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Biotech / Medical : Incyte (INCY) -- Ignore unavailable to you. Want to Upgrade?

To: Michael Feldstein who wrote (644)	5/19/1998 12:38:00 PM
From: Rocketman	Read Replies (2) \| Respond to of 3202

Chart out the growth rate sometime, revenue and profit. Keep in mind that they have 3 year deals with their customers, with royalties and milestone payments from product development events. If you look at P/E much, you are a stranger to biotech, the fact that INCY is a biotech and even has a PE says a lot, most are negative. Check out the R&D deals, the potentially huge value of the EST patents and other sequence patents, diaDexus diagnostics potential, the business model of non-exclusive deals lending itself to a consortium approach, the one stop genomics platform company, the continuous incremental improvement approach to how they sequence better and faster, that this is not just a biotech, but also a software company, the ever expanding product line, never lost a customer yet......... If you believe that the growth can continue at a similar rate, and that the market isn't tapped yet (and I don't think the surface has hardly been scratched), then you can explain off the PE by the growth rate. If you believe in genomics and that it is the power of the next era of medicine and science, then you want some INCY in your portfolio. But, Hey, I'm biased: DO YOUR OWN DUE DILIGENCE!!! Rman

To: Michael Feldstein who wrote (644)	5/19/1998 6:39:00 PM
From: Andreas Helke	Read Replies (1) \| Respond to of 3202

I don't know where you got your PE of 70 but I assume that it is a ttm (trailing 12 months) earnings number. Trailing PEs are totally meaningless for a growth company. Nobody will pay you anything for past earnings of such a company. The important thing is what you will get in the future. With the 1999 earnings estimates you get a PE of about 40 which looks pretty reasonable for a leading genomics company with strong revenue growth. Incyte currently spends a lot of money to develop their future business therefore current earnings are not that important for judging the company. You can check future earnings at nasdaq.com where all available estimates for NASDAQ listed companies are shown and not only 2 years like Zacks is doing. For Incyte we get 1998 $0.747 1999 $0.964 2000 $1.6 2001 $2.05 2002 $2.28 Nobody really has figured out who to valuate biotech companies. With the successful ones you can expect huge future earnings. But the difficult thing is to figure out how likely it is that those earnings actually will materialize. Some companies like Ligand look cheap and stay that way for years. One analyst has done a 10 year forecast for Ligand earnings and figured out earnings per share in 2006 that are about as high as the current stock price. Others like EntreMed get expensive over night just on the hope that a drug candidate will turn out to be a wildly successful drug. I have ignored the genomics companies for a long time and preferred to just buy more of that cheap Ligand stock or more Agouron at $50 that later turned out to be not that cheap. I started buying Agouron for $20 and $15. The current price is $35. Compared to most other biotechs Ligand looked like a huge bargain for much of the last two years. But when I finally head too much Ligand stock in my portfolio I took another look at the genomics field and started buying. I now have shares of AFFX, INCY, MDYN and MLNM. With Incyte I started with just a few shares at $50 and pretty exactly hit the top. When I could get shares for $45 I doubled down. I doubled my shares again for $42.50. When Incyte hit my next target price of $35 I had no money left and had to pass on the opportunity. Andreas