Greetings ladies and gentlemen and welcome to the Incyte Corporation’s fourth quarter 2008 financial results and 2009 financial guidance. (Operator Instructions). As a reminder this conference is being recorded. It is now my pleasure to introduce your host, Ms. Pamela Murphy, VP of Investor Relations and Corporate Communications. Thank you, Ms. Murphy you may begin.

Good morning and thank you all for joining us today. On the call today are Paul Friedman, Incyte’s President and Chief Executive Officer; Dave Hastings, Executive Vice President and Chief Financial Officer; and Rich Levy, Executive Vice President and Chief Drug Development and Medical Officer. Paul will begin with a brief update on the program with the progress we’ve made in our clinical program and Dave will follow with a review of our fourth quarter financial results and 2009 financial guidance. We’ll then open up the call for Q&A. Before beginning, I’d like to remind you that some of the statements made during the call today including statements regarding our plans and expectations for our drug discovery and development programs, including timing of our clinical trials and the potential efficacy of our compounds as well as our expected financial results and financial guidance are forward-looking statements. These forward-looking statements are subject to a number of risks and uncertainties that may cause our actual results to differ materially including those described in our Form 10Q for the quarter ended September 30, 2008 and from time to time in our SEC documents. Paul?

Good morning I am going to start by bringing you up to date with respect to the INCB 18424 program and myelofibrosis; specifically where we stand with respect to beginning our registration studies in both the United States and in Europe, and then I will review what we expect to accomplish in 2009 for our other programs. In late December we submitted an SPA to the FDA for our registration trial in myelofibrosis and as we expected exactly 45 days from the date of submission of the SPA we received written comments from them. While the FDA agreed with most of what we proposed in the SPA I would say a high proportion or majority again as we expected in this first round they did make a number of suggestions for us to consider many of which we will simply accept. There is a couple for which we wanted input from our lead investigators to help us determine the best responses to these suggestions. We have already received much of the feedback from the investigators and the remainder is expected promptly. The key message here is that while we may choose to further discuss or negotiate one or more of the FDA’s suggestions, we are optimistic that all the remaining points with respect to the FDA can be resolved during the next round of the SPA process. This would keep us on schedule for starting the study as originally planned in the first half of this year. I should mention as well that the registration study in Europe also remains on track. While it is frustrating for me and I know for you that we have to remain more opaque with respect to the specifics of the SPA than we wish, it is simply not appropriate at this stage for…

Thanks Paul and good morning everybody. As Paul mentioned I will start with a very brief overview of our year end financial results and then I will provide financial guidance for 2009. Our ending cash at December 31, 2008 was approximately $218 million. During 2008 we used approximately $141 million cash which was in line with our guidance. Our operating expenses including R&D expense were also in line with our expectations as we continued our investments on our key clinical programs while closely managing our G&A expenses. We will now turn to our 2009 financial guidance. We are focused on managing expenses very tightly and prioritize our spending in 2009 and we will continue to invest in our key clinical programs but discontinue spending in our non core programs. As a result our cash use in 2009 is expected to decrease and will range from $122 million to $128 million. This guidance includes the use of approximately $5 million for net lease related cost in our closed California facilities and does not include any funds we could received from future collaborations. Another area I would like to briefly discuss this morning is our operating expenses, particularly research and development costs. Thus far operating expenses are in line with our expectations. R&D expense totaled $71.1 million and although our R&D expenses can vary from quarter to quarter due to the timing of our clinical activities, we’re on track to incur between $140 million and $148 million for the year. Our R&D spending reflects our commitment to invest in the clinical pipeline which you saw today continued to make excellent progress. We expect our 2009 revenue to be in the range of $2 million to $3 million. And again this guidance excludes any revenue that would be recognized from future partnerships or collaborations. We expect our R&D expense to range from $115 million to $120 million in 2009 including a non cash expense of $7 million to $9 million related to the impact of expense in stock options. As I previously mentioned in the cash guidance, decreased R&D expense in 2009 versus 2008 is directly related to our prioritization of our clinical programs. We expect Selling, General and Administrative expenses to be in the range of $21 million to $23 million in 2009 including a non cash expense of $3 million to $4 million related to the impact of expense in stock options. Our increase in SG&A is directly related to expenses associated with our initial sales and marketing preparations for the commercialization of 424 myeloproliferative disorders. In terms of other income expenses, we expect interest income to be in the range of $1 million to $2 million in 2009 while interest expense is expected to be approximately #26 million. As a reminder the $26 million includes a non cash expense of $11 million related to the amortization of the original issued discount on our 3.5% convertible senior notes. With that I will turn the call back to Paul.

