1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
or
[ ] TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________________ to ______________________
Commission File Number: 0-27488
INCYTE PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-3136539
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
3174 Porter Drive
Palo Alto, California 94304
(Address of principal executive offices)
(415) 855-0555
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. [X] Yes [ ] No
The number of outstanding shares of the registrant's Common Stock, $0.001 par
value, was 10,570,583 as of June 30, 1997.
Page 1 of 17
Exhibit Index on Page 15
2
INCYTE PHARMACEUTICALS, INC.
INDEX
PART I: FINANCIAL INFORMATION
PAGE
----
ITEM 1. Financial Statements - Unaudited
Condensed Consolidated Balance Sheets - June 30, 1997 and
December 31, 1996............................................................. 3
Condensed Consolidated Statements of Operations - three and six month
periods ended June 30, 1997 and 1996.......................................... 4
Condensed Consolidated Statements of Cash Flows - six months ended
June 30, 1997 and 1996........................................................ 5
Notes to Condensed Consolidated Financial
Statements.................................................................... 6
ITEM 2. Management's discussion and analysis of financial condition
and results of operations..................................................... 8
PART II: OTHER INFORMATION
ITEM 1. Legal Proceedings............................................................ 13
ITEM 2. Changes in Securities........................................................ 13
ITEM 3. Defaults Upon Senior Securities.............................................. 13
ITEM 4. Submission of Matters to a Vote of Security Holders.......................... 13
ITEM 5. Other Information............................................................ 13
ITEM 6. Exhibits and Reports on Form 8-K............................................. 13
Signatures................................................................... 14
Exhibit
Index........................................................................ 15
Page 2 of 17
3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Incyte Pharmaceuticals, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
June 30, December 31,
1997 1996*
-------- --------
ASSETS
Current assets:
Cash and cash equivalents $ 11,303 $ 7,628
Marketable securities - available-for-sale 26,597 30,622
Accounts receivable 3,966 2,469
Prepaid expenses and other current assets 1,929 2,456
-------- --------
Total current assets 43,795 43,175
Property and equipment, net 25,768 22,936
Long-term investments 5,313 313
Deposits and other assets 1,732 452
-------- --------
Total assets $ 76,608 $ 66,876
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,604 $ 4,670
Accrued liabilities 4,588 1,507
Deferred revenue 18,453 14,878
Current portion of capital lease obligations and notes payable 34 73
-------- --------
Total current liabilities 26,679 21,128
Noncurrent portion of capital lease obligations and notes payable 23 37
Noncurrent portion of accrued rent 430 464
Stockholders' equity:
Capital stock 11 10
Additional paid-in capital 83,094 81,832
Unrealized losses on securities available-for-sale (30) (73)
Accumulated deficit (33,599) (36,522)
-------- --------
Total stockholders' equity 49,476 45,247
-------- --------
Total liabilities and stockholders' equity $ 76,608 $ 66,876
======== ========
* The condensed consolidated balance sheet at December 31, 1996 has been
derived from the audited financial statements at that date.
See accompanying notes Page 3 of 17
4
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Incyte Pharmaceuticals, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- ---------------------
1997 1996* 1997 1996*
-------- -------- -------- --------
Revenues $ 21,192 $ 8,413 $ 39,051 $ 14,687
Costs and expenses
Research and development 16,764 9,313 31,494 17,058
Selling, general and administrative 2,905 1,282 5,479 2,527
-------- -------- -------- --------
Total costs and expenses 19,669 10,595 36,973 19,585
Income (loss) from operations 1,523 (2,182) 2,078 (4,898)
Interest and other income, net 525 586 1,003 1,264
-------- -------- -------- --------
Income (loss) before income taxes 2,048 (1,596) 3,081 (3,634)
Provision for income taxes 106 - 158 -
-------- -------- -------- --------
Net income (loss) $ 1,942 $ (1,596) $ 2,923 $ (3,634)
======== ======== ======== ========
Net income (loss) per share $ 0.17 $ (0.16) $ 0.26 $ (0.36)
======== ======== ======== ========
Shares used in computing net income
(loss) per share 11,434 10,104 11,443 10,069
======== ======== ======== ========
* Restated to reflect combined results and financial position of Incyte
Pharmaceuticals, Inc. and Genome Systems, Inc.
