What INCY is putting into the INCY Genetics, the new company, is only a minor part of their databases and not much cash at all. LifeSeq Genome and LifeSNP are new dbases that have been created since the Annual meeting on June 15th this year and which probably don't even have any subscribers (or revenue) yet (no press releases saying anyone subscribed yet). I would expect them to come soon. LifeSeq Atlas is the chromosomal mapping dbase that is fairly recently created and which has a very small subscriber base as yet (like maybe 2 or 3 subscribers, I can find only two in press releases, Monsanto and Upjohn-Pharmacia).
incyte.com
When INCY starts new dbases, they give a great deal to the early subscribers, so I would not attribute much INCY General revenue stream to the LifeSeq Atlas dbase. The big revenue comes from LifeSeq, LifeSeqFL and PathoSeq and LifeSeq GeneAlbum, which have a much larger customer base.
What INCY has been doing is adding lots of new products and revenue streams. The early naysayers said what else can you offer besides LifeSeq.
What INCY also has which is not reflected in the stock price one bit is Synteni and the GEM chip microarrays, which are now actual products and not theoretical products. I think the Synteni ramp up is one of the most exciting parts of the company. Also, diaDexus will come up with great things and revenue for them too.
Yeah, it is getting to be a complicated story. For the confused, my advice is to find a good old one product make it or break it biotech that is easy to understand - you pass the FDA and make money or it tanks.
One problem with INCY that doesn't help cut through the confusion is that they basically ignore the day to day stock price. They just don't react to it. Roy Whitfield's philosophy is very long term: "If you build the company the stock price will take care of itself."
While the rest of the world panics on the ups and downs of the world markets and the whims of the mutual fund money managers and the American consumers, INCY marches on building a company for the next century. If you are a trader and all you care about is this quarter's revenues and earnings, then this might not be the stock for you right now. If you are interested in a company that is building long term value in one of the biggest most important areas that mankind has ever delved into, understanding and harvesting the fundamental building blocks of life itself, then INCY is a great buy, particularly right now since the momentum crew and traders have given it away.
What INCY Genetics is, is essentially like starting a new INCY all over again. Yep, us early ones in have been diluted through the years, but the basis for us is in the $1-$4 range (including the early private investors and those who bought at the IPO 4 1/2 years ago). Yeah that dilution and 5-20X multiple has really hurt us. It takes money to make money. I see this as a chance to be in on another INCY at the ground floor again - a great opportunity. Dilution is fine with me as long as the money goes to good use and creates more value than it costs. They've done well so far and I don't see it changing. Also, while INCY doesn't consult with its shareholders before making a move like this, you can damn well bet that they consulted with who they work for: their Pharma clients. They did the Synteni deal because the clients wanted them to, and I'd bet they did this deal for the same reason.
Confusing eh? Life is not simple. Just try and understand the genome, it makes this deal structure simple. This is not the typical tracking stock deal to take a money losing division and hide it from the public eye. It is an opportunity to be part of a new venture with great long term prospects, without hurting the profitability of the parent company. I think they are doing great things and looking ahead and not reading and reacting to the daily stock market.
Rocketman |