Thanks Dave and so operator we can now open up the call for questions.

(Operator Instructions) Our first question comes from Thomas J. Russo - Robert W. Baird & Co. Thomas J. Russo - Robert W. Baird & Co.: Paul recognizing that there is a limited amount you can say with regard to your interactions with FDA and the SPA, can you just comment on whether there is any disagreement on the basic design that you laid out, I think in December and the co primary endpoints that you suggested?

The vast majority of what is in the SPA they have agreed with, we have some discussions going on about certain analysis and certain things that bear on the endpoints but we are in very good shape and what I do not want to do is lay out where we are in the discussions because I do not know for sure how it is going end up but we are very confident that we will be on our way to doing the registration study in the time frame that we originally laid out. Thomas J. Russo - Robert W. Baird & Co.: At this point what would you expect in terms of enrollment to complete the enrollment for Phase III across all the sites that you mentioned earlier?

You mean in terms of time? Thomas J. Russo - Robert W. Baird & Co.: Yes time to complete enrollment.

Yes about 6 months.

Yes Rich just confirmed what we have said before. We think it would be about 6 months. Thomas J. Russo - Robert W. Baird & Co.: Lastly can you comment on just some additional color on what kind of sales and marketing preparation work is in the plans for 2009 for 424 and myelofibrosis?

We just had come into the room our new Executive VP for Commercial Operations, Pat Andrews and so I will let her comment on that.

Good morning everyone. We have to build an infrastructure for in site to be able to successfully launch 424 and myelofibrosis and we have also have to do all of the standards marketing to prepare the market for that which includes a lot of market research. It includes identifying target audiences. It includes things along these lines. The infrastructure is a very important part, identifying vendors who will able to provide the services that we need. They are very cost effective way. Those will be the main plans that we are working on for 2009.

Our next question comes from Cory Kasimov with J.P. Morgan Chase.

I guess I will skip any SG&A related questions and save you there but as far as 050 is concerned, Paul you have indicated in the past that in addition to waiting on some of the data from those one month cohort studies you were also waiting on the long term animal studies, have you in fact gotten a part of [26:21] the decision to proceed with 050?

Yes we have dog and rat 6-month results which are reassuring and indicate that we have room to move in those ranging studies that we were hoping to have. So we had to have that plus the early good looking RA results in the one month studies and we have both.

It is unprecedented. I really do mean that from a mid to large tech companies, you can figure that they are to your classical bigwig pharmaceutical companies. This is, I believe a once in a lifetime opportunity to find an oral agent that looks as good if not better than the [NDTNS]. If you will have one in your stable and you want to be or you are in the inflammatory disease area, you have to be interested in this. That the kind of interests that we are seeing.

Also form a partnering standpoint with regards to the HSD1, could you also characterize discussions there, the FDA update in the draft guidance for diabetes trials.

Remember what we have said is that we are going to do an interim analysis that will not be made public. We have not done that yet. We are coming up on it and at that time we will reinitiate talks with the companies who wanted to see the 3-month data plus some who we did not interact with the first time around. So we are waiting for that. With respect to the FDA guidelines, I am not sure if they are written in stone yet but they are likely to be accepted. The characteristics of the HSD1 inhibitor are precisely what the FDA guidelines would hope a compound would have. In other words the worry here is obviously that the [glutazones] in particular seem to if anything exacerbates cardio- vascular risk and we could debate mechanistically how that happens, but the HSD mechanism is compatible with a lowering of hemoglobin A1c plus the kinds of cardio protective changes in people. People with the metabolic syndrome, for example that would be cardio protective and therefore would not expect unless you got unlucky in Phase III study to see a signal which would then make it necessary to do this larger trials and possibly have some delay in getting registered that you would have with the compound where you get the signal. I mean we have seen statistically significant lowering of LDL Cholesterol, Total Cholesterol, trans and triglycerides. We have seen blood pressure lowering but systolic and diastolic. We have seen the weight gain. It is the reverse of what you see when you put in the HSD gene into a transgenic animal and have it expressed, in fact, you create the metabolic syndrome and so what you are doing here is you are reversing the metabolic syndrome. So if I were a business development or a thought leader at a company that is in the diabetes business this would be the kind of compound that I would want to have and for that reason, despite those guidelines, I would think this would be a very attractive program. As long as the interim analysis shows what we are anticipating it is going to show.