See accompanying notes Page 4 of 17
5
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Incyte Pharmaceuticals, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Six Months Ended
June 30,
----------------------
1997 1996*
-------- --------
Cash flows from operating activities:
Net income (loss) $ 2,923 $ (3,634)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 4,647 2,350
Changes in certain assets and liabilities:
Accounts receivable (1,497) (2,161)
Prepaid expenses and other assets (753) 109
Accounts payable (1,066) 2,613
Accrued liabilities 3,047 1,034
Deferred revenue 3,575 8,028
-------- --------
Total adjustments 7,953 11,973
-------- --------
Net cash provided by operating activities 10,876 8,339
Cash flows from investing activities:
Long-term investments (5,000) (625)
Capital expenditures (8,967) (11,486)
Proceeds from operating leases 1,528 -
Purchases of securities - available-for-sale (4,511) (11,231)
Sale of securities - available-for-sale 8,514 -
Maturity of securities - available-for-sale 25 11,111
-------- --------
Net cash used in investing activities (8,411) (12,231)
Cash flows from financing activities:
Proceeds from issuances of common stock 1,263 562
Principal payments on capital lease obligations (53) (42)
-------- --------
Net cash provided by financing activities 1,210 520
-------- --------
Net increase (decrease) in cash and cash equivalents 3,675 (3,372)
Cash and cash equivalents at beginning of the period 7,628 10,547
-------- --------
Cash and cash equivalents at end of the period $ 11,303 $ 7,175
======== ========
Supplemental schedule of cash flow information:
Interest paid $ 14 $ 19
======== ========
Taxes paid $ 70 $ -
======== ========
* Restated to reflect combined results and financial position of Incyte
Pharmaceuticals, Inc. and Genome Systems, Inc.
See accompanying notes Page 5 of 17
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INCYTE PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. The condensed consolidated balance sheet as of June 30, 1997,
statements of operations for the three and six months ended June 30, 1997 and
1996 and the statements of cash flows for the six months ended June 30, 1997 and
1996 are unaudited, but include all adjustments (consisting of normal recurring
adjustments) which the Company considers necessary for a fair presentation of
the financial position, operating results and cash flows for the periods
presented. The condensed consolidated financial statements include the accounts
of its wholly-owned subsidiaries. In July 1996, all of the outstanding shares of
Genome Systems, Inc. ("Genome Systems") were acquired by the Company in a
business combination accounted for as a pooling-of-interests. Accordingly, all
prior financial data have been restated to represent the combined financial
results of the previously separate entities (Note 4). Although the Company
believes that the disclosures in these financial statements are adequate to make
the information presented not misleading, certain information and footnote
information normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain reclassifications were made to prior periods' balances to conform with
the 1997 presentation.
Results for any interim period are not necessarily indicative of results for any
future interim period or for the entire year. The accompanying financial
statements should be read in conjunction with the financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996.
2. REVENUE RECOGNITION
The Company recognizes revenue for database collaboration agreements evenly over
the term of the agreement. Revenue is deferred for fees received before earned.
Revenues from custom orders, such as satellite databases, are recognized upon
shipment. Revenues from reagents and genomic screening products are recognized
when shipped, and revenues from genomic screening services are recognized upon
completion.
Page 6 of 17
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3. NET INCOME (LOSS) PER SHARE
Net income (loss) per share is computed using the weighted average number of
shares of common stock outstanding and dilutive common equivalent shares. Common
equivalent shares from stock options and warrants are excluded from the
computation for periods prior to 1997, as their effect is antidilutive. For the
three and six months ended June 30, 1997, common equivalent shares from stock
options are included in the computation using the treasury stock method as their
effect is dilutive.
