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Biotech / Medical : Incyte (INCY)

INCY 105.62

+3.5%

2:52 PM EST

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To: Cliff who wrote (564)	2/5/1998 2:01:00 AM
From: Joseph wang	Read Replies (1) of 3202

Erosion of Incyte's subscription fees?? I don't think so. Company consolidations don't mean anything. There is such a wide range of usage of genomics. Fees have been and will become increasingly expensive. Contracts are good for only 3 years. Glaxo and SMK are due for a renewal in 2 years ... it will cost them probably in the neighborhood of $80 million dollars for a 3 year contract in the year 2000. They have to do it because everyone else is doing it. But more importantly, genomics is a vital resource and tool for medical research. Incyte's database is getting larger and more useful (more information and more improvements). The database will inevitably result in development of new drugs and new findings. As for other pharmas, I think many pharms which have not signed on yet will feel the pressure and need to do so as Incyte offers one of the largest (if not the largest) genomic database in the world. There are still many German pharmas who haven't signed on yet...there's alot more subscription fees to collect! also, Incyte undoubtly is targetting mid-size pharmaceuticals and smaller companies that can't afford its services...we'll see how that develops this year since the top 20 bio-tech/pharmaceuticals are almost all signed on (but many will be up for renewal next year!!...subscription fees are probably close to $8 million a year right now...and will probably go for $10million a year by next year...which makes a 3 year contract worth $30 million dollars....renewal of 6 clients in 1999 will give Incyte an additional $180 million dollars over 3 years!) With 20+ subscribers, subscription fees alone will generate alot of revenue and stable income. When the royalties come in....from SMK/Glaxo for example...royalties will be incredibly high. Incyte will have alot of money to dump into more R&D and aquisitions. I see a very promising future.

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