Incyte Corporation announced that it would close its Palo Alto, California research facilities and headquarters, effective April 2, 2004, completing its transition to a drug discovery and development company. As a result, Incyte will reduce its workforce by 257 employees and expects to eliminate approximately $50 million in annual operating expenses. This action will not affect Incyte's ability to leverage its extensive gene-related intellectual property portfolio or to collect milestone and royalty payments associated with its prior and current LifeSeq subscription agreements. Incyte will continue to operate its Proteome subsidiary in Beverly, Massachusetts, which produces the BioKnowledge Library (BKL) information product line. BKL provides fundamental biological information about human, animal, and microbial proteins based on expert, literature-based annotation. The Proteome subsidiary operates on a low expense base and was incrementally cash-positive in 2003.

Paul Friedman, Incyte's CEO, stated, "The decision to close our Palo Alto facilities reflects the difficult realities of the genomic information marketplace and our belief that Incyte's most promising, value-creating activities are taking place in drug discovery and development. We appreciate that Incyte's long history in genomics has provided critical intellectual property and financial resources that will serve the company well going forward, and we wish to extend our appreciation to the Palo Alto team for their many contributions to Incyte's past growth and commercial success."

John Keller, Incyte's chief business officer, stated, "As the volume of public domain data has increased, our ability to secure high-value subscriptions for our proprietary genomic data product lines, LifeSeq and ZooSeq, has decreased. As a result, we can no longer justify the extensive investment and infrastructure associated with the Palo Alto site. Incyte's information product-related activities are now focused on the Proteome subsidiary and leveraging our intellectual property portfolio."

David Hastings, executive vice president and chief financial officer of Incyte, stated, "Given the infrastructure costs in Palo Alto, combined with the expected decrease in our 2004 revenue, the decision to cease operations in California is essential to complete our transition into a drug discovery and development company. With our powerful scientific team, growing pipeline and the implementation of this difficult but necessary decision, we believe we can succeed in our mission to bring important new medicines to patients and create significant and lasting value for our shareholders."