My Notes from the LEXG / INCY Joint call
I'll start in at the Q & A portion which is roughly 9 mins into the call.
 Dennis Harp - DBAB I don't think this guy was too familiar with LEXG @ all
 Asked how far the partners were planning on taking any products once they had targets - Response was that they would be keeping options open.
 Run Rate for LEXG is 500 targets per year.
 Joint committee will select the targets / genes. Roughly 18 months from time of gene selection to being able to analyze the gene function model.
 A Sands said they would be ramping up to be able to do 1000 genes per yr by end of year.
 Sales of LexVision by INCY would result in what ASands called "significant % of LexVision revenue".
 INCY is open to bringing multiple information sources to have in the sales portfolio. RW said that they would be doing more in Proteomics.
 Each partner can separately pick products and if successful pay royalties to the other company
 No specifics given as to how the candidates will be picked - response was that it was a system not unusual in biotech area
 Question regarding HGSI IP port in the secreted portfolio : Pretty interesting. INCY took a swipe at them saying that (1) "No can claim to have the whole area locked up" in terms of patents. (2) RW said that investors should look @ number of issued full length gene patents. INCY has "over 600" to HGSI's "180". Later another question was centered on how many of INCY's current patents cover secreted proteins, no exact answer (this is INCY after all) but Lee ? said that a "significant percentage" of the patents involve secreted proteins.
 RW also said that based on the number of patents issued, he thinks INCY has a fairly lg. proportion of the secreted protein area locked up.
 Analyst asked why, with INCY's lg cash position, they didn't take a larger piece of the pie in this deal? RW said that this deal was very large and would involve a lot of resources...I think getting @ the fact that they would need both areas of expertise that the 2 partners are bringing to pull this off. I didn't get what the analyst was after here. It's a COLLABORATION. BTW, if JPMorgan is looking for someone to ask decent questions, I'm available. Kidding.
 Duration of the alliance is for 3 years with an option to extend an additonal 2 years. 5-total.
As always, if you listened and heard something differently or something I missed, please add. This was a lot of info and I listened twice to make sure I'm putting a close record of what was said down here. I know this will be looked at by INCY fans as well : )
My takeaways from the call:
 My first experience with INCY on a call. This mgmt team knows a lot more than Wall St gives them credit for. Nothing new to SIBiotech Investors, I know.
 My first take is that LEXG was having difficulty selling & marketing the LexVision product on their own. That INCY will be getting a decent chunk of the LexVision sales going forward bears this out. However, that LEXG was willing to give that portion up tells me that the focus has shifted from selling raw data to a more product based approach. I suspect that DGEN's database may in fact be better in terms of raw data for pharma partners. However, I also believe that DGEN is rapidly falling behind in terms of future product development. I think that DGEN may have to go after a MEDX or an HGSI / CRA to keep pace in terms of targets / products if that's where they think the major payoff is.
 The secreted protein area is getting crowded!!!!
I'll stop with the diarrhea of the mouth.
In terms of disclosure I own INCY, LEXG, & DGEN and obviously would like to see them all go up. I am a capitalist at heart. ; )
Happy Investing,
Jason |
