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Incyte to Cut 257 Jobs as Q4 Revenue Plummets

NEW YORK, Feb. 2 (GenomeWeb News) - Incyte reported today that it is laying off 257 employees - about 57 percent of its workforce -- as it shuts down its Palo Alto, Calif.-based research facilities and headquarters.

 

The move will effectively complete the company's transformation to a drug discovery and development firm.

 

The job cuts, said Incyte, are expected to trim about $50 million in annual operating costs.

 

"As the volume of public domain data has increased, our ability to secure high-value subscriptions for our proprietary genomic data product lines, LifeSeq and ZooSeq, has decreased," John Keller, Incyte's chief business officer, said. "As a result, we can no longer justify the extensive investment and infrastructure associated with the Palo Altosite."

 

As a result of this latest restructuring, Incyte said that it recorded $11.5 million in charges in 2003, and will record up to $47 million in charges in 2004. The cash impact from restructuring-related charges is expected to be up to $23 million, said the company.

 

After the restructuring, Incyte will have about 180 employees in Wilmington, Del., and about 35 employees in Beverly, Mass.

 

Incyte also reported today a drop in fourth-qaurter 2003 revenues to $10.3 million from $21.1 million in the year-ago quarter. Revenues for the year arrived at $47 million, down from about $101.6 million in 2002.

 

Quarterly research and development spending declined to $27.6 million from $33.6 million, while full-year 2003 R&D costs dipped to $116.2 million from $152.4 million the year before.

 

The company's net loss in the fourth quarter was $40.7 million, or $0.56 per share, versus $67.5 million, or $1 per share, in the same period in 2002. Incyte's net loss for 2003 rose to $166.5 million, or $2.33 per share, up from $136.9 million, or $2.03 per share, the year before.

 

As of Dec. 31, Incyte had cash, cash equivalents, and marketable securities worth roughly $293.8 million. The company added, however, that about $130 million to $140 million of that is expected to be used this year.

 

Specifically, Incyte said that it expects to use up to $80 million in cash for its Wilmington-based drug discovery and development, as well as administrative support functions, in 2004. In addition to the $23 million in cash earmarked for restructuring-related activities, Incyte said that it anticipates spending up to $15 million on first quarter operations of the information product line and transitional expenses related to ceasing its operations.

 

Another $16 million is expected to go towards net interest expense, other items, and working capital changes primarily related to the information product line.

 

Incyte noted that these cash expenditure figures exclude the possible in-licensing or purchase of products in clinical development.

 

Incyte added that it anticipates its revenues for 2004 to be in the range of $7 million to $9 million, while R&D costs are expected to be in the range of $91 million to $95 million, of which $73 million is likely to be associated with the company's Wilmingtonoperations.

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