Our next question comes from Thomas Wei with Piper Jaffray

I just wanted to confirm on the 424 for myelofibrosis that the basic design of the trials, the duration, the size of the trial is unaffected by this point that the FDA has come back to you with.

Tom I am not going to get into the details. I will say that we said 6 months to recruit trials and it is going to be about the same size. There are good firm end points and we are quite confident that we will be able to resolve the few issues that you will always get the first time that the SPA response comes back.

Ok that is fair. For the HSD1 program, can you just remind us what the trial is actually powered to sow on A1c? What would you consider the minimum threshold for success?

You have to realize the kinds of patients that come into trials these days do not come in nothing so they tend to have lower hemoglobin A1cs than in the olden days. You know when people would come in with 10s and 11s; they tend to come in the 8s now or even the 7s. You are not going to see in most people to present changes. You are looking for, I would say, you would like to see something at least half a percent or greater. If you look at what the DPT4S do for example, they are in that range but if you had that or more plus the good lipid effects, no weight gain and in fact the blood pressure lowering I would say that would be a pretty interesting profile. Rich what do you think?

Yes I agree there have been studies with for example that is now showing about 0.4% wherein earlier studies showed 0.6% to 0.7% simply because the patient population has changed. We are looking and we are very comfortable with the 0.5%.

If for some reason the interim analysis did not meet your expectations, would you tell us next month if you would consider that to be a material event?

I think if there were dead blanks which it isn’t going to be, we would probably pull the plug on it and tell you but if we saw 0.48% Hemoglobin A1c or 0.486% or something like that, probably not we will keep running the study. What I will tell you and I expect to be able to tell you this is that we have reinitiated talks with the companies which should give you some feeling that we are seeing something.

That is helpful and then just lastly on the PDET trial, what did you mean by initial encouraging data? What sort of feedback are you getting from the first 50 patients who have been enrolled?

It actually is interesting. I do not see any great harm in saying that it is pretty interesting. It is small number of patients and the way the study is designed is a dose ranging study for the first 2 months and what that means I, it is the same thing we did in myelofibrosis because this is the way the investigators wanted to design the study. It does not allow you to make dose adjustments unless there is safety issue for the first two months. So we have had a couple of people who came into the study who had borderline hemoglobin who were on a high dose in their hemoglobin belts right below Grade 1, those would be people who you would, in real life, start on a lower dose. These were people with ET not with PV as I recall. The majority of the people in the study have done remarkably well. We normalized their blood counts. People who have been phlebotomy dependent have all required no phlebotomies since they have been on the drug. As you would expect if they have big spleens, their spleen shrink and if they have constitutional symptoms they are dramatically relieved just like they were in the myelofibrosis patients. We expected that. What we were looking for beyond that was normalization of counts. So we are becoming more and more confident that with the same kind of dosing regimen that you would use, that we are using in the myelofibrosis trials where you can dose adjust in amore facile way than the current PBET study design allows. The vast majority of patients are going to be controllable with respect to their counts and their phlebotomy needs as well as with respect to their organomegaly in their constitutional symptoms. The early results are pretty exciting.

Aside from the hemoglobin issue and what sounds like a couple of patients that you mentioned on ET side does it seem like the therapeutic is wider in this population?

