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Incyte Annual Report, Year Ended Dec 31, 2005

Filing Date
Filed March 3, 2006
Period End
December 31, 2005
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 3, 2006. Cited figures are marked; the original filing is the authoritative source.

Incyte Corporation's 10-K for fiscal 2005 describes a company that has shifted from genomic information products to focusing solely on small-molecule drug discovery and development in three core areas: HIV, inflammation and cancer, with a diabetes program also underway.

Revenues fell to $7.8 milliona in 2005 from $14.1 million in 2004 and $41.2 million in 2003, as information products were discontinued. Net loss was $103.0 million in 2005 versus $164.8 million in 2004, and the accumulated deficit reached $839.3 million. Cash, cash equivalents and marketable securities declined to $345.0 million from $469.8 million, and stockholders' equity turned to a deficit of $19.4 million, with total consolidated debt of $341.9 million.

The company's most important near-term catalysts are its lead HIV candidate, dexelvucitabine (DFC), and its CCR2 antagonist program. The FDA asked Incyte to run a second Phase IIb trial (Study 204) before Phase III for DFC, which began in February 2006. In January 2006, Pfizer became effective as the worldwide partner for CCR2 antagonists (excluding multiple sclerosis and one undisclosed indication), with Incyte receiving a $40 million upfront payment and eligibility for up to $743 millionb in additional development and milestone payments.

Pfizer also purchased a $10 millionc convertible note in February 2006. The filing states the company expects continued losses in 2006 and beyond, does not expect product revenues for several years, and believes existing cash will be adequate for at least the next twelve months. It also discloses an ongoing patent suit by Invitrogen Corporation for which the company cannot reasonably estimate a possible loss, and notes that adoption of SFAS 123R is expected to add $5.0 million to $6.0 million of research and development expense and $2.0 million to $3.0 million of selling, general and administrative expense in 2006.

02—Key points

Key Highlights

  1. Revenues declined to $7.8 million in 2005 from $14.1 million in 2004 and $41.2 million in 2003, as the company exited information products.
  2. Net loss narrowed to $103.0 million in 2005 from $164.8 million in 2004; basic and diluted loss per share was $1.24 versus $2.21 in 2004.
  3. Cash, cash equivalents and marketable securities totaled $345.0 million at December 31, 2005, down from $469.8 million a year earlier.
  4. Stockholders' equity was a deficit of $19.4 million at year-end 2005, with total consolidated debt of $341.9 million and an accumulated deficit of $839.3 million.
  5. DFC (dexelvucitabine) received an FDA request for a second Phase IIb trial (Study 204, initiated February 2006), delaying entry into Phase III.
  6. Pfizer's collaboration on CCR2 antagonists became effective in January 2006, with a $40 million upfront payment and up to $743 million in additional milestone and development payments.
  7. The company has no drug products with revenue to date and expects losses to continue in 2006 and future periods.

03—Questions

Frequently Asked Questions

  1. Is Incyte generating revenue from drug sales?

    No. The filing states that to date the company does not have any drug products that have generated revenues. Revenues of $7.8 million in 2005 were derived primarily from information products, which the company has discontinued, and the company does not expect to generate revenues from its drug discovery efforts for several years, if at all.

  2. What is the status of the company's lead HIV drug candidate?

    DFC (dexelvucitabine) completed a Phase IIb trial, Study 203, in 2005. After meeting with the FDA, the company was asked to run a second Phase IIb trial before Phase III. Study 204, comparing DFC directly to 3TC in about 250 treatment-experienced patients, was initiated in February 2006.

  3. What does the Pfizer agreement mean for Incyte?

    Under the November 2005 agreement, effective January 2006, Pfizer gained worldwide development and commercialization rights to Incyte's CCR2 antagonist portfolio, excluding multiple sclerosis and one undisclosed indication. Incyte received a $40 million upfront payment and is eligible for up to $743 million in additional development and milestone payments, plus royalties on worldwide sales. Pfizer also bought a $10 million convertible subordinated note in February 2006.

  4. Does Incyte have enough cash to fund operations?

    The company states that its cash, cash equivalents and marketable securities will be adequate to satisfy its capital needs for at least the next twelve months. However, it had $345.0 million in cash and securities at year-end 2005, down from $469.8 million, and it expects continued losses and net cash use in 2006. It also has $250 million of 3½% convertible notes due 2011 and $91.6 million of 5.5% notes due 2007 outstanding.

  5. What are the main legal risks disclosed?

    The main disclosed litigation is a patent infringement suit filed in October 2001 by Invitrogen Corporation in federal district court in Delaware, alleging infringement of three patents. The company cannot reasonably estimate the possible range of loss, and it expects the litigation to result in substantial legal costs regardless of outcome.

04—Continue

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