Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Vector1 who wrote (719)	9/1/1998 6:20:00 AM
From: Richard Huth	Read Replies (1) \| Respond to of 3202

In my last posting I said I will stay aside, even if INCY will stay profitable. Within the last few days some analysts have published strong buy recommendations on INCY. The support did not last very long, and share prices started to tumble again. Some will argue that this is caused by the general market condition and the general negative sentiment for biotechs. But I see this a little bit different. INCY has experienced a strong support by analysts, with no result. This makes me wonder about the market sentiment. One should think in the world of blind the one-eyed man is king. In other words, in a bear market the market interest should concentrate even more on strong recommended companies that are not hit by the economical turmoil. And especially with an (announced) increase in earnings. In my opinion the reason for being short, or at least not being long is the complexity of the deal. If it would have an easy to understand structure, that does not leave a lot of questions open to investors, INCY would not have been hit as it was. To give a short overview of the new construction: The company's existing gene expression database business is to be called Incyte General, covered by the INCY stock. Hexagen (bought for $5 million in cash and 1 million shares of INCY common stock + 100'000 shares to cover Hexagen's outstanding stock options = cash drain + dilution) will be incorporated into a new business called Incyte Genetics. Incyte Genetics will be covered by its own tracking stock, which will be issued as a dividend to current stockholders. An additional public offering to finance the company (INCY expects $200 million to be invested within the next 2 years) is planned in the future (= further dilution). Incyte Genetics will offer a similar database subscription and service model as Incyte General (INCY). It does include LifeSeq Atlas, LifeSeq Genome and LifeSNP. LifeSeq Atlas and LifeSeq Genome have been part of the INCY database, the only real new addition is LifeSNP. And this is where the questions start. Loosing some part of it's database, how will INCY add enough additional value to their existing database to generate the expected revenue stream from the existing and possible new customers? What will happen to customers that have already signed to the LifeSeq databases under INCY? Given the actual situation, how much shares have to be offered to get Incyte Genomics financed? There is still a lot of "fog" around the deal. And as long investors cannot see clearly what lies ahead, the enthusiasm to buy INCY should be moderate - even if analyst recommend the stock. As long as I do not get a clear picture I will continue to stay aside - not invested. Under $15 it will be worth thinking about re-entering the market even with some "fog" left. Richard