Incyte Reviews Recent Progress in Multiple Programs; Announces 2006 Financial Results and 2007 Financial Guidance.Conference Call and Webcast Scheduled for 8:30 a.m. ET Today WILMINGTON, Del. -- Incyte Corporation (Nasdaq:INCY) today reviewed the Company's recent progress and 2007 objectives for its drug discovery and development programs in 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. , diabetes, inflammation and oncology oncology /on·col·o·gy/ (ong-kol´ah-je) the sum of knowledge regarding tumors; the study of tumors. on·col·o·gy n. , and announced its 2006 financial results and 2007 financial guidance. Paul A. Friedman, Incyte's President and Chief Executive Officer stated, "We have made a great deal of progress growing our pipeline in 2006 and we're encouraged by the positive data we have seen in both our HIV and diabetes programs. With several more programs expected to generate additional clinical proof-of-concept results, 2007 promises to be a particularly important and eventful e·vent·ful adj. 1. Full of events: an eventful week. 2. Important; momentous: an eventful decision. year for Incyte." Recent Accomplishments in Drug Discovery and Development [TABLE OMITTED] New Programs in Inflammation and Oncology In January, we announced two new programs involving inhibitors of the janus-associated kinases (JAKs) which we believe have significant therapeutic potential as treatments for chronic inflammatory conditions, myeloproliferative disorders Myeloproliferative disorder A disorder in which the bone marrow produces too many cells too rapidly. Mentioned in: Polycythemia Vera myeloproliferative disorder A hematopoietic stem cell disease. , and certain other cancers. We have identified a range of potent, moderately selective, oral JAK2 inhibitors from several different chemical scaffolds. A number of these compounds are expected to enter clinical trials beginning in the first half of this year. At least one of these trials has the potential to provide proof-of-concept results before year-end. 2007 Objectives for Drug Discovery and Development * In our HIV program, for our lead 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, present the final viral load viral load n. The concentration of a virus, such as HIV, in the blood. viral load, n a measure of the number of virus particles present in the bloodstream, expressed as copies per milliliter. reduction and safety data from the Phase IIa trial, complete the required drug interaction studies, and initiate a Phase IIb clinical study. * For our follow-on CCR5 antagonist, INCB15050, which is in Phase I development, given the positive preliminary results we have seen with the lead compound, we do not expect to advance the follow-on compound beyond Phase I development. * In our diabetes program, present the final data from the 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. fat biopsy study and initiate and complete a one-month Phase IIa clamp study in type 2 diabetics for INCB13739, our most advanced 11beta-HSD1 compound. * In our lead oncology program involving our oral sheddase inhibitor INCB7839, complete the Phase Ib/IIa dose-escalation trial in refractory cancer refractory cancer Oncology Cancer that is unresponsive to treatment. See Radioinsensitive. patients, establish the maximum tolerated dose (MTD MTD Mounted MTD Maximum Tolerated Dose MTD Memory Technology Device MTD Month To-Date MTD Methadone (drug screening) MTD motion to dismiss (legal) MtD Mountain Dew MTD Memory Technology Driver ) and select a dose to take forward in Phase II breast cancer trials and possibly one other solid tumor tumor: see neoplasm. type. In parallel, enroll additional cancer patients into the Phase Ib/IIa trial, at the MTD, to assess safety and potentially relevant biomarkers of sheddase inhibition. * For our lead CCR2 antagonist, INCB8696, initiate development as a treatment for MS, beginning with a Phase I trial in healthy volunteers. Under our agreement with Pfizer, we have also retained and may pursue a second indication, lupus nephritis lupus nephritis n. Glomerulonephritis that occurs with systemic lupus erythematosus and is characterized by hematuria progressing to renal failure. , and potentially other autoimmune autoimmune /au·to·im·mune/ (-i-mun´) directed against the body's own tissue; see under disease and response. au·to·im·mune adj. nephritides. * For our JAK2 program, that we believe may have utility in chronic inflammatory conditions, myeloproliferative disorders, and certain other cancers, initiate several clinical trials, with the potential to provide proof-of-concept results for at least one indication before year-end. * For our discovery programs, continue to advance additional follow-on compounds in our lead programs as well as identify and progress new molecular entities, targeted to clinically relevant targets, into IND-enabling studies. 