INCYTE CORP Q3 2005 Earnings Conference Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Thomas Wei - Piper Jaffray - Analyst : Thanks very much, I had a couple of questions; the first on the extension study for dexelvucitabine. Can you clarify the comment that was made around the rate of the elevated pancreatic enzymes not having increased with increasing duration of dosing? Does that mean there have been no additional cases of hyperlipasemia in the extended follow-up beyond what we already know, or does that mean that it just looks unchanged when you look at it on a per-patient month or per-patient year adjusted basis?

Question: Thomas Wei - Piper Jaffray - Analyst : So it sounds like there have been two additional cases of the 100 patients who are in the expansion study and not on DDI?

Question: Thomas Wei - Piper Jaffray - Analyst : And can you just give us a little bit of detail around those cases? Those are Grade IV cases, and when did they emerge?

Question: Thomas Wei - Piper Jaffray - Analyst : And in the protocols, are those patients withdrawn from the study?

Question: Thomas Wei - Piper Jaffray - Analyst : And the hyperlipasemia resolved after drug withdrawal?

Question: Thomas Wei - Piper Jaffray - Analyst : I have one question on the CCR5 and I will jump back in the queue. There has been a lot of controversy around the propensity for cross-resistance in this class. Have you been able to explore that at all, your compound versus the Pfizer or Schering compound officially? Or if not, can you at least tell us what degree of structural similarity there is between your series and what's in clinical development right now?

Question: Thomas Wei - Piper Jaffray - Analyst : Alright, thanks very much.

Question: David Witzke - Banc of America Securities - Analyst : And then, again, on the CCR5 antagonist class, as Thomas alluded to, there have been some setbacks both at Schering and at GSK. Has your enthusiasm for this compound abated at all? Do you think there's any sort of a class effect with respect to the liver tox? I know Schering had some trouble with virus in naive patients. Any additional thoughts on that?

Question: Sapna Srivastava - Morgan Stanley - Analyst : Hi. I have two questions. The first is on your Phase IIb study. Could you explain why you're not extending the site (ph) of the trial (indiscernible) registration (indiscernible)? And the second question is just from a business development strategy. (indiscernible) the multiple areas that you're going into from HIV divertese (ph) cancer. What is the strategy going forward? How do you plan to advance the pipeline?

Question: Sapna Srivastava - Morgan Stanley - Analyst : And so do you think the 80 to 200 patient study could be considered an additional (ph) trial? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies.

Question: Sapna Srivastava - Morgan Stanley - Analyst : And the second question please?

Question: Sapna Srivastava - Morgan Stanley - Analyst : Thank you.

Question: Eun Yang - Jefferies - Analyst : Thanks. I have one more question on the CCR5 antagonist. Recently, there is an article in Major Medicine indicating that blocking CCR5 could make HIV patients more vulnerable or prone to infections such as the flu and curtovirus (ph). And I am just wondering what do you think would be the most challenging part of developing drugs against the CCR5? That's the number one question. And the second question is on CCR2 antagonist. At least in the animal model, blocking CCR5 is a quite useful diminishing arthritis symptoms in patients with RA, particularly in the early stage of a disease. But in the later stage of the disease, when you block the CCR5, it actually aggravates the symptoms. So I'm just wondering what are your thoughts on developing this LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. drug in the arthritis patients and whether in your current Phase II study, patients have more on the early stage side than later stage of the disease?

Question: Eun Yang - Jefferies - Analyst : The second question is referring to CCR2.

Question: Eun Yang - Jefferies - Analyst : No, there is CCR2 (ph) in the animal studies. The case that I mentioned regarding to CCR2 antagonist is in the animal study list (ph). Some paper just showed that if you block the CCR2 in animals with RA, like a collagen-induced arthritis, actually --.

Question: Eun Yang - Jefferies - Analyst : One was a knockout and the other one is actually collagen-induced arthritis in the mouse model.

Question: Eun Yang - Jefferies - Analyst : And in the Phase IIa study with the CCR2 receptor antagonist, the patients where they're already in the trial, have they been treated with TNFR (ph) blockers?

Question: Eun Yang - Jefferies - Analyst : But you're using it in conjunction with methotrexate?

Question: Eun Yang - Jefferies - Analyst : Thank you very much.

Question: Maneesh Jain - Thomas Weisel Partners - Analyst : Good morning, thank you for taking my questions. Regarding DFC, it sounds like you're planning on meeting with the FDA imminently. So can you give us a feel for, since you've heard of the FDA's concerns, what steps you guys have taken to affect enrollment in the second Phase IIb trial, if and when it opens?

