Edgar Filing: INCYTE GENOMICS INC

Filed Pursuant to Rule 424(b)(3)
Registration No. 333-55826

PROSPECTUS
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1,248,522 Shares

INCYTE GENOMICS, INC.

Common Stock

______________________

The selling stockholders identified in this prospectus may sell up to
1,248,522 shares of our common stock.

Our common stock is traded on the Nasdaq National Market under the symbol
"INCY." The last reported sale price of our common stock on the Nasdaq National
Market on May 23, 2001 was $23.16 per share.

______________________

Investing in our common stock involves a high degree of risk. You should
carefully read and consider the "Risk Factors" beginning on page 3.

______________________

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is
a criminal offense.

______________________

The date of this prospectus is May 24, 2001

You should read carefully the entire prospectus, as well as the documents
incorporated by reference in the prospectus, before making an investment
decision.

INCYTE GENOMICS, INC.

We provide products and services based on genomic information. Genomics
involves the analysis of genetic information and its relationship to disease.
We develop and sell the following products and services:

. genomic databases that include

-- our proprietary and publicly available genomic information,
including the order, or sequence, of the molecules, or bases, in
the DNA comprising genes,

-- information regarding variations in a single base between two
individuals, which are referred to as single nucleotide
polymorphisms or SNPs, and

-- gene expression information, which is information regarding the
extent to which specific genes in a cell are active in specified
conditions;

. custom genomic products and services that include

-- software that helps to analyze and manage genomic data,

-- microarray-based gene expression services that use microarrays,
which are silicon or glass chips that have different DNA
fragments, or probes, located in known positions on the chips, to
obtain gene expression information,

-- physical copies of genes or gene fragments in our databases,
called bioreagents, and related services,

-- services that provide the sequence information, stated in bases,
of customer supplied organic material, and

-- services that discover SNPs in genes by utilizing our SSCP
technology.

We focus on providing integrated products and services designed to assist
pharmaceutical and biotechnology companies in the discovery and development of
new drugs and diagnostic tests. Our products and services can be applied to
gene discovery, understanding the genetic bases of diseases, identifying new
molecules that may play a role in the disease process, referred to as drug
targets, and the discovery and correlation of variations in the sequence of
individual genes to disease.

Incyte and LifeSeq are our registered trademarks. GEM is our trademark.

Incyte was incorporated in Delaware in 1991. We changed our name from
Incyte Pharmaceuticals, Inc. to Incyte Genomics, Inc. in June 2000. Our
executive offices are located at 3160 Porter Drive, Palo Alto, California 94304
and our telephone number is (650) 855-0555.

RISK FACTORS

We have had only limited periods of profitability, we expect to incur losses in
the future and we may not return to profitability

We had net losses from inception in 1991 through 1996 and again incurred
net losses in 1999 through the three months ended March 31, 2001. Because of
those losses, we had an accumulated deficit of $95.2 million as of March 31,
2001. We intend to continue to spend significant amounts on new product and
technology development, including therapeutic drug discovery and development
programs and making our products available online, and to increase our
investment in marketing, sales and customer service. The amounts we intend to
spend on new product and technology development include spending for our efforts
to determine the sequence of genes, or genomic sequencing, determine gene
functions, develop database and software products such as our gene expression
database, discover SNPs, expand research and development alliances, and develop
electronic commerce products. As a result, we expect to incur losses in 2001. We
may report net losses in future periods as well. We will not return to
profitability unless we increase our revenues or reduce our expenses.

To generate significant revenues, we must obtain additional database
collaborators and retain existing collaborators

As of March 31, 2001, we had over 30 database agreements. If we are unable
to enter into additional agreements, or if our current database collaborators
choose not to renew their agreements upon expiration, we may not generate
additional revenues or maintain our current revenues. Our database revenues are
also affected by the extent to which existing collaborators expand their
agreements with us to include our new database products and the extent to which
existing collaborators reduce the number of products or services for which they
subscribe, the impact of which will vary based upon our pricing of those
products and services. Some of our database agreements require us to meet
performance obligations, some or all of which we may not be successful in
attaining. A database collaborator can terminate its agreement before the end of
its scheduled term if we breach the agreement and fail to cure the breach within
a specified period.

Our longer-term strategy for profitability includes licenses under our gene-
related intellectual property, but these licenses may not contribute to revenues
for several years, and may never result in revenues

Part of our strategy is to license to database collaborators and to some of
our other customers our know-how and patent rights associated with the genetic
information in our proprietary databases, for use in the discovery and
development of potential pharmaceutical, diagnostic or other products. Any
potential product that is the subject of such a license will require several
years of further development, clinical testing and regulatory approval before
commercialization. Therefore, milestone or royalty payments from these
collaborations may not contribute to revenues for several years, if at all.

We may not be able to generate significant growth in revenue if we are not able
to generate significant revenues from our custom genomic products and services

We expect that our custom genomic products and services will become a
greater percentage of our revenues. Whether this occurs, and whether these
products and services will generate significant revenues, depends on our ability
to increase our customer base, increase sales to existing customers, and
increase our production capacity in a timely manner and with consistent volumes
and quality to meet the increased demand.

