I wish RMAN was around to cheer us up... this is very depressing, even HYSQ & GLGC are outperforming INCY. I can't blame them too much though, management was so freakin sure of themselves on this issue. Of course they may eventually be right... but there's this:
By Stephanie O'Brien, CBS MarketWatch
Last Update: 4:45 PM ET Sep 13, 1999 Also: Movers & Shakers
SANTA CLARA, Calif. (CBS.MW) -- Shares of Incyte Pharmaceuticals plunged 34 percent after a judge ruled against the company in a key patent dispute.
After the close of trading Friday, Affymetrix Inc., (AFFX: news, msgs) whose GeneChip system analyzes and manages human genetic information, said the U.S. Patent and Trademark Office had ruled in its favor in two instances.
Shares of Incyte fell 14 1/8 to 27 1/4, while Affymetrix was up 19 15/16, or about 20 percent, to 121 1/16.
The dispute began in 1998 when Affymetrix was issued a patent involving its gene expression and monitoring services and filed an injunction against Incyte, according to Michael King, an analyst at BancBoston Robertson Stephens.
Affymetrix's GeneChip analyzes variations in genetic material to determine the effectiveness of treatments in experimental settings. Incyte Pharmaceuticals' (INCY: news, msgs) LifeSeq database links biological data with genetic information to aid drug discovery.
In a statement, Vern Norviel, senior vice president and general counsel for Affymetrix, said the patent office's decision allows Affymetrix to move forward with its strategy.
"We look forward to even greater focus on building our business and accelerating the pace of biological research with our unique technologies," he said.
"The (Patent and Trademark Office's) decision to support Affymetrix's patents is a positive surprise, above and beyond our best expectations, and virtually eliminates the patent litigation risk from the Affymetrix story," BancBoston Robertson Stephens' King said in a note to clients.
The ruling allows Affymetrix to establish the GeneChip as the preferred technology with no patent concerns or interferences, King also said in the note.
Separately, Affymetrix said it has acquired Genetic MicroSystems, a privately held company that makes DNA array technology. The transaction is valued at about $100 million, Affymetrix Chief Financial Officer Ed Hurwitz told CBS.MarketWatch.com.
Woburn, Mass.-based GeneticMicroSystems manufactures instruments for making and analyzing DNA arrays for use in life-science research. Under the terms of the merger agreement, Affymetrix will issue approximately 1 million shares of common stock, or about 4 percent of its shares outstanding, for all of GeneticMicroSystems' stock.
The acquisition should have a positive benefit on Affymetrix' income statement beginning in the 2001 fiscal year, King said.
Virtually eliminates the patent litigation risk to AFFX's stock... hmmmm, does this mean there might have been a risk that INCY actually owned all the rights to AFFX's chips to begin with, or does it mean that no way will INCY win the court battle brewing now... ie. INCY has no patent rights at all and must pay AFFX royalties or whatever.
Here's INCY's positive spin:
"We are obviously disappointed in the Board's decision, which we plan to appeal. In addition, the interference decision was based on limited evidence relating to only two legal issues, and does not address other validity and non-infringement defenses that are the subject of the separate litigation between the companies," said Lee Bendekgey, Incyte's General Counsel. "We continue to believe that these defenses will enable us to prevail at trial, just as we defeated Affymetrix' earlier request for a preliminary injunction."
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