01—Abstract
Summary
Summary of the 10-K filed April 2, 2001. Cited figures are marked; the original filing is the authoritative source.
Incyte Genomics, Inc. (now Incyte Corporation) reported a net loss of $29.7 milliona for 2000, compared with a net loss of $26.8 million in 1999 and net income of $3.5 million in 1998.
Revenues rose to $194.2 millionb in 2000 from $157.0 million in 1999, driven mainly by new database agreements, the Pfizer partner program, the isSNP product and custom genomics services. Research and development expense increased to $192.6 million and selling, general and administrative expense to $64.2 million, and the company states it expects to report a net loss at least through 2001 as it invests in intellectual property, drug discovery, proteomics and bioinformatics. The balance sheet was strengthened by financing in February 2000: $200.0 million of 5.5% convertible subordinated notes due 2007 and a private placement of 4,000,000 common shares for $422.0 million gross.
Cash, cash equivalents and marketable securities totaled $582.2 millionc at December 31, 2000, against $66.9 million a year earlier, and stockholders' equity was $622.7 million. The company acquired Proteome, Inc. in December 2000 for 1,248,522 shares and $37.7 million in cash, creating $70.8 million of excess purchase price over net tangible assets, mostly goodwill and database value. The main risk highlighted is litigation with Affymetrix, Inc., which has sued the company for patent infringement and seeks injunctions, damages and tripled damages for alleged willful infringement.
The company has countersued Affymetrix and states it cannot reasonably estimate a possible range of loss. The company also settled its lawsuits with Gene Logic Inc. in January 2001, with Gene Logic receiving a non-exclusive license. Other risks include dependence on a small number of database collaborators, with one customer contributing 11%d of 2000 revenues, and the company's stated intention not to develop pharmaceutical products itself.
02—Key points
Key Highlights
- Revenues were $194.2 million in 2000, up from $157.0 million in 1999 and $134.8 million in 1998.
- Net loss was $29.7 million, or $0.47 per share, in 2000, compared with a net loss of $26.8 million, or $0.48 per share, in 1999.
- Research and development expense rose to $192.6 million in 2000 from $146.8 million in 1999.
- Cash, cash equivalents and marketable securities were $582.2 million at December 31, 2000, up from $66.9 million a year earlier.
- February 2000 financings included $200.0 million of 5.5% convertible subordinated notes due 2007 and a 4,000,000-share private equity offering for $422.0 million gross.
- The December 2000 acquisition of Proteome, Inc. was accounted for as a purchase, with $70.8 million of purchase price in excess of net tangible assets allocated mainly to goodwill and database value.
- Affymetrix, Inc. has pending patent infringement lawsuits against the company seeking injunctions and damages, and the company cannot reasonably estimate a possible range of loss.
03—Questions
Frequently Asked Questions
Is the company expected to become profitable soon?
The filing states that the company expects to report a net loss at least through 2001 and that it will not return to profitability unless it increases revenues or reduces expenses. It also notes that expenses are expected to increase with continued investment in products, research and development, and Proteome operations.
How much cash does the company have and is it sufficient?
At December 31, 2000, the company had $582.2 million in cash, cash equivalents and marketable securities. The company believes its existing resources will be adequate to satisfy its capital needs for at least the next twelve months, based on current plans.
What is the main litigation risk?
Affymetrix, Inc. has filed lawsuits alleging the company infringes several U.S. patents, including claims about high density arrays and GEM microarray technology, and seeks permanent injunctions, damages and tripled damages for alleged willful infringement. The company has filed its own infringement suit against Affymetrix and believes it has meritorious defenses, but states that it cannot reasonably estimate the possible range of any loss.
How concentrated is the customer base?
The company had more than 30 database collaboration agreements at December 31, 2000. One customer contributed 11% of total revenues in 2000, and the filing says loss of revenue from any individual database agreement is not anticipated to have a material adverse impact on the business or financial condition.
What convertible debt does the company have outstanding?
The company issued $200.0 million of 5.5% convertible subordinated notes due February 1, 2007 in February 2000, with an initial conversion price of $67.42 per share. In November 2000 it repurchased $15.0 million face value on the open market, and $185 million remained outstanding at December 31, 2000.
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