Our operating results are difficult to predict, which may cause our stock price
to decline and result in losses to investors

Our operating results are difficult to predict and may fluctuate
significantly from period to period, which may cause our stock price to decline
and result in losses to investors. Some of the factors that could cause our
operating results to fluctuate include:

. changes in the demand for our products and services, including our
database business;

. the introduction of competitive databases or services, including
databases of publicly available, or public domain, genetic
information;

. the nature, pricing and timing of products and services provided to
our collaborators;

. acquisition, licensing and other costs related to the expansion of our
operations, including operating losses of acquired businesses;

. losses and expenses related to our investments in joint ventures and
businesses;

. regulatory developments or changes in public perceptions relating to
the use of genetic information and the diagnosis and treatment of
disease based on genetic information;

. changes in intellectual property laws that affect our rights in
genetic information that we sell;

. payments of milestones, license fees or research payments under the
terms of our increasing number of external alliances; and

. expenses related to, and the results of, litigation and other
proceedings relating to intellectual property rights, including the
lawsuits filed by Affymetrix and counterclaims filed by Affymetrix.

We have significant fixed expenses, due in part to our need to continue to
invest in product development and extensive support for our database
collaborators. We may be unable to adjust our expenditures if revenues in a
particular period fail to meet our expectations, which would harm our operating
results for that period. Forecasting operating and integration expenses for
acquired businesses may be particularly difficult, especially where the acquired
business focuses on technologies that do not have an established market. We
believe that period-to-period comparisons of our financial results will not
necessarily be meaningful. You should not rely on these comparisons as an
indication of our future performance. If our operating results in any future
period fall below the expectations of securities analysts and investors, our
stock price will likely fall, possibly by a significant amount.

Our industry is intensely competitive, and if we do not compete effectively, our
revenues may decline

We compete in markets that are new, intensely competitive, rapidly
changing, and fragmented. Many of our current and potential competitors have
greater financial, human and other resources than we do. If we cannot respond
quickly to changing customer requirements, secure intellectual property
positions, or adapt quickly and obtain access to new and emerging technologies,
our revenues may decline. Our competitors include:

. Affymetrix, Inc.,

. Celera Genomics Group of Applera Corporation,

. CuraGen Corporation,

. Gene Logic Inc.,

. Human Genome Sciences, Inc.,

. Invitrogen Corporation,

. Millennium Pharmaceuticals, Inc.,

. major pharmaceutical companies, and

. universities and other research institutions, including The SNP
Consortium, which is funded by a number of pharmaceutical companies,
and those receiving funding from the federally funded Human Genome
Project.

The human genome contains a finite number of genes. Our competitors may
seek to identify, sequence and determine the biological function of numerous
genes in order to obtain a proprietary position with respect to new genes.

In addition, we face competition from companies who are developing and may
seek to develop new technologies for discovering the functions of genes, gene
expression information, including microarray technologies, discovery of
variations among genes and related technologies. Also, if we are unable to
obtain the technology we currently use or new advanced technology on acceptable
terms, but other companies are, we will be unable to compete.

We also face competition from providers of software. A number of companies
have announced their intent to develop and market software to assist
pharmaceutical companies and academic researchers in managing and analyzing
their own genomic data and publicly available data. If pharmaceutical companies
and researchers are able to manage their own genomic data, they may not
subscribe to our databases.

Extensive research efforts resulting in rapid technological progress
characterize the genomics industry. To remain competitive, we must continue to
expand our databases, improve our software, and invest in new technologies. New
developments will probably continue, and discoveries by others may render our
services and potential products noncompetitive.

Our new investments in validating drug targets will lead to increased expenses
and may not result in commercial products or services

We have recently decided to further invest in validating drug targets
associated with diseases that may be linked to several or many genes working in
combination. The process of discovering drugs based upon genomics is new and
evolving rapidly, and we have limited experience in discovering or developing
drugs. These efforts will result in increased expenses and may not result in
commercial products or services. There is limited scientific understanding
generally relating to the role of genes in diseases, and few, if any, products
based on gene discoveries have been developed and commercialized. Accordingly,
even if we are successful in identifying genes, biological pathways or drug
candidates associated with specific diseases, we or our collaborators may not be
able to develop or commercialize products to improve human health. Rapid
technological development by us or others may result in compounds, products or
processes becoming obsolete before we recover our development expenses.

Our revenues could decline due to patent positions becoming publicly available,
or due to our competitors publicly disclosing their discoveries

Our competitors may discover and establish patent positions with respect to
the genes in our databases. Our competitors and other entities who engage in
discovering the location of genes within a DNA strand and may make the results
of their sequencing efforts publicly available. Currently, academic institutions
and other laboratories participating in the Human Genome Project make their gene
sequence information available through a number of publicly available databases,
including the GenBank database. Also, Celera Genomics Group has publicly stated
that it is committed to make available to the public basic human sequence data.
The public availability of these discoveries or resulting patent positions
covering substantial portions of the human genome could reduce the potential
value of our databases to our collaborators. It could also impair our ability to
realize royalties or other revenue from any commercialized products based on
this genetic information.

We are involved in patent litigation, which if not resolved favorably could
require us to pay damages and stop selling and using microarray products

We are currently involved in patent litigation. If we lose this litigation
we could be prevented from producing and using our microarray products,
including uses of those products for purposes of providing gene

expression database products and gene expression services. We could also be
required to pay damages. In January 1998, Affymetrix filed a lawsuit in federal
court alleging that we infringe U.S. patent number 5,445,934. The complaint
alleges that we infringed the `934 patent by making, using, selling, importing,
distributing or offering to sell in the United States high density arrays and
that this infringement was willful. Affymetrix seeks a permanent injunction
enjoining us from further infringement of the `934 patent and, in addition,
seeks damages, costs, attorneys' fees and interest. Affymetrix also requests
triple damages based on its allegation of willful infringement by us.

