By Randall Osborne
West Coast Editor
Already an industry heavyweight, Incyte Genomics Inc. is beefing up with proteins, paying $77 million in cash and equity for all outstanding stock of privately held Proteome Inc., which boasts a prestigious lineup of customers for its proteomics databases.
Roy Whitfield, CEO of Palo Alto, Calif.-based Incyte, said annotating the human proteome is "the next frontier, if you will, in genomics," and told analysts in a conference call that Proteome will help Incyte win "a very exciting endgame" in that space.
"The proteome is far more complex than the genome," Whitfield said. "Even in the genome, most genes don't have names yet, let alone [known] functions."
The buyout, expected to close next week, will be accounted for as a purchase, with a dilution to shareholders of less than 5 percent, said John Vuko, Incyte's chief financial officer.
He said further details will be disclosed later, but Proteome has "revenues in the millions of dollars, and we're going to fold that into our guidance [for Incyte revenues] next year." Company officials said the buyout of Proteome was viewed as a five-year-return venture.
Randy Scott, president and chief scientific officer, said Incyte "looked at Proteome several years ago, when we did the deal with Oxford GlycoSciences [OGS]. Our primary interest was in their annotation capabilities."
Incyte entered the proteomics deal with OGS in January 1998, starting off with a $5 million equity investment. (See BioWorld Today, Jan. 15, 1998.)
Proteome, Scott said, with a business model similar to Incyte's, has "about 100 scientists out there in the academic communities," helping to gather data, which the company organizes.
"They have some technologies and other things, but the primary rationale of the acquisition was to create a deeply annotated database," Scott said.
Proteome will maintain its operations in Beverly, Mass., and James Garrels will remain as president and CEO of the firm, whose customers, Whitfield noted, include such names as American Home Products Corp., of Madison, N.J.; Bristol-Myers Squibb Co., of New York; Eli Lilly and Co., of Indianapolis; Glaxo Wellcome plc, of London; Johnson & Johnson, of New Brunswick, N.J.; Pfizer Inc., of New York; and SmithKline Beecham plc, of London, among others.
"In fact, just earlier this week, Bayer [AG, of Leverkusen, Germany] and Genentech [Inc., of South San Francisco] also became customers of Proteome," Whitfield said.
Incyte's stock (NASDAQ:INCY) closed Thursday at $23.687, down 81.25 cents.