I would say yes because the counts are higher. I would not even call them side effects. I would call them variability in measurements from time to time so we have had a couple of people who had hematocrit of 31 and they had a 29.5 that sort of thing but you probably would not just randomize them to a high dose. If you were dose adjusting, you would start them on a lower dose when they came in to your office and then you would work your way up. We have seen nothing again except for that and it would look like that these people, because their marrows are hyper-proliferative mainly although some of them can be either just phlebotomized or they can be close to going over the myelofibrosis but the majority of them have quite active marrows and so they are more resistant to the toxic potential of JAK suppression that you see in the myelofibrosis patients if you dose too high.

Our next question comes from Liisa A. Bayko - JMP Securities, LLC

I just wanted to see if maybe you could give us a flavor as to the design of the RA trial now that you have identified the [39:43] that you are going to take forward and a little more about the dosage that you are going to explore.

As Paul said earlier, all the doses that we are going to be exploring are once a day. The drug has longer half life and it is really good as a once a day drug. This trial is really a two part trial. The first part is a relatively small, approximately 100 patients, three dose and placebo with an interim analysis that will do around the end of the yea. At that point we will either expand some or all of the doses or potentially add higher or lower doses if by chance the ones we take so far were not exactly ideal but we are pretty confident with the doses. I would say that all of the doses are 10 milligrams, once a day or less. They are more potent, it has the longer half life than 424 so the actual number of milligrams per day is quite a bit less.

So it is 10, 5 and 2 or what are the doses you are trying?

It is for 7 and 10.

And then the second trial?

We are only doing one study but it is two parts. The trial would exactly be a much larger, less trial we do before we start Phase III with probably about 300 additional patients added to the Phase IIB study that we have a really robust data set and no issues would go into Phase III.

Can you talk about background therapy and all that kind of stuff?

I think that is going to be patients who have failed the marks and often will be on the D mark mostly [41:36] stage but others would still be allowed but patients do not have [41:41] although I believe tat they are not excluded from this study. No one would be on anything like a T&F.

How many sites?

I am not actually familiar with all those details at this point. My team is but I do not have that number at hand.

When do you think you are going to start this specifically?

Mid second quarter

And then a question for David, have you begun to think about addressing or restructuring an element of the balance sheet and can you just comment on your progress on that.

Yes, certainly managing our capital structure is a key objective for us in 2009. On the convert side if you know they are doing a couple of years but because of their size and significance we will take advantage any opportunity that we see to reduce structure those. I do not want to get into all the details of that but there are various alternative strategies we could seek and we will obviously look to that when the opportunity strikes.

Our next question comes from Eun Yang with Jeffries and Company

Regarding the follow on JAK inhibitor, now that you are planning to start the 30 month dose ranging sometime in the second quarter, in terms of the partnering options, does that depend on the interim analysis that you are planning at the end of this year?\

It may or it may not. It depends on what people are willing to put on the table. If you just think about this logically, we have got at one month with both compounds; we have results which look better than what you see with anything at six weeks. Our data look a little better than what you see with the Pfizer compound at six weeks. The Pfizer compound is a little dirtier than our compound. They successfully completed three months studies and are now in Phase III. We have six month animal toxicology and the data at three months with Pfizer looked somewhat better than at one month. It did not look as much better three months as it did as you see that the change with any T&F because I think you get the effect, you get dramatic effects quicker with the JAK compound which you would expect improvement at three months. If you were on the other side of the negotiating table and you are willing and able to connect all those dots which is not to hard to do, you should expect that the Incyte people would be looking for a Phase IIB type deal and we can get that now probably we would do the deal because we would like to be able to begin to explore things like inflammatory valve disease and ocular indications, anterior [Inaudible] for example, dry eye and systemic psoriasis things that we can do but we do not have the money to do them all in parallel. You have also have to consider what is that worth in maybe you take a slight discount to the absolute deal that you could get with the post Phase IIB data but it would go that far if we do not get the terms that we are looking for. I can tell you that with the level of interests that we have in the program. The number of companies that are interested in it that we expect to be in an auction like process which should also give us a fair amount of leverage to maximize deal terms.

The second question on the diabetes product 739, if the data from Phase IIB studies is not up to your expectation, would you plan to move it with the follow on program to continue the diabetes program at Incyte?