In September 1998, Affymetrix filed an additional lawsuit in Federal Court,
alleging we infringed U.S. patent number 5,800,992 and U.S. patent number
5,744,305. The complaint alleges that we infringed the `305 patent by making,
using, selling, importing, distributing or offering to sell in the United States
high density arrays. It also alleges that we infringed the `992 patent by using
GEM(TM) microarray technology to conduct gene expression monitoring and other
applications using two-color labeling, and that this infringement was willful.
Affymetrix seeks a permanent injunction enjoining us from further infringement
of the `305 and `992 patents, and in addition, seeks damages, costs, attorneys'
fees and interest. Affymetrix also requests triple damages based on the
allegation of willful infringement. The court held a pretrial hearing in
November 2000 to determine how to construe the patent claims that will be
litigated in trial. In January 2001, the court issued a ruling describing how
the claims in the `934, `305 and `992 patents should be interpreted. The court
requested additional briefing regarding one of the claim terms in the `992
patent and Affymetrix has sought reconsideration of the court's construction of
two additional claim terms in the `992 patent. The court has not yet issued any
rulings based on the additional briefs.

Following issuance of the court's claim construction ruling, we filed a
motion for partial summary judgment that our cDNA arrays do not infringe any
claim of the `934 patent or claims 1 and 3 through 13 of the `305 patent. On
May 2, 2001, the court granted summary judgment ruling that our accused cDNA
arrays do not infringe any claim of the `934 patent claims or claims 1 and 3
through 13 of the `305 patent.

In April 1999, the Board of Patent Appeals and Interferences of the United
States Patent and Trademark Office declared interferences between pending patent
applications licensed exclusively to us and the Affymetrix `305 and `992
patents. The Board of Patent Appeals and Interferences invokes an interference
proceeding when more than one patent applicant claims the same invention. During
the proceeding, the Board of Patent Appeals and Interferences evaluates all
relevant facts, including those bearing on first to invent, validity, enablement
and scope of claims, and then makes a determination as to who, if anyone, is
entitled to the patent on the disputed invention. In September 1999, the Board
of Patent Appeals and Interferences determined that we had not met our prima
facie case, and ruled that the patents licensed by us from Stanford University
were not entitled to priority over corresponding claims in the two Affymetrix
patents. We are seeking de novo review of the Board's decisions in the United
States District Court for the Northern District of California.

In August 2000, we filed a lawsuit against Affymetrix in federal court
alleging infringement of U.S. patent numbers 5,716,785 and 5,891,636. The
patents relate to technologies used in the amplification of RNA and the
generation of gene expression information. Affymetrix has filed counterclaims in
this lawsuit that allege, among other things, that we infringe U.S. patent
number 6,040,193 and U.S. patent number 5,871,928. These counterclaims allege
that we infringe these patents by making, using, offering to sell and/or selling
within the United States the inventions claimed in the patents, including, in
the case of the `193 patent, methods for forming microarrays and, in the case of
the `928 patent, methods for analyzing nucleic acids. The counterclaims also
allege that we engaged in acts of unfair competition under California statutory
and common law. Affymetrix seeks a permanent injunction enjoining us from
further infringement of the `193 patent and `928 patent and, in addition, seeks
damages, costs and attorneys' fees and interest. Affymetrix further requests
triple damages from the infringement claims based on its allegation of willful
infringement by us.

We believe we have meritorious defenses and intend to defend the suits and
counterclaims brought by Affymetrix vigorously. However, our defenses may be
unsuccessful. At this time, we cannot reasonably estimate the possible range of
any loss resulting from these suits and counterclaims due to uncertainty
regarding the ultimate outcome. Regardless of the outcome, the Affymetrix
litigation has resulted and is expected to continue to result in substantial
expenses and diversion of the efforts of our management and technical personnel.
Further, there can be no assurance that any license that may be required as a
result of this litigation or the outcome thereof would be made

available on commercially acceptable terms, if at all. This litigation may also
affect our potential customers' willingness to use our microarray services and
gene expression databases, which could affect our revenue.

If we are subject to additional litigation and infringement claims, they could
be costly and disrupt our business

The technology that we use to develop our products, and the technology that
we incorporate in our products, may be subject to claims that they infringe the
patents or proprietary rights of others. The risk of this occurring will tend to
increase as the genomics, biotechnology and software industries expand, more
patents are issued and other companies attempt to discover genes and SNPs and
engage in other genomic-related businesses.

As is typical in the genomics, biotechnology and software industries, we
have received, and we will probably receive in the future, notices from third
parties alleging patent infringement. We believe that we are not infringing the
patent rights of any third parties. Except for Affymetrix, no third party has
filed a patent lawsuit against us.

We may, however, be involved in future lawsuits alleging patent
infringement or other intellectual property rights violations. In addition,
litigation may be necessary to:

. assert claims of infringement;

. enforce our patents;

. protect our trade secrets or know-how; or

. determine the enforceability, scope and validity of the proprietary
rights of others.

We may be unsuccessful in defending or pursuing these lawsuits. Regardless
of the outcome, litigation can be very costly and can divert management's
efforts. An adverse determination may subject us to significant liabilities or
require us to seek licenses to other parties' patents or proprietary rights. We
may also be restricted or prevented from manufacturing or selling our products
and services. Further, we may not be able to obtain any necessary licenses on
acceptable terms, if at all.