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement No. 128, Earnings per Share, which is required to be adopted on
December 31, 1997. At that time, the Company will be required to change the
method currently used to compute earnings per share and to restate all prior
periods. Under the new requirements for calculating primary earnings per share,
the dilutive effect of stock options will be excluded. The Company expects that
there will be no material impact on the earnings per share for the three and six
months ended June 30, 1997 and 1996.
4. BUSINESS COMBINATIONS
In July 1996, the Company issued 204,073 shares of Common Stock in exchange for
all of the capital stock of Genome Systems, Inc., a privately held genomics
company located in St. Louis, Missouri. Genome Systems provides genomic research
products and technical support services to scientists to assist them in the
identification and isolation of novel genes. The merger has been accounted for
as a pooling of interests and, accordingly, the Company's financial statements
and financial data have been restated to include the accounts and operations of
Genome Systems for all periods presented.
The table below presents the separate results of operations for Genome Systems
for the period prior to the merger (in thousands):
Genome
Incyte Systems Combined
------ ------- --------
Three months ended June 30, 1996
Revenue $7,630 $783 $8,413
Net income (loss) (1,603) 7 (1,596)
Six months ended June 30, 1996
Revenue 13,213 1,474 14,687
Net income (loss) (3,661) 27 (3,634)
5. STOCKHOLDERS' EQUITY
On May 21, 1997, the Company's stockholders approved an increase in the number
of shares of Common Stock authorized for issuance from 20,000,000 to 75,000,000
and an increase in the number of shares of Common Stock reserved for issuance
under the 1991 Stock Plan from 2,000,000 to 2,400,000. The Company's
stockholders also adopted the 1997 Employee Stock Purchase Plan (the "ESPP").
The Company has authorized 200,000 shares of Common Stock for issuance under the
ESPP. Each regular full-time and part-time employee is eligible to participate
after one year of employment. The initial offering period commences August 1,
1997 and ends November 1, 1999.
Page 7 of 17
8
PART I - FINANCIAL INFORMATION
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management's Discussion and Analysis of Financial Condition and
Results of Operations as of June 30, 1997 and for the three and six month
periods ended June 30, 1997 and 1996 should be read in conjunction with the
Management's Discussion and Analysis of Financial Condition and Results of
Operations and the section entitled "Item 1. Business Factors That May Affect
Results" included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996 and the section of the Company's registration statement on
Form S-3 filed with the Securities and Exchange Commission on July 15, 1997
entitled "Risk Factors".
When used in this discussion, the word "expects" and similar expressions
are intended to identify forward-looking statements. Such statements, which
include statements as to expected expenditure levels and the adequacy of capital
resources, are subject to risks and uncertainties that could cause actual
results to differ materially from those projected. These risks and uncertainties
include, but are not limited to, the ability of the Company to obtain and retain
customers; competition from other entities; early termination of a database
collaborator agreement or failure to renew an agreement upon expiration; the
ability to successfully integrate the operations of recent business
combinations; the cost of accessing technologies developed by other companies;
uncertainty as to the scope of coverage, enforceability or commercial protection
from patents that issue on gene sequences and other genetic information; and the
matters discussed in Item 1 of the Company's Form 10-K for the year ended
December 31, 1996 under the caption "Business -- Factors That May Affect
Results". These forward looking statements speak only as of the date hereof. The
Company expressly disclaims any obligation or undertaking to release publicly
any updates or revisions to any forward-looking statements contained herein to
reflect any change in the Company's expectations with regard thereto or any
change in events, conditions or circumstances on which any such statement is
based.
OVERVIEW
Incyte Pharmaceuticals, Inc. (the "Company") designs, develops and
markets genomic database products, genomic data management software tools and
related reagents and services. The Company's genomic databases integrate
bioinformatics software with proprietary and, when appropriate, publicly
available genetic information to create information-based tools used by
pharmaceutical and biotechnology companies in drug discovery and development. In
building the databases, the Company utilizes high-throughput, computer-aided
gene sequencing and analysis technologies to identify and characterize the
expressed genes of the human genome, as well as certain animal, plant and
microbial genomes.
