By Lisa Seachrist

Washington Editor

Less than a month after raising $150 million in a offering of convertible subordinated notes, Incyte Pharmaceuticals Inc. continued to capitalize on Wall Street's giddy crush on all things genomics by raising $422 million in a private placement.

The company raised the money through the sale of 2 million shares of common stock at $211 per share, a 6.2 percent discount to a recent closing price. The Palo Alto, Calif., company can't disclose the investors until the shares are registered with the SEC.

"Obviously, we are very pleased with the offering," Incyte CEO Roy Whitfield said. "And we are very excited with the investors who've chosen to take such are large position in Incyte."

With nearly $600 million added to its coffers just this year, Whitfield said the genomics database company would use the cash to establish a venture capital fund and gain much needed flexibility for any acquisitions.

"We feel we have a unique vantage point when it comes to reviewing what's happening in the genomics field," Whitfield said. "We see an opportunity to exploit that vantage point by having a large venture fund to invest in new ideas."

In addition, Whitfield noted, the company's stock has risen so high, that having cash available will allow it to consider new acquisitions. "We have no plans to acquire any business at this time," he emphasized.

Incyte's stock (NASDAQ:INCY) price has, indeed, had a wild ride of late. The 52-week low for the stock is $16.438. As recently as October, the company's stock closed at $16.875 following the second downward revision of its revenues for 1999. (See BioWorld Today, Oct. 5, 1999, p. 1.)

Following news the company had signed its biggest database deal to date with Pfizer Inc. in November, Incyte's stock closed at $24.50 a share. (See BioWorld Today, Nov. 23, 1999, p. 1.)

However, like most genomics' companies stocks, Incyte has enjoyed an exuberant rise since then, closing Wednesday at $252, up $26.937.

Incyte provides an integrated platform of technologies aimed at understanding the molecular basis of diseases. It develops and markets genomic databases, genomic data management software, microarray-based gene expression services, related reagents and services.

In light of its business model, Kevin Tang, senior biotech analyst with New York-based Deutsche Banc Alex. Brown Inc., considers even the current trading price undervalued for Incyte. In a research note, Tang gives a 12-month price target for the stock of $374 a share. He breaks down that estimate by valuing Incyte's current database subscription at $209 a share with $165 a share covering the company's royalty portfolio. Tang points out that nearly 30,000 royalty-bearing licenses have been taken out by Incyte subscribers.

Robert Toth, vice president and analyst with Prudential Vector Healthcare in San Francisco, considers Incyte's valuation low in comparison to Rockville, Md.-based Celera Genomics.

"There is definitely a relative valuation disparity between the two companies," Toth said. "Incyte has the established business model, and they have a technology that is more adept at finding the utility of a gene. The valuation explosion in [this sector] makes me think this space has gotten a little ahead of itself."

Toth pointed to an influx of high-tech money into the genomics sector. "A lot of investors are unsophisticated about the genomics industry and the money is flowing to the biggest, most capitalized names," Toth said.

While genomics is all promise at the moment, Toth maintained the promise is an extraordinary one. He likened the sequencing of the human genome to having a new periodic table of elements, which has allowed medicine to advance to the point it is now. Understanding the human genome will allow medicine to take a quantum leap forward, he said.

"The difference in perceived value of these companies and real value is really extreme right now," Toth said. "That being said, I truly believe genomics will fundamentally change how we practice medicine."