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Incyte Warns of Larger Losses, Signs Millennium Deal, Expands Others

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PALO ALTO, Calif.--Incyte Pharmaceuticals warned investors last week that it will report a larger than expected third-quarter loss. Roy Whitfield, Incyte's CEO, attributed the results to lengthy deal cycles and delays in finalizing two government contracts, but analysts and industry insiders speculated that increased competition in the genomic database market is leading to data commoditization and eroding prices.

In an earnings prean-nouncement, Incyte said it expects to report third-quarter revenues of approximately $35.4 million, including $28.1 million in database revenues, $3.5 million in microarray revenues, and $2.2 million in reagent revenues. The company predicted net expenses of $46 million, for a net loss of at least $10.6 million in the quarter. For the year, Incyte predicted a net loss of between $24 and $27 million. In 1998 Incyte had a net income of $3.5 million.

Incyte also announced last week that it had signed up Millennium Pharmaceuticals as a LifeSeq Gold and LifeTools customer. In addition, in an expansion of its existing contract, AstraZeneca became the first subscriber to the LifeExpress gene expression database, which includes RNA expression information generated by Incyte and protein expression information generated by Oxford GlycoSciences. Schering also expanded its agreement with Incyte recently to include a subscription to Incyte's LifeSeq Gold database. Incyte said in September it will also begin making data contained in LifeSeq Gold, as well as software and reagents, available to academic researchers. The Huntsman Cancer Institute will be first to join the so-called In Silico Partnership Program.

Whitfield said Incyte is "poised for a much stronger fourth quarter." Actual third-quarter results will be released October 19.

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