Revenues recognized by the Company are predominantly related to database
collaboration agreements and consist primarily of non-exclusive database access
fees. Revenues also include the sales of genomic screening products and services
and fees for custom or "satellite" database services. The Company's database
collaboration agreements also provide for future milestone payments and
royalties from the sale of products derived from proprietary information
obtained through the databases. There
Page 8 of 17
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can be no assurance that any database collaborators will ever generate products
from information contained within the databases and thus that the Company will
ever receive milestone payments or royalties.
The Company has incurred annual operating losses since inception. While
the Company reported net income in the first and second quarters of 1997, there
can be no assurance that the Company can maintain profitability. The Company's
ability to achieve and maintain significant revenues will be dependent upon its
ability to obtain additional database collaborators and retain existing
collaborators. The Company's ability to maintain profitability will be dependent
upon its ability to obtain such database collaborators, the level of
expenditures necessary for the Company to maintain and support its services to
its collaborators, and the extent to which it incurs research and development,
investment, acquisition-related or other expenses related to the development and
provision of its products and services to database collaborators. There can be
no assurance that the Company will be able to obtain any additional agreements
for such products and services. Further, the Company's database collaboration
agreements typically have a term of three years, which may be terminated earlier
by a collaborator if the Company breaches the database collaboration agreement,
which may include certain performance obligations, and fails to cure such breach
within a specified period. One of the Company's database collaboration
agreements expires at the end of 1997 and there can be no assurance that the
agreement will be renewed, and if renewed, under what terms. Further, beginning
in August 1997, one database collaborator has the right on 30 days' written
notice to terminate its database collaboration agreement. There can be no
assurance that any of the Company's database collaboration agreements will be
renewed upon expiration or not terminated earlier in accordance with its terms.
The loss of revenues from any database collaborator could have a material
adverse effect on the Company's business, financial condition and results of
operations.
The Company's operating results may fluctuate significantly from quarter
to quarter as a result of a variety of factors, including changes in the demand
for the Company's products and services, the pricing of database access to
database collaborators, the nature, pricing and timing of other products and
services provided to the Company's collaborators, changes in the research and
development budgets of the Company's collaborators and potential collaborators,
capital expenditures, acquisition and licensing costs and other costs related to
the expansion of Incyte's operations and the introduction of competitive
databases or services. In particular, the Company has a limited ability to
control the timing of database installations, there is a lengthy sales cycle
required for the Company's database products, the Company's revenue levels are
difficult to forecast, the time required to complete custom orders can vary
significantly and the Company's increasing investment in external alliances
could result in significant quarterly fluctuations in expenses due to the
payment of milestones, license fees or research payments. The Company's
investments in joint ventures and businesses may require the Company to record
losses or expenses related to its proportionate ownership interest in such
entities, the acquisition of in-process technologies, or the impairment in the
value of the securities underlying such investments. In addition, the need for
continued investment in development of the Company's databases and related
products and services and for extensive ongoing collaborator support
capabilities results in significant fixed expenses. If revenue in a particular
period does not meet expectations, the Company may not be able to adjust
significantly its level of expenditures in such period, which would have an
adverse effect on the Company's operating results. The Company believes that
quarterly comparisons of its financial results will not necessarily be
meaningful and should not be relied upon as an indication of future performance.
In July 1996, the Company issued Common Stock in exchange for all of the
outstanding shares of Genome Systems, Inc. ("Genome Systems"), a genomics
service company located in St. Louis, Missouri. The transaction has been
accounted for as a pooling of interests, and the consolidated financial
statements discussed herein and all historical financial information have been
restated to reflect the combined operations of both companies. In August 1996,
the Company acquired for stock Combion, Inc. ("Combion"), a microarray
technology company located in Pasadena, California. The acquisition of
Page 9 of 17
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Combion has been accounted for as a purchase, and the consolidated financial
statements discussed herein include the results of Combion from the date of
acquisition, August 15, 1996, forward.
