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Incyte Annual Report, Year Ended Dec 31, 2002

Filing Date
Filed March 28, 2003
Period End
December 31, 2002
Security
INCY
In the record · 2016–202610-K1510-Q348-K107

INCY filed 15 annual reports (10-K), 34 quarterly reports (10-Q) and 107 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Dec ’16Dec ’16
  2. FY2018 annual report10-K · Feb ’19Feb ’19
  3. Leadership change8-K · Jan ’22Jan ’22
  4. Leadership change8-K · Dec ’25Dec ’25

01—Abstract

Summary

Summary of the 10-K filed March 28, 2003. Cited figures are marked; the original filing is the authoritative source.

Incyte Corporation (formerly Incyte Genomics, Inc., renamed March 15, 2003) reported a net loss of $136.9 milliona for fiscal 2002 on revenues of $101.6 million, down from $219.3 million in 2001.

The company is shifting from its genomic information business toward therapeutic drug discovery. Management expects revenues in 2003 to be lower than 2002 as customers cut spending on genomic information and focus on late-stage research. Revenue from information products (database access and IP licensing) was 96%b of 2002 total net revenues, versus 79% in 2001.

The company took $37.3 millionc in restructuring and other charges in 2002, including a $33.9 million charge tied to a November 2002 plan to cut about 37% of its workforce and consolidate Palo Alto facilities. Management expects this program to reduce annual expenses by over $80.0 million beginning in 2003 compared with 2002, while stating that therapeutic discovery spending will continue to rise. The company completed its acquisition of Maxia Pharmaceuticals in February 2003, which adds a preclinical diabetes program and carries up to $14.0 million in contingent earn-out payments.

Management expects to record an in-process R&D or other charge in the first quarter of 2003. Cash, cash equivalents and marketable securities totaled $429.0 milliond at year-end 2002, against $172.0 million of convertible subordinated notes and an accumulated deficit of $405.0 million.

Management believes existing resources are adequate for at least the next twelve months. The company also faces ongoing patent litigation with Invitrogen, which management says could result in substantial costs.

02—Key points

Key Highlights

  1. Net loss of $136.9 million ($2.03 per share) in 2002, compared with $183.2 million in 2001.
  2. Revenues fell to $101.6 million in 2002 from $219.3 million in 2001; management expects 2003 revenues to be lower still.
  3. Workforce reduction of approximately 37% announced November 12, 2002, with a $33.9 million restructuring charge and expected annual savings of over $80.0 million beginning in 2003.
  4. Cash, cash equivalents and marketable securities of $429.0 million at December 31, 2002, versus $172.0 million of convertible subordinated notes outstanding.
  5. Acquisition of Maxia Pharmaceuticals completed February 18, 2003, adding a late-preclinical Type 2 diabetes program and up to $14.0 million in potential earn-out payments.
  6. Invitrogen patent infringement litigation is ongoing; management cannot reasonably estimate the possible range of loss.
  7. Over 500 U.S. patents held on human full-length genes, according to the filing.

03—Questions

Frequently Asked Questions

  1. Why did revenue decline so sharply in 2002?

    Management attributes the drop from $219.3 million to $101.6 million to a softening market for genomic information, reduced research spending by pharmaceutical and biotechnology companies (partly due to industry consolidation), pricing pressure, and the elimination of lower-margin product lines. Revenue from exited custom genomics product lines was $3.6 million in 2002 versus $45.3 million in 2001.

  2. What is the company's strategy going forward?

    Incyte is focusing on therapeutic drug discovery, with three small-molecule programs launched by January 2003 (one in inflammation and two in cancer), and it intends to manage its information products on a cash-flow-positive basis. Management states it does not expect significant revenue from its therapeutic efforts for several years, if at all.

  3. How much cash does the company have and how long will it last?

    The company had $429.0 million in cash, cash equivalents and marketable securities at December 31, 2002, and states that existing resources will be adequate to satisfy capital needs for at least the next twelve months. Net cash used in operating activities was $58.3 million in 2002, and the company expects to use net cash in 2003.

  4. What are the main risks identified in the filing?

    Key risks include continued losses and no assured return to profitability, customer consolidation and reduced research budgets, competition from better-funded rivals, uncertainty over the patentability and enforcement of gene patents, the outcome of the Invitrogen litigation, and the early stage and uncertain success of drug development. The filing also notes $172.0 million of convertible debt and an accumulated deficit of $405.0 million.

04—Continue

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