Incyte Genomics Reports Financial Results for the Second Quarter of Fiscal 2002 Palo Alto, CA, July 25, 2002 – Incyte Genomics, Inc., a leader in genomics-advantaged therapeutic discovery (Nasdaq: INCY), today reported its consolidated financial results for the second quarter ended June 30, 2002. The Company reported revenues associated with the information product line (which includes database subscriptions, partnership programs and licensing activities) of $27.9 million for the second quarter of 2002 compared to revenues of $43.2 million for the same period last year. Total second quarter 2002 revenues for Incyte were $29.1 million, compared to $56.1 million for the comparable quarter in 2001. Included in the total second quarter revenues was $1.2 million associated with the wind-down of discontinued product lines announced in the fourth quarter of 2001. The decrease in total revenues for the quarter results from the discontinued custom genomics product lines that provided revenues of $12.9 million for the second quarter of 2001, as well as from the strategy announced in the first quarter of 2002 to use the information product line assets in a manner that also supports the Company's therapeutic discovery and development initiative. "Our information product line generated revenues and positive cash flow within the range of our expectations," said Paul A. Friedman, M.D., Chief Executive Officer of Incyte. "In addition, during the second quarter, our recruiting activities for the therapeutic discovery and development group continued at a rapid pace and we are well ahead of our goals in hiring both experienced biologists and chemists." The net loss for the quarter ended June 30, 2002, was $17.4 million, or $0.26 per share, compared to $9.9 million, or $0.15 per share, for the same quarter in 2001. Included in the quarter results for 2002 are: $1.4 million net expenses of "Non-recurring restructure and long-lived asset write-downs", $1.9 million gain from "Debt Extinguishment" and $0.6 million loss in accordance with SFAS 133, on "Certain derivative financial instruments." In addition, the increased net loss for the current quarter, compared to the comparable quarter in 2001, reflects the increased expenses associated with the build-up of the East Coast therapeutic discovery and development operations, the reduction in revenues and expenses associated with the restructure announced in the fourth quarter of 2001 and the reduction in revenues related to the implementation of the strategy to use the information assets in a manner that also supports the Company's therapeutic discovery and development initiative. As of June 30, 2002, cash and short-term investments totaled $476.2 million, compared to $491.7 million as of March 31, 2002 and $507.9 million as of December 31, 2001. "Our strategy is to manage the information product line so that it is cash-positive. In turn, the cash generated can then help fund our therapeutic discovery and development efforts. The second quarter performance confirms this strategy as less than $11 million of cash was consumed by the company prior to repurchasing a portion of our convertible notes," said John Vuko, Chief Financial Officer of Incyte. Research and Development expenses for the quarter ended June 30, 2002, decreased 28% to $37.6 million from $52.2 million over the comparable quarter of the prior year. The decrease reflects the elimination of expenses tied to the restructuring announced in the fourth quarter of 2001, offset by increased spending for the Company's therapeutic discovery and development efforts. Selling, General and Administrative expenses decreased in the quarter by 31% to $12.8 million compared with $18.6 million for the same period in 2001, principally because of expense reductions stemming from the restructuring announced in the fourth quarter of 2001. Q2 Highlights: Incyte presented and webcast a detailed strategic plan at the May 2002, Deutsche Bank Healthcare Conference. This presentation included a recap of Incyte's strengths, the strategy for leveraging its information product line assets with its therapeutic discovery and development initiative, its small molecule discovery and development strategies, and metrics to measure the company's progress. Incyte entered into a non-exclusive license with Affymetrix, Inc. for certain key Incyte intellectual property facilitating Affymetrix's entry into the clinical diagnostics field. Incyte continued its rapid hiring and is well ahead of its recruiting targets with more than 75 highly qualified scientific and associated personnel hired to date to support its East Coast small molecule efforts. Company management will host a conference call on Thursday July 25, 2002 at 2:00 p.m. PDT to discuss the company's results. The domestic dial-in number for the conference call will be 888-964-4739 and the International dial-in number will be 973-582-2737. A replay of the conference call will be available through August 1, 2002 (12:00 midnight PDT). The replay dial-in number for both U.S. and International callers will be 973-341-3080 and the PIN number access code will be 3379535. A webcast will be distributed over CCBN's Investor Distribution Network to both institutional and individual investors. Individual investors can listen to the call through CCBN's individual investor center at www.companyboardroom.com or by visiting any of the investor sites in CCBN's Individual Investor Network such as America Online's Personal Finance Channel. Institutional investors can access the call via CCBN's password protected event management site, StreetEvents (www.streetevents.com). Incyte Genomics, Inc., with a vision to be the leader in genomics-advantaged therapeutic discovery and development, has the largest commercial portfolio of issued United States patents covering human, full-length genes and the proteins they encode. Incyte is leveraging its leading intellectual property and genomic information position to be a leader in discovering and developing therapeutic small molecules, secreted proteins and antibodies. In addition, Incyte has developed the leading integrated platform of genomic technologies designed to aid in the understanding of the molecular basis of disease. Incyte develops and markets genomic databases and licenses pharmaceutically relevant intellectual property. These offerings facilitate pharmaceutical and biotechnology researchers in their drug discovery and development; including gene discovery, understanding disease pathways, identifying new disease targets and the discovery and correlation of gene sequence variation to disease. Except for the historical information contained herein, the matters set forth in this press release, including statements as to the substance of Incyte's presentation at the Deutsche Bank Healthcare Conference, including discussions of the Company's strategies and metrics for the Company's progress, the Company's ability to further implement its strategy of managing a cash-positive information product line, Incyte's ability to leverage its intellectual property position to become a leader in therapeutic small molecule, secreted protein and antibody discoveries, and whether Incyte's product offerings will continue to facilitate the drug discovery and development efforts of pharmaceutical and biotechnology researchers, are 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 impact of competition and of technological advances and the ability of Incyte to compete against parties with greater financial or other resources, the effectiveness and extent of utilization of databases in pharmaceutical research and development, the ability to introduce new products and product upgrades in a timely manner, the ability of Incyte to implement successfully its plans to ramp up its therapeutic discovery efforts, changes in Incyte's business plan, Incyte's ability to obtain patent protection for its discoveries and to continue to be effective in expanding its patent coverage, and other risks detailed from time to time in Incyte's SEC reports, including its Quarterly Report on Form 10-Q for the quarter ended March 31, 2002. Incyte disclaims any intent or obligation to update these forward-looking statements. - Tables Follow - ###