We may be unable to protect our proprietary information, which may result in its
unauthorized use and a loss of revenue

Our business and competitive position depend upon our ability to protect
our proprietary database information and software technology. Despite our
efforts to protect this information and technology, unauthorized parties may
attempt to obtain and use information that we regard as proprietary. Although
our database subscription agreements require our subscribers to control access
to our databases, policing unauthorized use of our databases and software may be
difficult.

We pursue a policy of having our employees, consultants and advisors
execute proprietary information and invention agreements when they begin working
for us. However, these agreements may not provide meaningful protection for our
trade secrets or other proprietary information in the event of unauthorized use
or disclosure.

Our means of protecting our proprietary rights may not be adequate, and our
competitors may:

. independently develop substantially equivalent proprietary information
and techniques;

. otherwise gain access to our proprietary information; or

. design around patents issued to us or our other intellectual property.

If the inventions described in our patent applications on full-length or partial
genes are found to be unpatentable, our issued patents are not enforced or our
patent applications conflict with patent applications filed by others, our
revenues may decline

One of our strategies is to file patent applications on what we believe to
be novel full-length and partial genes and SNPs obtained through our efforts to
discover the order, or sequence, of the molecules, or bases, of genes. We have
filed U.S. patent applications in which we claimed partial sequences of some
genes. We have also applied for patents in the U.S. and other countries claiming
full-length gene sequences associated with cells and tissues involved in our
gene sequencing program. We hold a number of issued U.S. patents on full-length
genes and one issued U.S. patent claiming multiple partial gene sequences. While
the United States Patent and Trademark Office has issued patents covering full-
length genes, partial gene sequences and SNPs, the Patent and Trademark Office
may choose to interpret new guidelines for the issuance of patents in a more
restrictive manner in the future, which could impact the issuance of our pending
patent applications. We also do not know whether or how courts may enforce our
issued patents, if that becomes necessary. If a court finds these types of
inventions to be unpatentable, or interprets them narrowly, the value of our
patent portfolio and possibly our revenues could be diminished.

We believe that some of our patent applications claim genes and partial
sequences of genes that may also be claimed in patent applications filed by
others. In some or all of these applications, a determination of priority of
inventorship may need to be decided in an interference before the United States
Patent and Trademark Office, before a patent is issued. If a full-length or
partial length sequence for which we seek a patent is issued to one of our
competitors, we may be unable to include that full-length or partial length
sequence on a microarray or in a library of bioreagents. This could result in a
loss of revenues.

If the effective term of our patents is decreased due to changes in the U.S.
patent laws or if we need to refile some of our patent applications, the value
of our patent portfolio and the revenues we derive from it may be decreased

The value of our patents depends in part on their duration. A shorter
period of patent protection could lessen the value of our rights under any
patents that we obtain and may decrease the revenues we derive from our patents.
The U.S. patent laws were amended in 1995 to change the term of patent
protection from 17 years from patent issuance to 20 years from the earliest
effective filing date of the application. Because the average time from filing
to issuance of biotechnology applications is at least one year and may be more
than three years depending on the subject matter, a 20-year patent term from the
filing date may result in substantially shorter patent protection. Also, we may
need to refile some of our applications claiming large numbers of gene sequences
and, in these situations, the patent term will be measured from the date of the
earliest priority application. This would shorten our period of patent
exclusivity and may decrease the revenues that we might obtain from the patents.

International patent protection is particularly uncertain, and if we are
involved in opposition proceedings in foreign countries, we may have to expend
substantial sums and management resources

Biotechnology patent law outside the United States is even more uncertain
than in the United States and is currently undergoing review and revision in
many countries. Further, the laws of some foreign countries may not protect our
intellectual property rights to the same extent as U.S. laws. We may participate
in opposition proceedings to determine the validity of our foreign patents or
our competitors foreign patents, which could result in substantial costs and
diversion of our efforts.

If our programs relating to the role of genetic variation in disease and drug
response are not successful, they may not generate significant revenues or
result in profitable operations

Part of our business is focused on developing information-based and other
products and services to assist pharmaceutical companies in a new and unproven
area: the identification and correlation of variation in genetic composition to
disease and drug response. We will incur significant costs over the next several
years in expanding our research and development in this area. These activities
may never generate significant revenues or profitable operations.

This aspect of our business focuses on single nucleotide polymorphisms or
SNPs, one type of genetic variation. The role of SNPs in disease and drug
response is not fully understood, and relatively few, if any, therapeutic or
diagnostic products based on SNPs have been developed and commercialized. Among
other things, demand in this area may be adversely affected by ethical and
social concerns about the confidentiality of patient-specific genetic
information and about the use of genetic testing for diagnostic purposes.

Except for a few anecdotal examples, there is no proof that SNPs have any
correlation to diseases or a patient's response to a particular drug or class of
drug. Identifying statistically significant correlations is time-consuming and
could involve the collection and screening of a large number of patient samples.
We do not know if the SNPs we have discovered to date are suitable for these
correlation studies because the variations we discovered may not occur
frequently enough to justify use by a pharmaceutical company.

Our success in this area will also depend upon our ability to develop, use
and enhance new and relatively unproven technologies. Among other things, we
will need to continue to improve the throughput of our SNP-discovery technology.
We may not be able to achieve these necessary improvements, and other factors
may impair our ability to develop our SNP-related products and services in time
to be competitively available.