RESULTS OF OPERATIONS
Revenues for the three and six months ended June 30, 1997 increased to
$21.2 million and $39.1 million, respectively, compared to $8.4 million and
$14.7 million for the corresponding periods in 1996. Revenues resulted primarily
from database access fees and, to a much lesser extent, from genomic screening
products and services and custom satellite database services. The increase in
revenues was predominantly driven by an increase in the number of database
collaboration agreements. Total costs and expenses for the three and six months
ended June 30, 1997 increased to $19.7 million and $37.0 million, respectively,
compared to $10.6 million and $19.6 million for the corresponding periods in
1996. Research and development expenses accounted for 82% and 83% and selling,
general and administrative expenses accounted for 18% and 17% of the period to
period increase in the comparable three and six month periods, respectively.
Total costs and expenses are expected to increase in the foreseeable future due
to continued investment in new product development and data production,
obligations under existing and future research and development alliances, and
increased investment in marketing, sales and customer services. The magnitude of
the Company's operating expenses will largely be a function of the Company's
ability to secure new collaborators for its database products and services.
However, if the Company does not obtain additional collaborators in a timely
manner or if the Company's database collaborators do not renew their
collaboration agreement at the end of their applicable terms, the Company may
not be able to adjust significantly its level of expenditures in any period,
which would have an adverse effect on the Company's operating results.
Research and development expenses for the three and six months ended
June 30, 1997 increased to $16.8 million and $31.5 million, respectively,
compared to $9.3 million and $17.1 million for the corresponding periods in
1996. The increase in research and development expenses resulted primarily from
an increase in bioinformatics and database development efforts, in addition to
growth in sequencing production, increased costs related to intellectual
property protection and increased expenses related to continuing operations at
Combion and expanding operations at Genome Systems. The Company expects research
and development spending to increase over the next few years as the Company
continues to broaden its gene sequence production operations, pursue the
development of new database products and services, invest in new technologies
and invest in the continued protection of its intellectual property.
Selling, general and administrative expenses for the three and six
months ended June 30, 1997 increased to $2.9 million and $5.5 million,
respectively, compared to $1.3 million and $2.5 million for the corresponding
periods in 1996. The increase in selling, general and administrative expenses
resulted primarily from the growth in marketing, sales and customer support and
corporate administration. The Company expects that selling, general and
administrative expenses will increase throughout 1997 due to continued growth in
marketing, sales and customer support, as well as expanding operations.
Interest and other income, net for the three and six months ended June
30, 1997 decreased to $0.5 million and $1.0 million, respectively, from $0.6
million and $1.3 million for the corresponding periods in 1996 primarily as a
result of reduced interest income from lower average combined cash, cash
equivalent and marketable securities balances.
The estimated effective annual income tax rate for the second quarter of
1997 is 5%, which represents the provision of federal and state alternative
minimum taxes after utilization of net operating loss carryforwards. No
provisions have been recorded prior to the 1997 fiscal year as the Company
incurred annual net operating losses.
Page 10 of 17
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LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1997, the Company had $37.9 million in cash, cash
equivalents and marketable securities, compared to $38.3 million as of December
31, 1996. For the six month period ended June 30, 1997, cash provided by
operations was largely offset by investments in capital equipment, consisting
primarily of data processing-related computer hardware and laboratory equipment,
as well as expenditures for research and development alliances and facilities
improvements. The Company has classified all of its marketable securities as
short-term, as the Company may not hold its marketable securities until maturity
in order to take advantage of favorable market conditions. Available cash is
invested in accordance with the Company's investment policy's primary objectives
of liquidity, safety of principal and diversity of investments.
