Incyte Reports Progress in Multiple Clinical Programs Announces Third Quarter Financial Results

Incyte Corporation (Nasdaq:INCY) today announced its third quarter 2008 financial results and reported continued progress in multiple clinical programs.

Paul Friedman, M.D., President and CEO of Incyte, stated, "Recently presented clinical data for our lead JAK inhibitor, INCB18424, continue to support its broad therapeutic potential as a treatment for myelofibrosis, rheumatoid arthritis and psoriasis. With additional Phase II trial results expected in 2009 from several other clinical programs, including 11beta-HSD1 and HM74A and the potential start of our registration trials in myelofibrosis patients, we’re confident we can continue to strengthen the pipeline and create sustainable value.”

Below is a summary of recent achievements and clinical activities:

Third Quarter Financial Results

Cash Position

As of September 30, 2008, cash, short-term and long-term marketable securities totaled $249.9 million, compared to $257.3 million as of December 31, 2007.

During the nine months ended September 30, 2008, we used $109.1 million in cash and marketable securities. This figure does not include proceeds of $101.7 million, net of the underwriting discount and offering expenses, received from the follow on equity financing completed in the third quarter of 2008. Cash use guidance of $132 to $142 million for 2008 remains unchanged.

Revenues

Total revenues for the quarter ended September 30, 2008 were $1.1 million as compared to $6.7 million for the same period in 2007. Revenues for the nine months ended September 30, 2008 were $3.0 million, as compared to $24.7 million for the same period in 2007. The decrease was primarily the result of revenues recognized in 2007 under our collaborative research and license agreement with Pfizer.

Net Loss

The net loss for the quarter ended September 30, 2008 was $44.8 million, or $0.48 per share, as compared to $24.5 million, or $0.29 per share, for the same period in 2007.

The net loss for the nine months ended September 30, 2008 was $130.5 million or $1.50 per share, as compared to $65.1 million or $0.77 per share, for the same period in 2007.

The increase in net loss for the quarter and nine-months ended September 30, 2008 from the same periods in 2007 is primarily the result of the growth and advancement of our clinical pipeline. Included in the net loss for the quarter and the nine months ended September 30, 2008 was $3.9 million and $11.1 million, respectively, of non-cash expense related to the impact of expensing share-based payments, including employee stock options, as compared to $2.6 million and $7.4 million, respectively, for the same periods in 2007.

Operating Expenses

Research and development expenses for the quarter ended September 30, 2008 were $36.9 million as compared to $25.0 million for the same period last year. Research and development expenses for the nine months ended September 30, 2008 were $108.0 million, as compared to $72.3 million for the same period last year. The increase in research and development expenses resulted from the growth and advancement of our clinical pipeline. We expect our research and development expenses to vary from quarter to quarter, primarily due to the timing of our clinical development activities.

Included in the research and development expenses for the quarter and the nine months ended September 30, 2008 was $2.8 million and $8.1 million, respectively, of non-cash expense related to the impact of expensing share-based payments, including employee stock options, as compared to $1.8 million and $5.1 million, respectively, for the same periods in 2007.

Selling, general and administrative expenses for the quarter and the nine months ended September 30, 2008 were $4.0 million and $12.5 million, respectively, as compared to $3.6 million and $10.8 million, respectively, for the same periods in 2007.

Included in the selling, general and administrative expenses for the quarter and the nine months ended September 30, 2008 was $1.1 million and $3.0 million, respectively, of non-cash expense related to the impact of expensing share-based payments, including employee stock options, as compared to $0.8 million and $2.3 million, respectively, for the same periods in 2007.

Interest Income (Expense)

Interest income for the quarter and the nine months ended September 30, 2008 was $1.3 million and $4.7 million, respectively, as compared to $2.9 million and $10.7 million, respectively, for the same periods in 2007.

Interest expense for the quarter and the nine months ended September 30, 2008 was $6.3 million and $18.6 million, respectively, as compared to $6.0 million and $17.9 million, respectively, for the same periods in 2007. Included in interest expense for the quarter and the nine months ended September 30, 2008, was $2.2 million and $6.5 million, respectively, of non-cash charges to amortize the original issue discount of our 3 1/2% Convertible Senior Notes.

Conference Call Information

Incyte will hold its third quarter 2008 financial results conference call this morning at 8:30 a.m. ET Thursday, November 6, 2008. To access the conference call, please dial 877-407-8037 for domestic callers or 201-689-8037 for international callers. When prompted, provide the passcode, which is 300368.

If you are unable to participate, a replay of the conference call, when made available, will be available for thirty days. The replay dial-in number for the U.S. is 877-660-6853 and dial-in number for international callers is 201-612-7415. To access the replay you will need the conference account number 278 and the ID number 300368.

The conference call will also be webcast live on CCBN and can be accessed at www.incyte.com under Investor Relations, Events and Webcasts. When available, the conference call replay can also be accessed at www.incyte.com under Investor Relations, Events and Webcasts.

About Incyte

Incyte Corporation is a Wilmington, Delaware-based drug discovery and development company focused on developing proprietary small molecule drugs to treat serious unmet medical needs. Incyte's pipeline includes multiple compounds in clinical development for oncology, inflammation and diabetes. For additional information on Incyte, visit the Company's web site at www.incyte.com.

Forward-Looking Statements

Except for the historical information contained herein, the matters set forth in this press release, including statements with respect to the broad therapeutic potential of our lead JAK inhibitor, INCB18424, as a treatment for myelofibrosis, rheumatoid arthritis and psoriasis, expectations regarding continuing to strengthen the pipeline and create sustainable value, expectation regarding results from several other clinical programs expected in 2009, including 11beta-HSD1 and HM74A and the potential start of registration trials in myelofibrosis patients, the continued enrollment of patients in a Phase II trial to confirm an optimal dosing regimen and to select the co-primary endpoint to use for the INCB18424 registration trials in myelofibrosis, plans to present results from a Phase II trial of INCB18424 in PV and ET in mid-2009 and expectations regarding trial size of the Phase II trial for INCB18424 in PV and ET, expectations of top-line results later this year, plans to initiate two six-month Phase IIb trials of INCB18424 in RA in the fourth quarter, expectations that results from a three month Phase IIb trial of INCB18424 in mild to moderate psoriatic patients are expected in the second half of 2009, plans to initiate a Phase IIb trial with INCB28050 in RA patients in the first half of 2009, expectations that a Phase IIb trial in type 2 diabetes for our 11beta-HSD1 inhibitor INCB13739 will provide top-line results in mid-2009, expectations that a Phase IIa trial in type 2 diabetes for our HM74a agonist INCB19602 will provide top-line proof-of-concept data early next year, the continued enrollment in a Phase II trial with our sheddase inhibitor INCB7839, expectations that top line results for the Phase II trial of INCB7839 will be provided late this year or early in 2009, and financial guidance about expected cash use, are all forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the high degree of risk associated with drug development and clinical trials, the uncertainty of the FDA approval process, results of further research and development, the impact of competition and of technological advances and the ability of Incyte to compete against parties with greater financial or other resources, Incyte's ability to enroll a sufficient number of patients for its clinical trials, and other risks detailed from time to time in Incyte's filings with the Securities and Exchange Commission, including its Quarterly Report on Form 10-Q for the quarter ended June 30, 2008. Incyte disclaims any intent or obligation to update these forward-looking statements.