If our strategic investments result in losses, our earnings may decline

We make strategic investments in joint ventures or businesses that
complement our business. These investments may:

. often be made in securities lacking a public trading market or subject
to trading restrictions, either of which increases our risk and
reduces the liquidity of our investment;

. require us to record losses and expenses related to our ownership
interest, such as the losses we reported in 1997, 1998, 1999 and the
first quarter of 2000 related to our investment in diaDexus, LLC;

. require us to record charges related to the acquisition of in-process
technologies or for the impairment in the value of the securities
underlying our investment; and

. require us to invest greater amounts than anticipated or to devote
substantial management time to the management of research and
development relationships and joint ventures.

The market values of many of these investments fluctuate significantly. We
evaluate our long-term equity investments for impairment of their values on a
quarterly basis. Impairment could result in future charges to our earnings.
These losses and expenses may exceed the amounts that we anticipated.

Because our sales cycle is lengthy, we may spend a lot of time and money trying
to obtain new or renewed subscriptions to our products and services but may be
unsuccessful, which could hurt our profitability

Our ability to obtain new subscribers for our databases, software tools and
microarray and other services or to obtain renewals or additions to existing
subscriptions depends upon prospective subscribers' perceptions that our
products and services can help accelerate drug discovery efforts. Our database
sales cycle is typically lengthy because we need to educate our potential
subscribers and sell the benefits of our tools and services to a variety of
constituencies within potential subscriber companies. In addition, each database
subscription and microarray services agreement involves the negotiation of
unique terms. We may expend substantial funds and management effort with no
assurance that a new, renewed or expanded subscription or services agreement
will result. These expenditures, without increased revenues, will negatively
impact our profitability. Actual and proposed consolidations of pharmaceutical
companies have affected the timing and progress of our sales efforts. We expect
that future proposed consolidations will have similar effects.

If we encounter problems in meeting customers' software needs, our revenues
could decline and we could lose our customers' goodwill

Our databases require software support and will need to incorporate
features determined by database collaborators. If we experience delays or
difficulties in implementing our database software or collaborator-requested
features, we may be unable to service our collaborators, which could result in a
loss of revenues and customer goodwill.

We have encountered difficulties integrating companies we acquired, and if in
the future we cannot smoothly integrate businesses we acquire, our operations
and financial results could be harmed

In December 2000, we acquired Proteome, Inc. As part of our business
strategy, we may acquire other assets, technologies and businesses. Our past
acquisitions have involved and our future acquisitions may involve risks such as
the following:

. we may be exposed to unknown liabilities of acquired companies;

. our acquisition and integration costs may be higher than we
anticipated and may cause our quarterly and annual operating results
to fluctuate;

. we may experience difficulty and expense in assimilating the
operations and personnel of the acquired businesses, disrupting our
business and diverting management's time and attention;

. we may be unable to integrate or complete the development and
application of acquired technology;

. we may experience difficulties in establishing and maintaining uniform
standards, controls, procedures and policies;

. our relationships with key customers of acquired businesses may be
impaired, due to changes in management and ownership of the acquired
businesses;

. we may be unable to retain key employees of the acquired businesses;

. we may incur amortization expenses if an acquisition results in
significant goodwill or other intangible assets; and

. our stockholders may be diluted if we pay for the acquisition with
equity securities.

In addition, if we acquire additional businesses that are not located near
our Palo Alto, California headquarters, we may experience more difficulty
integrating and managing the acquired businesses' operations.

If we are unable to manage effectively our growth, our operations and ability to
support our customers could be affected, which could harm our revenues

We may continue to experience growth in the number of our employees and the
scope of our operations. This growth has placed, and may continue to place, a
significant strain on our management and operations. Our ability to manage this
growth will depend upon our ability to attract, hire and retain skilled
employees. Our success will also depend on the ability of our officers and key
employees to continue to implement and improve our operational and other systems
and to hire, train and manage our employees.

In addition, we must continue to invest in customer support resources as
the number of database collaborators and their requests for support increase.
Our database collaborators typically have worldwide operations and may require
support at multiple U.S. and foreign sites. To provide this support, we may need
to open offices in additional locations, which could result in additional
burdens on our systems and resources.

We depend on key employees in a competitive market for skilled personnel, and
the loss of the services of any of our key employees would affect our ability to
achieve our objectives

We are highly dependent on the principal members of our management,
operations and scientific staff. Our product development, operations and
marketing efforts would be delayed or curtailed if we lose the services of any
of these people.

Our future success also will depend in part on the continued service of our
executive management team, key scientific, software, bioinformatics and
management personnel and our ability to identify, hire, train and retain
additional personnel, including customer service, marketing and sales staff. We
experience intense competition for qualified personnel. If we are unable to
continue to attract, train and retain these personnel, we may be unable to
expand our business.

We rely on a small number of suppliers of products we need for our business, and
if we are unable to obtain sufficient supplies, we will be unable to compete
effectively

Currently, we use gene sequencing machines supplied by Molecular Dynamics,
a subsidiary of Amersham Pharmacia Biotech, Ltd., and chemicals used in the
sequencing process, called reagents, supplied by Sigma-Aldrich, Inc. in our gene
sequencing operations. If we are not able to obtain additional machines or an
adequate supply of reagents or other materials at commercially reasonable rates,
our ability to identify genes or genetic variations would be slower and more
expensive.