Net cash provided by operating activities was $10.9 million for the six
months ended June 30, 1997, as compared to net cash provided by operating
activities of $8.3 million for the six months ended June 30, 1996. The increase
in net cash provided by operating activities resulted primarily from the change
from net loss to net income in 1997, increased depreciation and amortization
expense and accrued liabilities partially offset by decreased deferred revenues
and accounts payable. Net cash generated by operating activities may in the
future fluctuate significantly from quarter to quarter due to the timing of
large prepayments by database collaborators.
The Company's investing activities, other than purchases, sales and
maturities of marketable securities, have consisted of capital expenditures and
strategic equity investments. Capital expenditures for the six months ended June
30, 1997 decreased to $9.0 million from $11.5 million for the six months ended
June 30, 1996 due primarily to the use of an operating lease for $1.5 million of
the capital additions and the timing of capital purchases. Strategic equity
investments in companies with which the Company has research and development
alliances increased to $5.0 million for the six months ended June 30, 1997 from
$0.6 million for the six months ended June 30, 1996.
Net cash provided by financing activities was $1.2 million and $0.5
million for the six months ended June 30, 1997 and 1996, respectively. The
increase was primarily due to proceeds from the exercise of stock options.
The Company expects its cash requirements to increase in the remainder
of 1997 and in 1998 as it increases its investment in data-processing-related
computer hardware in order to support its existing and new database products,
continues to seek access to technologies through investments, research and
development alliances, license agreements and/or acquisitions, and addresses its
needs for larger facilities and/or improvements in existing facilities. The
Company expects to continue to fund future operations with revenues from genomic
database products and services in addition to using its current cash, cash
equivalents and marketable securities.
In July 1997, the Company filed with the Securities and Exchange
commission a registration statement relating to the proposed public offering of
1,000,000 shares of its Common Stock (plus up to 150,000 shares that may be sold
by the underwriters to cover over-allotments, if any). All shares are to be
sold by the Company. The net proceeds of the offering are expected to be used
for: capital expenditures, including data processing-related computer hardware,
laboratory equipment, scientific instrumentation, and expansion of the Company's
facilities; strategic equity investments in joint ventures or businesses;
acquisitions of businesses, technologies and products that complement the
Company's business; and for working capital and other general corporate
purposes. Based upon its current plans, the Company believes that the proceeds
of this offering, together with its existing resources and anticipated cash flow
from operations, will be adequate to satisfy its capital needs at least through
1998. If this offering is not consummated, the Company believes that its current
cash, cash equivalents and marketable securities will satisfy the Company's
projected working capital, capital expenditure and other cash requirements at
least for the next twelve months. However, the Company can offer no assurance
that the Company will be able to obtain additional collaborators or retain
existing collaborators for the Company's databases or that such database
products and services will produce revenues, which together
Page 11 of 17
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with the Company's cash, cash equivalents and marketable securities, will be
adequate to fund the Company's cash requirements. The Company's cash
requirements depend on numerous factors, including the ability of the Company to
attract and retain collaborators for its databases and genomic products and
services; the Company's research and development activities, including
expenditures in connection with alliances, license agreements and acquisitions
of and investments in complementary technologies and businesses; competing
technological and market developments; the cost of filing, prosecuting,
defending and enforcing patent claims and other intellectual property rights;
the purchase of additional capital equipment, including capital equipment
necessary to ensure that the Company's sequencing operation remains competitive;
and costs associated with the integration of new operations assumed through
mergers and acquisitions. There can be no assurance that additional funding, if
necessary, will be available on favorable terms, if at all.
Page 12 of 17
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INCYTE PHARMACEUTICALS, INC.
