Acknowledging that it can no longer make money by providing human gene sequencing information, Incyte Corp. says it will close its Palo Alto, Calif., research facilities, effective April 2. The move will eliminate 257 jobs--nearly 60% of the company's employees.
"As the volume of public domain data has increased, our ability to secure high-value subscriptions for our proprietary genomics data product lines has decreased," explains John Keller, chief business officer. Incyte says it will continue to collect milestone and royalty payments associated with subscriptions.
Incyte is another casualty of a failed strategy to sell proprietary gene sequence data to drug company researchers. The genomics data business began to wilt in 2000 when the government-funded Human Genome Project accelerated its free Web publication of raw sequencing data. Like competitors Celera Genomics and Human Genome Sciences, Incyte is shifting gears toward drug discovery and development.
A.G. Edwards stock analyst Craig West says Incyte made the right move financially. "Competing with the government is a bad idea," West says.
Incyte will be left with 215 employees--35 in Beverly, Mass., where the firm supplies information on human, animal, and microbial proteins; and 180 in Wilmington, Del., where it expects to spend $140 million on drug discovery this year. At the end of 2003, Incyte had cash on hand of $294 million, down from $429 million in 2002.