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Incyte price target raised
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February 23, 2000: 12:57 p.m. ET
Deutsche Banc issues upbeat 12-month forecast on genomics company
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NEW YORK (CNNfn) - Bullish on the outlook for the already high-flying genomics segment of the biotech industry, a Wall Street analyst raised his 12-month price target Wednesday on genetic information database Incyte Pharmaceuticals Inc. to $374 per share, from $235, a boost of about 60 percent.
The upbeat forecast by Deutsche Banc Alex. Brown analyst Kevin Tang helped push Incyte (INCY: Research, Estimates) shares up 28-3/8, or about 13 percent, to 253-7/16 at midday. The stock has climbed from a 12-month low of 16-7/8 to as high as 278-1/4, as investors rush to buy stocks associated with genomics, the study of the structure and function of human genes.
Drug developers hope that by better understanding the human body's molecular structure, they will be able to identify the genetic basis of many deadly diseases and formulate powerful drugs to treat them.
"We really think Incyte has proved itself to be the commercially viable genomics company," Tang, who rates Incyte shares a "strong buy," told CNNfn.com. "A lot of these companies have great science -- we think this company is unique in that it combine great science with a great business model."
The Palo Alto, Calif., company Wednesday announced a $422 million private placement of 2 million shares of its common stock at $211 per share to selected institutional investors. Tang said the company has amassed a financial war chest of more than $650 million in cash, arming it with the resources for rapid growth.
Over the past few months, Incyte has signed pacts with Pfizer Inc. (PFE: Research, Estimates), Eli Lilly & Co. (LLY: Research, Estimates), AstraZeneca PLC (AZN: Research, Estimates) and other major drug makers, giving these firms access to its database of genetic information and data management software tools.
Under many of its deals, the company will get royalty payments if drug companies bring products to market resulting from use of its gene database. Genomics research is still in early stages, however, and the launch of genomics-based drugs is considered years away.
Tang also cited the launch of Incyte's Internet strategy, which is designed to extend the company's genetic database to academic researchers. The total life science research budget of U.S. academic institutions amounts to about $18 billion, about twice that of the global pharmaceutical industry, he said.
For the 1999 fourth quarter, Incyte posted a loss of 22 cents per diluted share. The company should return to profitability by the fourth quarter of 2000, Tang predicted. 
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Incyte Pharmaceuticals
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