If the information we obtain from third-party data sources is corrupt or
violates the law, our revenues and operating results could decline

We rely on and include in our databases scientific and other data supplied
by others, including publicly available information from sources such as the
Human Genome Project. This data could contain errors or other defects, which
could corrupt our databases. In addition, we cannot guarantee that our data
sources acquired this information in compliance with legal requirements. If this
data caused database corruption or violated legal requirements, we would be
unable to sell subscriptions to our databases. These lost sales would harm our
revenue and operating results.

Security risks in electronic commerce or unfavorable internet regulations may
deter future use of our products and services, which could result in a loss of
revenues

We offer several products through our website on the Internet and may offer
additional products in the future. Our ability to provide secure transmissions
of confidential information over the Internet may limit online use of our
products and services by our database collaborators as we may be limited by our
inability to provide secure transmissions of confidential information over the
Internet. Advances in computer capabilities and new discoveries in the field of
cryptography may compromise the security measures we use to protect our website,
access to our databases, and transmissions to and from our website. If our
security measures are breached, our proprietary information or confidential
information about our collaborators could be misappropriated. Also, a security
breach could result in interruptions in our operations. The security measures we
adopt may not be sufficient to prevent breaches, and we may be required to incur
significant costs to protect against security breaches or to alleviate problems
caused by breaches. Further, if the security of our website, or the website of
another company, is breached, our collaborators may no longer use the Internet
when the transmission of confidential information is involved. For example,
recent attacks by computer hackers on major e-commerce websites and other
Internet service providers have heightened concerns regarding the security and
reliability of the Internet.

Because of the growth in electronic commerce, the United States Congress
has held hearings on whether to further regulate providers of services and
transactions in the electronic commerce market. The federal government could
enact laws, rules and regulations that would affect our business and operations.
Individual states could also enact laws regulating the use of the Internet. If
enacted, these federal and state laws, rules and regulations could require us to
change our online business and operations, which could limit our growth and our
development of our online products.

Our customers may not consider the Internet as an acceptable method for
accessing our products and services

We have expended a significant amount of time and money to make our
products available through the Internet. In 2000, we introduced our on-line
product LifeSeq Gene-by-Gene and made LifeSeq Gold and LifeExpress available on-
line. If only a few of our customers choose to use the Internet as a method for
accessing our products and services, we may have to incur a charge against
earnings to write-off Internet related assets.

Because our activities involve the use of hazardous materials, we may be subject
to costly environmental liability that could exceed our resources

Our research and development involves the controlled use of hazardous and
radioactive materials and biological waste. We are subject to federal, state and
local laws and regulations governing the use, manufacture, storage, handling and
disposal of these materials and waste products. Although we believe that our
safety procedures for handling and disposing of these materials comply with
legally prescribed standards, the risk of accidental contamination or injury
from these materials cannot be completely eliminated. In the event of an
accident, we could be held liable for damages, and this liability could exceed
our resources.

We believe that we are in compliance in all material respects with
applicable environmental laws and regulations and currently do not expect to
make material additional capital expenditures for environmental control
facilities in the near term. However, we may have to incur significant costs to
comply with current or future environmental laws and regulations.

Because our revenues are derived primarily from the pharmaceutical and
biotechnology industries, our revenues may fluctuate substantially due to
reductions and delays in research and development expenditures

We expect that our revenues in the foreseeable future will be derived
primarily from products and services provided to the pharmaceutical and
biotechnology industries as well as to the academic community. Accordingly, our
success will depend in large part upon the success of the companies within these
industries and their demand for our products and services. Our operating results
may fluctuate substantially due to reductions and delays in research and
development expenditures by companies in these industries or by the academic
community. These reductions and delays may result from factors such as:

. changes in economic conditions;

. consolidation in the pharmaceutical industry;

. changes in the regulatory environment, including governmental pricing
controls, affecting health care and health care providers;

. pricing pressures;

. market-driven pressures on companies to consolidate and reduce costs;
and

. other factors affecting research and development spending.

These factors are not within our control.

If a natural disaster occurs, we may have to cease or limit our business
operations

We conduct our database, sequencing and a significant portion of our other
activities at our facilities in Palo Alto, California, and conduct our
microarray-related activities at our facilities in Fremont, California. Both
locations are in a seismically active area. Although we maintain business
interruption insurance, we do not have or plan to obtain earthquake insurance. A
major catastrophe, such as an earthquake or other natural disaster, could result
in a prolonged interruption of our business.

We may experience power blackouts and higher electricity prices as a result of
California's current energy crisis, which could disrupt our operations and
increase our expenses

California is in the midst of an energy crisis that could disrupt our
operations and increase our expenses. We rely on the major Northern California
public utility, Pacific Gas & Electric Company, or PG&E, to supply electric
power to our facilities in Northern California. Due to problems associated with
the de-regulation of the power industry in California and shortages in wholesale
electricity supplies, customers of PG&E have been faced with increased
electricity prices, power shortages and, in some cases, rolling blackouts. If
blackouts interrupt our power supply, we may be temporarily unable to continue
operations at our facilities. Any such interruption in our ability to continue
operations at our facilities could delay our ability to develop or provide our
products and services, which could damage our reputation and result in lost
revenue, either of which could substantially harm our business and results of
operations.

We have a large amount of debt and our debt service obligations may prevent us
from taking actions that we would otherwise consider to be in our best interests

As of March 31, 2001, we had:

. total consolidated debt of approximately $179.6 million,

. stockholders' equity of approximately $610.1 million, and

. a deficiency of earnings available to cover fixed charges of $10.3
million for the three months ended March 31, 2001.