PART II: OTHER INFORMATION
ITEM 1. Legal Proceedings
Not Applicable
ITEM 2. Changes in Securities
None
ITEM 3. Defaults upon Senior Securities
None
ITEM 4. Submission of Matters to a Vote of Security Holders
On May 21, 1997, the Company held its Annual Meeting of
Stockholders. The following actions were taken at the annual
meeting:
1. The following Directors were elected: FOR WITHHELD
-------- --------
a. Roy A. Whitfield 8,630,821 58,312
b. Randal W. Scott 8,631,071 58,062
c. Barry M. Bloom 8,630,871 58,262
d. Jeffrey J. Collinson 8,631,071 58,062
e. Frederick B. Craves 8,630,271 58,862
f. Jon S. Saxe 8,630,841 58,292
2. A proposal to amend the Company's Certificate of
Incorporation.
FOR AGAINST ABSTAIN BROKER NON-VOTE
--- ------- ------- ---------------
5,882,803 2,800,655 5,675 0
3. A proposal to amend the Company's 1991 Stock Plan.
FOR AGAINST ABSTAIN BROKER NON-VOTE
--- ------- ------- ---------------
6,555,184 759,522 10,470 1,363,957
4. A proposal to adopt the Company's 1997 Employee Stock Purchase
Plan.
FOR AGAINST ABSTAIN BROKER NON-VOTE
--- ------- ------- ---------------
4,847,125 2,470,061 7,990 1,363,957
5. The selection of the Company's independent auditors was
ratified.
FOR AGAINST ABSTAIN
--- ------- -------
8,684,433 1,500 3,200
ITEM 5. Other Information
None
ITEM 6. Exhibits and Reports on Form 8-K.
a) Exhibits
See Exhibit Index on Page 16
b) Reports on Form 8-K
None
Page 13 of 17
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INCYTE PHARMACEUTICALS, INC.
Date: July __, 1997 By: /s/ ROY A. WHITFIELD
-------------------------------
Roy A. Whitfield
Chief Executive Officer
Date: July __, 1997 By: /s/ DENISE M. GILBERT
-------------------------------
Denise M. Gilbert
Executive Vice President and
Chief Financial Officer
Page 14 of 17
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INCYTE PHARMACEUTICALS, INC.
EXHIBIT INDEX
Page No.
--------
11.1 Statement Re: Computation of Earnings (Loss) Per Share 16
27 Financial Data Schedule 17
Page 15 of 17
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EXHIBIT 11.1
INCYTE PHARMACEUTICALS, INC.
STATEMENT RE COMPUTATION OF EARNINGS (LOSS) PER SHARE
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
1997 1996 1997 1996
------- ------- ------- -------
Primary Earnings (Loss) Per Share
- ---------------------------------
Weighted average common shares outstanding
during the period 10,518 10,104 10,486 10,069
Adjustment for dilutive effect of outstanding
stock options 916 -- 957 --
------- ------- ------ ------
Weighted average common and common
equivalent shares used for primary earnings
(loss) per share 11,434 10,104 11,443 10,069
======= ======= ======= =======
Net income (loss) 1,942 (1,596) 2,923 (3,634)
======= ======= ======= =======
Net income (loss) per share $ 0.17 ($ 0.16) $ 0.26 ($ 0.36)
======= ======= ======= =======
Fully Diluted Earnings (Loss) Per Share
- ---------------------------------------
Weighted average common shares outstanding
during the period 10,518 10,104 10,486 10,069
Adjustment for dilutive effect of outstanding
stock options 1,013 -- 1,006 --
------- ------- ------- -------
Weighted average common and common
equivalent shares used for fully diluted earnings
(loss) per share 11,531 10,104 11,492 10,069
======= ======= ======= =======
Net income (loss) 1,942 (1,596) 2,923 (3,634)
======= ======= ======= =======
Net income (loss) per share $ 0.17 ($ 0.16) $ 0.25 ($ 0.36)
======= ======= ======= =======
Page 16 of 17
5
1,000
US DOLLAR
6-MOS
DEC-31-1997
JAN-1-1997
JUN-30-1997
1
11,303
26,597
3,966
0
0
43,795
39,986
14,218
76,608
26,679
0
0
0
11
49,465
76,608
0
39,051
0
0
31,494
0
0
3,081
158
2,923
0
0
0
2,923
.26
.25
