Here's a rough draft of the INCY quarterly meeting... I'll spruce it up a bit after I talk to some folks there... I've got some questions as well. Overall the meeting was very upbeat, and the management came across very positive and sure of themselves:
INCY's Quarterly meeting:
First reviewed the financial… broke down by product line:
Data base: 30.8mill 81% up 19% from last years quarter
MicroArray: 1.9 mill 5% up 48% from last years quarter
Software & Bioinfo: 2.8 mill 7% ????
Important points [microarrays]:
· Expect to see significant increase in 2H sales
· improved production capability, last week of June set record; able to fill contract commitments for the year now.
· substantial backlog
· growing demand in the sector
· Major supply agreement with Organon technica in June, and agreements with Astra & Roche in late June.
· 100 accounts now.
· "INCY has established a mkt. leading position in microArray data processing and information mngmt through its micraray software.
Important points [database]
· just signed deal with genentech is an example of how product has been able to increase per subscriber revenue.
· 9 out of 9 on renewals now, and most have increased financial commitment.
Road Map [Randy]
First generation was DNA sequencing for gene discovery, Second generation is DNA, RNA, and protein. Create great products, including their streamlining and integration. Points:
· New deal structures to bring smaller players to the table… i.e. Perhaps greater royalties but smaller upfront payments.
· Drive prices by increasing information available
· Bloomberg model
· expanding mkt. share & customer base…. thousands of institutions
· Really stressed "operating company" now… sensitive to profit worries.
Questions
*Deutche Bank- company still intends MicroArray revenues to be 10% of total for the year, unchanged from previous estimate.
*MicroArray volume up by orders of magnitude quarterly
*All microArray problems resolved in the last week of June and have had a "great" month since.
*see tremendous acceleration of microArray demand
*Current capacity can fulfill obligations for year.
*Genentech deal… custom info-datamanagement for them… new offering, plan on rolling out to big pharma first, rest later.
*Are others lining up for this product? Beat around the bush a bit and basically said they were just starting to market now [inf. management product] should see some fruit later this year. Certainly didn't get the impression they had another customer in the wings.
*inf. management product will be "fee for service"… revenues will be "lumpier" than the standard database revenues… but is in addition to the database fee.
*10% chip income will be reached with no further deals… just backlog.
*INCY sees lots of demand from biotech's and universities, etc.
Van Kampen Q's
*INCY sees broad swell of growth in micro array business.
*100 institutions using microarrays from INCY… you don't have to have a deal to use these.
*Database pricing now have 3-4 different structures depending on customer.
Karl Gordon
*Micro Arrays are currently a "service" not a "product"…. Company doesn't deliver these for others, done @ INCY. This was very interesting……. These are not just chips to sell YET. Supposedly instrumentation will be coming out next year to make this possible… this tells my it's the same at AFFX?? I get the feeling that the AFFX fans think they are just going to crank out chips like Intel…. Clearly if they have to be used at INCY, or AFFX sales will be limited??
*"When these instruments become available we see a broad shift from service based mkt. to a broad distributed array and database mkt.".
*INCY will be launching a formal expression database product in the fall.
companies can get public domain genes on incy's databases… then incy genes on a payperview basis, and license the gene if they use it.
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