A variety of uncertainties and contingencies will affect our future
performance, many of which are beyond our control. We may not generate
sufficient cash flow in the future to enable us to meet our anticipated fixed
charges, including our debt service requirements with respect to our convertible
subordinated notes due 2007 that we sold in February 2000. At March 31, 2001,
notes with a face value of $177 million were outstanding. The following table
shows, as of March 31, 2001, the aggregate amount of our interest payments due
in each of the next five years listed:

Aggregate
Year Interest
---- --------
2001..................................................... $9,735,000
2002..................................................... 9,735,000
2003..................................................... 9,735,000
2004..................................................... 9,735,000
2005..................................................... 9,735,000

Our substantial leverage could have significant negative consequences for
our future operations, including:

. increasing our vulnerability to general adverse economic and industry
conditions;

. limiting our ability to obtain additional financing;

. requiring the dedication of a substantial portion of our expected cash
flow from operations to service our indebtedness, thereby reducing the
amount of our expected cash flow available for other purposes, including
working capital and capital expenditures;

. limiting our flexibility in planning for, or reacting to, changes in our
business and the industry in which we compete; or

. placing us at a possible competitive disadvantage compared to less
leveraged competitors and competitors that have better access to capital
resources.

Our stock price has been and will likely continue to be volatile

Our stock price has been and is likely to continue to be highly volatile.
For example, our stock price has since the beginning of 2000 traded as high as
$144.53 on February 25, 2000 and as low as $10.875 on March 22, 2001. Our stock
price could fluctuate significantly due to a number of factors, including:

. variations in our actual or anticipated operating results;

. sales of substantial amounts of our stock;

. announcements about us or about our competitors, including technological
innovation or new products or services;

. litigation and other developments relating to our patents or other
proprietary rights or those of our competitors;

. conditions in the life sciences, pharmaceuticals or genomics industries;

. governmental regulation and legislation; and

. changes in securities analysts' estimates of our performance, or our
failure to meet analysts' expectations.

Many of these factors are beyond our control.

In addition, the stock markets in general, and the Nasdaq National Market
and the market for life sciences and technology companies in particular, have
experienced extreme price and volume fluctuations recently. These fluctuations
often have been unrelated or disproportionate to the operating performance of
these companies. These broad market and industry factors may decrease the market
price of our common stock, regardless of our actual operating performance.

In the past, companies that have experienced volatility in the market
prices of their stock have been the object of securities class action
litigation. If we became the object of securities class action litigation, it
could result in substantial costs and a diversion of management's attention and
resources, which could affect our profitability.

FORWARD-LOOKING STATEMENTS

When used in this prospectus, the words "expects," "anticipates,"
"estimates," "plans," and similar expressions are intended to identify forward-
looking statements. These are statements that relate to future periods and
include statements as to our expected net losses, our expected expenditures,
expenditure levels and rate of growth of expenditures, our expected cash flows,
our expected revenues and sources of revenues, the adequacy of our capital
resources, growth in our operations, our ability to commercialize products
developed under collaborations and alliances, our ability to complete the
sequence of full-length genes in areas of therapeutic interest and file patents
on these potential drug targets, our ability to integrate companies, operations
and products that we have acquired or will acquire, our ability to implement
online delivery of our database and software products, the scheduling and timing
of our litigation, our strategy with regard to protecting our proprietary
technology, our ability to compete and respond to rapid technological change,
the effect of governmental regulation, our compliance with applicable
environmental laws and regulations, and the performance and utility of our
products and services. Forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially from those
projected. These risks and uncertainties include, but are not limited to, the
extent of utilization of genomic information by the biotechnology and
pharmaceutical industries, risks relating to development of new products and
services and their use by our potential customers and collaborators, our ability
to work with our collaborators to meet the goals of our collaborators and
alliances, our ability to retain and obtain customers, competition from other
entities, the enforceability of commercial protection from patents that issue on
gene sequences and other genetic information, the cost of accessing or acquiring
technologies or intellectual property, the effectiveness of our sequencing
efforts, the impact of alternative technological advances and competition,
uncertainties associated with changes in patent laws and developments in and
expenses related to litigation and interference proceedings, the results of
businesses in which we purchased equity, and the risks set forth above under the
caption "Risk Factors."

PROCEEDS FROM THE OFFERING

We will not receive any proceeds from the sale of the shares by the selling
stockholders. All proceeds from the sale of the shares will be for the account
of the selling stockholders, as described below. See "Selling Stockholders" and
"Plan of Distribution."

SELLING STOCKHOLDERS

The following table sets forth certain information as of May 1, 2001
regarding the beneficial ownership of common stock by each of the selling
stockholders and the shares being offered by the selling stockholders. Each of
the selling stockholders owns less than 1% of the Company's outstanding common
stock prior to the offering. Information with respect to beneficial ownership is
based upon information obtained from the selling stockholders. Information with
respect to shares owned beneficially after the offering assumes the sale of all
of the shares offered and no other purchases or sales of common stock.

