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Biotech / Medical : VD's Model Portfolio & Discussion Thread -- Ignore unavailable to you. Want to Upgrade?

To: Rocketman who wrote (4335)	3/13/1998 12:39:00 AM
From: SnowShredder	Read Replies (1) \| Respond to of 9719

I'll just type the article...I need the practice...so here it goes. (Please excuse any errors) Gene(ius)---(title) Ever since Watson and Crick conceptualized the spiraling helix of DNA, scientists have thought that manipulating the genetic code could cure or prevent disease. Many diseases involve the absence of certain proteins, the overabundance of others, or proteins that refuse to do what they're supposed to do. That's why understanding the genetic code, which programs the body's protein production, should lead to potent new drugs-at least that's what Incyte Pharmaceuticals and its competitors hope. Incyte is engaged in the challenging task of mapping all 100,000 genes in the human genome and identifying the proteins they produce. Incyte and its competitors may have the same goal-to profit from the study of the genetic code-but their strategies differ. Companies such as Affymetrix and Human Genome Sciences are mapping the genome with an eye toward producing blockbuster drugs in years to come, whereas Incyte is licensing its LifeSeq genetic databases, nonexclusively, for cash now. Subscribers, such as the biotech Genentech and the pharmaceutical giants Glaxo Wellcome and Pfizer, pay $3 million to $8 million annually for a 3 year minimum, plus fees to have Incyte customize Incyte's strategy eliminates risky and costly drug discovery. And it generates profits, now. Fourth-quarter revenue jumped 87% over the year-ago period, to $26.6 million. Earnings skyrocketed to $0.17 a share from $0.01, making 1997 Incyte's first profitable year, with earnings of $10.4 million, or $0.43 a share, and revenue of $88.4 million (up 111%). But the strategy, some analysts predict, stunts the firm's future earnings. And Incyte is only one of many companies mapping genetic sequences, the government-sponsored Human Genome Project among them. Incyte, though, surely has a number of profitable years ahead. Management expects 1998 revenue to exceed $140 million; roughly $105 million is already guaranteed though existing contracts. At a recent $50, the stock sports a pricey p/e of 67 based on management's earnings predictions of $20 million in 1998, or about $0.75 a share. But the market seems willing to afford Incyte a lofty multiple; last year shares traded at an average p/e of 82, based on 1997 earnings. And with projections of nearly 100% earnings growth in 1998, Incyte's stock may get even loftier. EPS +1600% 3 months ended 12/31/97 12/31/96 Revenue $26,637 $14,181 Net Income $4,441 $226 Net Income per share $0.17 $0.01 Shares Outstanding 26,059 22,188 Industry : Biomedical/Genomic Price:$50.13 Telephone: 650-855-0555 Nasdaq : INCY