No, as we have matured here and evolved, we have decided not to continue with any other metabolic disease programs with the possible exception of doing something with HM 74 A in the future. If this particular compound does not work then the HSD mechanism is bogus. The early data says it works. All the animal results say it works. It’s been safe and we get low doses, once a day. You couldn’t ask for anything more appropriate to test the hypothesis or to take to market if the thing works. Our feeling is that if this does not work then HSD is not a mechanism that is useful in diabetes. I will say as one side view of this, we believe that one of our competitors developed their HSD compound not in their metabolism group but in their cardiovascular group and took their compound in for a cardiovascular indication and not for type II diabetes. Whether that was as a lipid agent and/or any hypertensive it is not completely clear to us but that is an avenue that we do not anticipate we are going to have to explore but the hemoglobin A1c results are about as binary as they could get but they are not absolutely binary because if you were disappointed there but you still have really good lipid results and/or blood pressure results you could see that there still might be a more limited number of potential partners who would be interested in the mechanism. So we just have to wait until we do the interim analysis but we expect we are going to see an adequate amount of hemoglobin A1c lowering on top of those other attributes.

The follow on to that then is in your partnership discussions for this product, does that also include a potential for cardiovascular indication?

Sure.

Our next question comes from Sapna Srivastava - Morgan Stanley

Hi this is Dave calling in for Sapna. Just a question on the launch preparations for 424, I was wondering if you could talk about what you think the overall costs are to get a US launch up and running and if you arte still thinking about partnerships for that program either in the US or Europe.

I will let the others talk about how granular we want to be about the costs but we have said that we definitely do not want a partner in North America. We are preparing to launch the drug ourselves and are quite confident that we can do that and we think that if we are going to grow up to be something we have to become fully integrated somewhere and this is our shot. The European rights are…if you had a way of retaining them and effectively selling either with a rent-a-force or your own sales force, the numbers look better than if you get yourself a partner to do it there. What we do in Europe really depends on discussions that we have with people about the program and there are multiple options for what we could do in Europe. Since the European sales of this kind of agent are higher than those in the United States then you have to look at what your margins are going to be before you can make that decision and I can assure you that we have multiple options from one end of the spectrum to other on the table and they are all being looked into now and by ‘looked into’ I mean actively not just sitting at a desk and talking about it. We cannot tell you at this point what would be best for us in Europe. I can tell you unequivocally that in North America we are going to sell the compound ourselves. So I would have Pat elaborate.

Okay. Preparation for launch is centered on really understanding the market and the need to what the physicians want and how the patients come in for treatment and it is by fairly classic thing. Within that we believe that we will be able to prepare the market in a very cost effective way because there is a limited prescribing audience. It is a high unmet need. We are going to be the first to market by a couple of years. The product worked very effectively. The physician audience is very active online and active in education so there is lots of ways to reach them. Ways that are very cost effective and the US itself has a remarkable vendor network in place that one can access for very specific that one needs and can do that very cost effectively. I think when you consider a launch in the US of a new oncology product think of one that could be done in a highly cost effective way because it is targeted and that is about what we would probably need to spend. We are still working on the specifics of that and we would have a better idea next year on the level of infrastructure that we would build and own versus what we would go outside for. That is probably a year out to get a more precise answer for the US. We are working in parallel to prepare for Europe but again a very early stage analysis on that. Our goal is to prepare for both and if turns out that we are able to proceed with Europe on our own, we would do that. If we are able to get superior offer to take our Europe and ex US rights we would certainly look into that.

Our next question is a follow up from Thomas J. Russo - Robert W. Baird & Co. Thomas J. Russo - Robert W. Baird & Co.: Just to touch again on the opportunity outside North America. Paul could you characterize the level of interest that you are receiving for that and if there is any catalyst that partners might be looking for, I am thinking along the lines of an SPA or similar regulatory step for Europe.