2006 Financial Results Cash Position As of December 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 $329.8 million as compared to $345.0 million as of December 31, 2005. During 2006, the Company used a total of $87.6 million in cash, excluding the impact of the following: * $111.9 million of proceeds from the sale of $151.8 million aggregate principal amount of 3u% Convertible Senior Notes due 2011; * $92.7 million used to redeem all of the outstanding 5.5% Convertible Subordinated Notes and the related accrued interest Accrued Interest The interest that has accumulated on a bond since the last interest payment up to but not including the settlement date. There are two methods for calculating accrued interest: 1) 360-day year method, used for corporate and municipal bonds. ; * $40.0 million upfront payment received from Incyte's collaborative research and license agreement with Pfizer; * $10.0 million received through the purchase of a Convertible Subordinated Note by Pfizer in connection with Incyte's collaborative research and license agreement; and * $3.2 million resulting from the increased market value of a strategic investment through its date of sale. Revenues Total revenues for the fourth quarter and full year ended December 31, 2006 were $7.1 million and $27.6 million, respectively, as compared to $1.0 million and $7.8 million for the same periods in 2005. The increase was the result of revenues recognized in 2006 under Incyte's collaborative research and license agreement with Pfizer. Net Loss The Company's net loss for the fourth quarter ended December 31, 2006 was $20.5 million, or $0.24 per share, as compared to $27.6 million, or $0.33 per share, for the same period in 2005. Included in net loss for the quarter ended December 31, 2006 were the following: * $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; * $0.8 million gain from the sale of a strategic investment, recorded in interest and other income, net; and * $2.1 million non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. to amortize amortize To write off gradually and systematically a given amount of money within a specific number of time periods. For example, an accountant amortizes the cost of a long-term asset by deducting a portion of that cost against income in each period. the original issue discount on our 3u% Convertible Senior Notes, recorded in interest expense. Net loss for the full year 2006 was $74.2 million, or $0.89 per share, as compared to $103.0 million, or $1.24 per share, for the full year 2005. Included in net loss for the full year 2006 were the following: * $1.3 million charge recorded in interest and other income, net as a result of a write-down related to the reduced market valuation of a strategic investment that Incyte holds in another company; * $3.4 million charge recorded in other expenses related to the settlement of litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. with Invitrogen Corporation related to Incyte's discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: genomic information business. This settlement resolved all outstanding claims included in the litigation; * $6.2 million gain from the sale of a strategic investment, recorded in interest and other income (expense), net; * $8.9 million of non-cash expense related to the impact of expensing share-based payments, including employee stock options; and * $2.1 million non-cash charge to amortize the original issue discount on its 3u% Convertible Senior Notes, recorded in interest expense. Included in the 2005 net loss was a gain of $2.8 million from the sale of a strategic investment included in interest and other income (expense), net. 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 December 31, 2006 were $23.6 million, as compared to $23.9 million for the same period last year. Included in research and development expenses for the quarter ended December 31, 2006 was a non-cash expense of $1.5 million related to the impact of expensing share-based payments, including employee stock options. Research and development expenses for the full year 2006 were $87.6 million, as compared to $95.6 million for the same period last year. Included in research and development expenses for the full year 2006 was a non-cash expense of $5.7 million related to the impact of expensing share-based payments, including employee stock options. The decrease in research and development expenses results from the Company's collaborative research and license agreement with Pfizer and the decision in April 2006 to terminate the development of its 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)]. program. The Company expects its research and development expenses to vary from quarter to quarter, primarily due to the timing of its clinical development activities. Selling, general and administrative expenses for the quarter ended December 31, 2006 were $3.3 million, as compared to $3.4 million for the same period last year. Included in selling, general and administrative expenses for the quarter ended December 31, 2006 was a non-cash expense of $0.8 million related to the impact of expensing share-based payments, including employee stock options. Selling, general and administrative expenses for the full year 2006 were $14.0 million, as compared to $11.7 million for the same period last year. Included in selling, general and administrative expenses for the full year 2006 was a non-cash expense of $3.2 million related to the impact of expensing share-based payments, including employee stock options. Interest Income (Expense) Interest income for the three and twelve months ended December 31, 2006 was $4.4 million and $15.8 million, respectively, as compared to $2.3 million and $9.7 million, respectively, for the comparable periods last year. Interest expense for the three and twelve months ended December 31, 2006 was $6.1 million and $17.9 million, respectively, as compared to $3.8 million and $16.1 million for the comparable periods last year. Included in interest expense for the three months ended December 31, 2006 was a $2.1 million non-cash charge to amortize the original issue discount of the 3u% Convertible Senior Notes. 