations (22,369) (17,993)
Interest and other income, net 8,886 2,152
Interest expense (3,859) (4,317)
Gain (loss) on certain derivative financial
instruments, net 36 (126)
--------- ---------
Loss from continuing operations (17,306) (20,284)
Income from discontinued operations - 153
--------- ---------
Net loss $(17,306) $(20,131)
========= =========
Basic and diluted net loss per share:
Continuing operations $(0.21) $(0.24)
Discontinued operations - -
--------- ---------
$(0.21) $(0.24)
========= =========
Shares used in computing basic and diluted
net loss per share 83,627 83,049
========= =========
INCYTE CORPORATION
Condensed Consolidated Balance Sheet Data
(in thousands)
March 31, Dec. 31,
2006 2005
--------- ---------
Cash, cash equivalents, and marketable
securities $372,427 $344,971
Total assets 398,756 374,108
Convertible subordinated notes 348,634 341,862
Total stockholders' deficit (37,771) (19,397)
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