Question: Maneesh Jain - Thomas Weisel Partners - Analyst : Okay. And then regarding the hyperlipasemia, it seems as if in the past, some of the patients that had, or maybe even all of the patients that had suffered Grade IV hyperlipasemia, seemed to be heavily pretreated and whom there may have been some subclinical injuries to the pancreas to begin with. Does that still hold true with these two additional cases that you told us about?

Question: Maneesh Jain - Thomas Weisel Partners - Analyst : And then just in regards to the pipeline, it sounds like the CCR2 program is progressing in RA and potentially moving into MS, but you're moving in a different direction regarding diabetes. So I am just curious, what's the potential for out-licensing any of the R&D programs in 2006?

Question: Maneesh Jain - Thomas Weisel Partners - Analyst : Thank you so much.

Question: Han Li - Suntrust - Analyst : A question for Paul or Rich, this is regarding Study 901. Can you remind us the (indiscernible) the extension study, how many patients in the study now and which dose of DFC are those patients on? And will I see data updated from time to time?

Question: Han Li - Suntrust - Analyst : So it should be 125 or 126 patients, there will be DFC at 200 mgs (ph) pretty soon, and there will be no DDI?

Question: Han Li - Suntrust - Analyst : How long you will follow those patients? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies.

Question: Han Li - Suntrust - Analyst : Thanks. The other question I have is more on the financial side, more for Dave. This is on the interest income guidance. You gave 9 to 10 million for the year. Please correct me if I'm wrong, but don't you already have 10.3 million in interest income up to now to this quarter? Does it mean that you're going to have a zero interest income in the fourth quarter?

Question: Han Li - Suntrust - Analyst : I see. And second question, on your '07 converge (ph), you still have a remaining balance of close to 91 million. Do you have any plans regarding the '07 conversion?

Question: Han Li - Suntrust - Analyst : Okay, thank you.

Question: Alex Hittle - A.G. Edwards - Analyst : Thank you, good morning. I have a couple of questions on the diabetes front here. First of all, on the CCR2, you've spoken about that and it wasn't clear to me whether your decision to sort of keep this on the shelf it appears going forward is a data-driven decision or a strategic decision. And then second, as I recall in the Maxia acquisition, there were two insulin sensitizers; one at J&J and one internal. And I'm wondering if you could update us on where those stand and whether or not the internal one is the one that is progressing here in the late preclinical? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies.

Question: Alex Hittle - A.G. Edwards - Analyst : Thank you.

Question: Vinny Jindal - Wedbush Morgan Securities - Analyst : Hi, good morning guys. A couple of questions on the kind of earlier stuff in your pipeline, first on sheddase. You guys had mentioned doing later trials that would look at sheddase in combination with other drugs that are either at standards of care or emerging as standards of care. What are your thoughts on any solid tumor trials with the sheddase inhibitor, including Avastin? Where do you think that drug fits into the clinical development strategy?

Question: Vinny Jindal - Wedbush Morgan Securities - Analyst : Okay. And on the CCR2 program, I know that you guys have multiple different molecules in that program, multiple different starting structures to build off of, and that some of your partnering strategy involves licensing out different chemical entities for different indications possibly. Are you going to be using the same molecule you used in the first Phase II's in RA and insulin diabetes indications into the next Phase II's, the RA and MS? Is it the same molecule in all four trials, or are you looking at various -- variations of those molecules at all for partnering potential?

Question: Vinny Jindal - Wedbush Morgan Securities - Analyst : Okay. And then one last question on the CCR5. Some of the toxicity of other compounds seem to have been due to some promiscuity of inhibition just generally inhibiting GPCR (ph). Does your molecule hit more directly the domain that's the business end for HIV entry, or is it kind of GPCR promiscuous or CCR5 generally promiscuous?

Question: Vinny Jindal - Wedbush Morgan Securities - Analyst : Got it, thanks guys.

Question: Soham Pandya - Susquehanna Financial Group - Analyst : Thank you for taking my question. Most of my questions have been asked, but a follow-up. You mentioned that sort of a 2% rate of hyperlipasemia in the safety (indiscernible) trial. What is your sense, what level is sort of acceptable in this sort of patient population for -- from a commercial standpoint? What level would be worrisome to you folks?

Question: Soham Pandya - Susquehanna Financial Group - Analyst : Great. That's very helpful. One final question on the proposed Phase IIb study. Are you going to preselect patients for the M184 mutation? You're going head-to-head against 3TC -- can you just help me understand that aspect?

Question: Soham Pandya - Susquehanna Financial Group - Analyst : Great, that's helpful. Thank you.

Question: Thomas Wei - Piper Jaffray - Analyst : Thanks. I had actually tried to dial myself out. I'll just follow-up with you after the call. Thanks.