2007 Financial Guidance Cash The Company expects its cash use in 2007 to range from $88 million to $95 million, which includes the use of approximately $5.4 million for net lease-related costs in its closed California facilities. This guidance excludes the in-license or purchase of products, and any funds received from its collaboration with Pfizer. Revenues The Company expects its 2007 revenues to be in the range of $22 to $25 million. Included in this guidance is approximately $22 million of revenues under Incyte's collaborative research and license agreement with Pfizer. Operating Expenses The Company expects research and development expenses to be in the range of $88 to $95 million in 2007, including a non-cash expense of $6 to $7 million related to the impact of expensing share-based payments, including employee stock options. The Company expects selling, general and administrative expenses to be in the range of $14 to $16 million in 2007, including a non-cash expense of $3 to $4 million related to the impact of expensing share-based payments, including employee stock options. The impact of expensing share-based payments, including employee stock options, is dependent upon the level of share-based payments issued, as well as the market price and other judgmental judg·men·tal adj. 1. Of, relating to, or dependent on judgment: a judgmental error. 2. Inclined to make judgments, especially moral or personal ones: assumptions used in estimating the fair value of such instruments. Other Income/Expense The Company expects interest income to be in the range of $11 to $12 million in 2007 while interest expense is expected to be approximately $24 million including a non-cash expense of $10 million related primarily to the amortization of the original issue discount on its 3u% Convertible Senior Notes. Conference Call Information Incyte will host a conference call on Thursday, February 15, 2007 at 8:30 a.m. ET to discuss the news contained in this release. The domestic dial-in number is 877-407-8037 and the international dial-in number is 201-689-8037. The conference ID # is 229131. 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 877-660-6853 and dial-in number for international callers is 201-612-7415. To access the replay you will need both the conference account number 278 and the ID number 229131. 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 focused on developing proprietary small molecule drugs to treat serious unmet medical needs. Incyte has a pipeline with programs in human immunodeficiency virus human immunodeficiency virus n. HIV. Human immunodeficiency virus (HIV) A transmissible retrovirus that causes AIDS in humans. (HIV), diabetes, oncology and inflammation. For additional information on Incyte visit the Company's web site at www.incyte.com. 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 Incyte's preclinical preclinical /pre·clin·i·cal/ (-klin´i-k'l) before a disease becomes clinically recognizable. pre·clin·i·cal adj. 1. and clinical compounds, completing and presenting data from several clinical 'proof-of-concept' 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 its compounds including Incyte's CCR5 antagonist compound INCB9471, its 11beta-HSD1 inhibitor compound INCB13739 and compounds from its new JAK2 program and expectations regarding the potential utility of Incyte's CCR5 antagonists antagonists, n muscles that counterbalance agonists during specific movements. opioid Neurology A pain-attenuating peptide that occurs naturally in the brain, which induces analgesia by mimicking endogenous opioids at opioid , INCB13739 and its JAK compounds, expectations regarding the initiation of a Phase IIb study of INCB9471 and a one-month Phase IIa study for INCB13739, expectations based on the initial results and regarding the completion of Phase I clinical trials for Incyte's follow-on CCR5 antagonist compound INCB15050, expectations regarding the timing of initiation of Phase I for INCB 8696, the CCR2 antagonist for the treatment of multiple sclerosis, and plans for pursuing a second indication, expectations regarding the timing of IND filings, the initiation of several Phase I clinical trials, and the potential for proof-of-concept results for the new JAK2 inhibitor compounds currently in preclinical development, completion of the Phase Ib/IIa clinical trial and initiation of several Phase II trials for Incyte's sheddase inhibitor, INCB7839, and expectations regarding the advancement of new follow-on compounds and new molecular entities into IND-enabling studies, financial guidance about expected cash use, revenues, expenses and other income/expense for 2007, 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 Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the quarter ended September 30, 2006. Incyte disclaims any intent or obligation to update these forward-looking statements. [TABLE OMITTED] [TABLE OMITTED] |
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