We have had really good discussions with the European regulatory agency and they have agreed fairly specifically how we would conduct the study and for how long. We have had and continue to have companies come in who have an interest in ex-North America rights. Some of these companies are the ones that are already selling a compound in the same therapeutic class in Europe and in the rest of the world and the challenge that has been given to them is they are going to have to show us financially that what they are putting on the table reaches an indifference range to what we think we could make the profits if we embark on this ourselves, even considering what the cost of start up would be. Thomas J. Russo - Robert W. Baird & Co.: Lastly on 050, I do not know if you have mentioned this earlier but it sounds as if you did collect ACR data in the Phase I trial. I was wondering if you could confirm that and also When we might see that data, the details from the Phase I trial of 050?

I will Rich elaborate but I do think at JP Morgan one of the slides had one of the cohorts of 050 on it. We showed them one of the cohorts because I think that was the one we completed at that time. You would see good number of ACR 50s, you would see ACR 70s and ACR 90 responses with this compound and that was once a day-10 milligrams once a day is what I think we showed.

What Paul said is obviously correct. We did a couple of cohorts. We might do another one going forward and again we have collected AC information as well as docs which are basically types of thing and seen results comparable to what we saw before as we sat. In terms of actually presenting the data, we have not made decisions yet on this relatively small studies to whether or not it would be presented in the scientific session or whether it might just be presented by Paul in one of the conferences at one t]point in time. The data has not been submitted to any meeting at this point.

Let me correct myself. We had that slide in the JP Morgan presentation but we removed it so we have not shown the data. What I just told you is what you would see when we show you the data at 10 milligrams once-a-day.

Our next question comes from Lucy Lu with Citigroup

Paul you spoke about the need to prioritize and focus on the R&D programs. I was wondering your R&D 2009 guidance of 150 from 120 from 2008, probably about 20% less or so. I was wondering what is that guidance based on, is that based on the previous and the recent approach, maybe a new development on R&D thinking? Finally can you tell us if the guidance includes the [47:52] programs, the oncology programs CMET and the IDO compounds?

The reduced spending in R&D is directly related to prioritization of the pipeline so 90% of our development cost will be in the JAK programs so that is our focus on our highest value. That guidance does not include any investments in IDO or CMET.

So you guys do not plan on taking in new trials or new programs for 2009?

That is correct. I would say in an ideal situation, if we were not trying to really conserve our money in this horrible market to make sure we get to launch in the best financial shape for us and our shareholders, we would move very aggressively with both of those programs. Especially with the cMET program because the concept with the oxalises compound and with [Inaudible] compound and this is clearly a better compound both from a safety stand point, from the ability to get to met in the central nervous system and with respect to being able to atrophy without exceeding toxic levels at peak to be able at the IC90 concentration. It is really a very interesting compound and we are hoping that we can bring in cash in some kind of deal this year that will allow us to then aggressively move on that alternatively if someone was sufficiently interested in the program. There may be some way of forming an early collaboration that would allow that program to move more quickly.

Chances of development are in the heart of the spending so we also have the discovery proportion as well.

Is it pre committed, is there any more room for the cut if it needs be or is that basically committed for 2009 already?

Well there is always variability on the R&D line and I am depending on the status of enrollment and cash flow and billing from CROs but we do not want to be so rigid that we do not have built in flexibility either on our cash guidance or in our plans that as circumstances change we can do that but we try to plan specifically for the JAK inhibitor program to be pretty much on track and committed unless something changes.

This does conclude the Q&A I would like to turn the floor back over to management for any closing comments.

Thanks for spending some time with us this morning. We are excited and optimistic about the myelofibrosis opportunity. I think those of you who followed and saw the presentations of competitor compounds at ASH now realize that this compound is by far the best compound. It is not only ahead but it maybe the only one that is really viable. We just have a few pieces to cross and I stood pat with the agency before we embark on what I think what will be an exciting Phase III study that will lead to a successful product both financially but also something that will dramatically change the lives of the myelofibrosis patients who truly have nothing else at this stage. We are looking forward to that as well. As soon as we crossed the tees and bat the eyes we will back to you with the relevant details of the registration study and I am cautiously optimistic that we will be doing that within the next couple of months with you. Thanks for tuning in and we will keep you informed of our progress as we go forward.

Ladies and gentlemen this does conclude today’s teleconference. You may disconnect your lines at this time. We thank you for your participation.