879169--3/3/2009--INCYTE

related topics

{product, candidate, development}

{property, intellectual, protect}

{product, liability, claim}

{control, financial, internal}

{personnel, key, retain}

{debt, indebtedness, cash}

{capital, credit, financial}

{cost, regulation, environmental}

{loan, real, estate}

RISKS RELATING TO OUR BUSINESS We are at the early stage of our drug discovery and development efforts and we may be unsuccessful in our efforts. Our efforts to discover and develop potential drug candidates may not lead to the discovery, development, commercialization or marketing of drug products. The success of our drug discovery and development efforts may depend on our ability to find suitable collaborators to fully exploit our capabilities. If we are unable to establish collaborations or if these future collaborations are unsuccessful, our research and development efforts may be unsuccessful, which could adversely affect our results of operations and financial condition. We face significant competition for our drug discovery and development efforts, and if we do not compete effectively, our commercial opportunities will be reduced or eliminated. We depend on our collaboration with Pfizer for the development and commercialization of CCR2 antagonist compounds. If conflicts arise between our collaborators, including Pfizer, licensees, or advisors and us, our collaborators, licensees, or advisors may act in their self-interest, which may adversely affect our business. We have limited expertise with and capacity to conduct preclinical testing and clinical trials, and our resulting dependence on other parties could result in delays in and additional costs for our drug development efforts. If we are unable to obtain regulatory approval to develop and market products in the United States and foreign jurisdictions, we will not be permitted to manufacture or commercialize products resulting from our research. We may not obtain a special protocol assessment for our JAK inhibitor for myelofibrosis. A special protocol assessment does not guarantee any particular outcome from regulatory review, including any regulatory approval. Our reliance on other parties to manufacture our drug candidates could result in a short supply of the drugs, delays in clinical trials or drug development, increased costs and withdrawal or denial of the regulatory authority's approval. We may incur additional expense in order to market our drug products. We might not be able to commercialize our drug candidates successfully, and we may spend significant time and money attempting to do so. If we fail to enter into additional licensing agreements or if these arrangements are unsuccessful, our business and operations might be adversely affected. Our ability to generate revenues will be diminished if we are unable to obtain acceptable prices or an adequate level of reimbursement from payors of healthcare costs. As our drug discovery and development operations are conducted at our headquarters in Wilmington, Delaware, the loss of access to this facility would negatively impact our business. We depend on key employees in a competitive market for skilled personnel, and the loss of the services of any of our key employees or our inability to attract and retain additional personnel would affect our ability to expand our drug discovery and development programs and achieve our objectives. If we fail to manage our growth effectively, our ability to develop and commercialize products could suffer. If product liability lawsuits are brought against us, we could face substantial liabilities and may be required to limit commercialization of our products and our results of operations could be harmed. Because our activities involve the use of hazardous materials, we may be subject to claims relating to improper handling, storage or disposal of these materials that could be time consuming and costly. RISKS RELATING TO OUR FINANCIAL RESULTS We expect to incur losses in the future and we may not achieve or maintain profitability in the future. We will need additional capital in the future. The capital markets may not permit us to raise additional capital at the time that we require it, which could result in limitations on our research and development or commercialization efforts or the loss of certain of our rights in our technologies or drug candidates. Our marketable securities are subject to certain risks that could adversely affect our overall financial position. Our current revenues are derived from collaborations and from licensing our intellectual property. If we are unable to achieve milestones, develop products or renew or enter into new collaborations, our revenues may decrease, and future milestone and royalty payments from our gene and genomics-related intellectual property may not contribute significantly to revenues for several years, and may never result in revenues. We have a large amount of debt and our debt service obligations may prevent us from taking actions that we would otherwise consider to be in our best interests. RISKS RELATING TO INTELLECTUAL PROPERTY AND LEGAL MATTERS If we are subject to arbitration, litigation and infringement claims, they could be costly and disrupt our drug discovery and development efforts. We may be unable to adequately protect or enforce our proprietary information, which may result in its unauthorized use, a loss of revenue under a collaboration agreement or loss of sales to generic versions of our products or otherwise reduce our ability to compete in developing and commercializing products. If the effective term of our patents is decreased due to changes in the United States patent laws or if we need to refile some of our patent applications, the value of our patent portfolio and the revenues we derive from it may be decreased. International patent protection is particularly uncertain and costly, and if we are involved in opposition proceedings in foreign countries, we may have to expend substantial sums and management resources.

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879169--3/3/2009--INCYTE_CORP