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Stocks I / Incyte Genomics

URL:  https://boards.fool.com/conference-call-13183679.aspx

Subject:  Conference call Date:  8/24/2000  1:35 PM
Author:  Lynton Number:  496 of 803

Incyte had a conference call yesterday to discuss their latest press releases, including the ones on the granting of the 500th patent for full length genes, the Motorola microarray deal, and the formation of the new e-health business.

They reiterated that they've filed on over 7,000 full length genes and parts of 50,000 genes in addition to actually receiving 500 full length patents. They said they've seen very little overlap in terms of other companies in patenting their stuff at the USPTO. They've seen very little adjudication necessary, and have been able to resolve issues expeditiously.

They commented a little about the patent lawsuits. They reminded the CC listeners that they didn't just willy-nilly file their recent lawsuits against AFFX and GLGC. They would rather cross lisence than sue. They noted that they had been in discussions for years with these folks. This is the first time they've stepped in with their own intellectual property. They feel they have a fundamental patent in RNA amplification. They intend on licensing it broadly, making it available to all who want it. They think it is rapidly becoming the standard technology for RNA amplification. As to AFFX press release that essentially said "we don't infringe, and even if we did there are other methods to do this that don't", Incyte asked the CC listeners to ask what are these other methods? AFFX hasn't actually detailed what these other methods are, so Incyte can't comment on them.

On the MOT microarray agreement, Incyte hinted that this was the tip of the iceberg. This agreement reminded them of their original Pfizer agreement. Before that agreement, they had a difficult time broadly licensing their gene sequencing information. For some reason, companies don't take them as seriously when they broadly license stuff. After Pfizer signed up, all the other pharmaceuticals quickly fell in line. That's what Incyte hinted will be happening with other microarray companies such as Packard (Agilent) and others. Overall, they feel that all the newcomers to microarrays were "ready for prime time".

Incyte (Randy Scott) noted that Incyte was "in awe" with the technology that Motorola brought to the table. More important than the immediate milestone payments and royalties is the "click thru" nature of the relationship in that this agreement will drive business via the internet directly to www.incyte.com and then on to their reagent, clone, and services businesses.

Incyte also mentioned that they have recently been seeing a lot of interest now from the genomic tools companies in licensing their database information.

Finally, Incyte discussed the new e-health company that Randy Scott will be heading. The business will use Incyte information to enable consumers/patients to link genomic information with disease (They will be using the Incyte information because, as R. Scott put it, Incyte is the Cisco of genomics). People with serious illnesses are hungry for knowledge. They intend to provide that information. The info on the new company was very vague; they haven't developed the details, yet, and they are somewhat secretive for competitive reasons.

They were asked why the new company and why not fold it into the existing company. In answering this, R. Scott noted that there are 3 waves to genomics. 1. Genomic sequencing and Moore's Law where sequencing greatly improved over a few short years. 2. Linking biotechs, pharmaceuticals, researchers, etc. and Metcalf's Law of Networking and the increasing value of networks. Incyte has it's hands full dealing with these.

R. Scott feels that the 3rd Wave is linking consumers and genomic information. That will be the goal of the new company. They didn't say this, but I suspect that by having a new company, they can also shield the existing Incyte from the losses and the hit to the bottom line that would have taken place to build up the new company.

They were asked about the relationship of the new company and diaDexus, their joint venture company with SmithKline Beecham. They feel that it will be highly complementary. diaDexus will be developing test kits based on genomic information. The new company would be involved in providing information to consumers about their availability.

Overall, Incyte sounded confident about the new company and that the existing Incyte had a seasoned management team that they've developed over the past 2 years that should be able to handle the loss of R. Scott's day to day operational management (he'll be stepping up to take the Chairman's spot, in addition to leading the new company).
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