Shares Owned Number of
Prior to Shares Being Shares Owned
Selling Stockholders Offering Offered After Offering
------------------------------------------------------------------- ------------------ --------------- ---------------

Boston Millenia Associates I Partnership........................... 5,779 5,779 -
Boston Millenia Partners Limited Partnership....................... 316,151 316,151 -
William Blair Capital Partners VI, L.P............................. 316,151 316,151 -
James I. Garrels................................................... 396,290 396,290 -
Joan E. Brooks..................................................... 169,099 169,099 -
William E. Payne................................................... 24,046 24,046 -
William E. Payne & Deborah E. Sellers, JTWROS...................... 1,006 1,006 -
Helen Garrels...................................................... 3,408 3,408 -
Hazen Farms, Inc................................................... 2,876 2,876 -
Hazen Supply Corporation........................................... 5,752 5,752 -
Brian Hill and Rebecca Hill, JTWROS................................ 287 287 -
Susan Payne........................................................ 575 575 -
Norman A. Jacobs................................................... 5,752 5,752 -
Maria C. Costanzo.................................................. 57 57 -
Henry Oettinger.................................................... 143 143 -
Kim Fechtel and David L. Osterbur, JTWROS.......................... 575 575 -
Kevin Roberg-Perez & Sharon Roberg-Perez........................... 575 575 -

All of the selling stockholders received their shares of Incyte common
stock in connection with the merger of Proteome, Inc. with and into a wholly
owned subsidiary of Incyte, pursuant to which all of the outstanding shares of
capital stock of Proteome were converted into a combination of shares of Incyte
common stock and cash, and all outstanding options to purchase common stock of
Proteome were converted into options to purchase shares of Incyte common stock.
The registration statement to which this prospectus relates is being filed
pursuant to a registration rights agreement among Incyte and the selling
stockholders. Subject to the terms and conditions of the registration rights
agreement, we agreed to file the registration statement to cover the shares of
Incyte common stock received by each selling stockholder in the merger and to
keep the registration statement effective until the earlier of (1) December 28,
2002, or (2) such time as all the shares offered by this prospectus have been
sold.

PLAN OF DISTRIBUTION

The selling stockholders may offer and sell the shares covered by this
prospectus at various times. As used in this prospectus, the term "selling
stockholders" includes donees, pledgees, transferees or other successors-in-
interest selling shares received from a named selling stockholder as a gift,
partnership distribution, or other non-sale-related transfer after the date of
this prospectus. The selling stockholders will act independently of Incyte in
making decisions with respect to the timing, manner and size of each sale. The
shares may be sold by or for the account of the selling stockholders in
transactions on the Nasdaq National Market, the over-the-counter market, or
otherwise. These sales may be made at fixed prices, at market prices prevailing
at the time of sale, at prices related to prevailing market prices, or at
negotiated prices. The shares may be sold by means of one or more of the
following methods:

. a block trade in which the broker-dealer so engaged will attempt to sell
the shares as agent, but may position and resell a portion of the block
as principal to facilitate the transaction;

. purchases by a broker-dealer as principal and resale by that broker-
dealer for its account pursuant to this prospectus;

. ordinary brokerage transactions in which the broker solicits purchasers;

. in connection with short sales, in which the shares are redelivered to
close out short positions;

. in connection with the loan or pledge of shares registered hereunder to
a broker-dealer, and the sale of the shares so loaned or the sale of the
shares so pledged upon a default;

. in connection with the writing of non-traded and exchange-traded call
options, in hedge transactions and in settlement of other transactions
in standardized or over-the-counter options;

. privately negotiated transactions; or

. in a combination of any of the above methods.

If required, we will distribute a supplement to this prospectus to describe
material changes in the terms of the offering.

In effecting sales, broker-dealers engaged by the selling stockholders may
arrange for other broker-dealers to participate in resales. Broker-dealers may
receive compensation in the form of discounts, concessions or commissions from
the selling stockholders or from the purchasers of the shares or from both.
This compensation may exceed customary commissions.

The selling stockholders and any broker-dealers, agents or underwriters
that participate with the selling stockholders in the distribution of the shares
may be deemed to be "underwriters" within the meaning of the Securities Act of
1933. Any commissions paid or any discounts or concessions allowed to any of
those persons, and any profits received on the resale of the shares purchased by
them, may be deemed to be underwriting commissions or discounts under the
Securities Act.

Incyte has agreed to bear all expenses of registration of the shares other
than fees and expenses, if any, of counsel or other advisors to the selling
stockholders. Any commissions, discounts, concessions or other fees, if any,
payable to broker-dealers in connection with any sale of the shares will be
borne by the selling stockholders selling those shares.

LEGAL MATTERS

Selected legal matters with respect to the validity of common stock offered
by this prospectus are being passed upon for Incyte by Pillsbury Winthrop LLP,
San Francisco, California.

EXPERTS

Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedule included in our Annual Report on Form 10-K for
the year ended December 31, 2000. Our consolidated financial statements and
schedule are incorporated by reference in this Prospectus in reliance upon Ernst
& Young LLP's report, which is based in part on the report of
PricewaterhouseCoopers LLP, given on their authority as experts in accounting
and auditing.

The audited financial statements of diaDexus, Inc. not separately presented
in this Prospectus, have been audited by PricewaterhouseCoopers LLP, independent
accountants, whose report thereon appears therein. Such financial statements, to
the extent they have been included in the consolidated financial statements of
Incyte Genomics, Inc., have been so included in reliance on the report of such
independent accountants given on the authority of said firm as experts in
auditing and accounting.

The audited historical financial statements of Proteome, Inc. included on
pages 2 through 13 of the Current Report on Form 8-K/A of Incyte Genomics, Inc.,
dated February 5, 2001 and incorporated by reference in this Prospectus, have
been so incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and special reports, proxy statements, and other
information with the Securities and Exchange Commission. You may read and copy
any materials we file with the Commission at the Commission's public reference
rooms :

450 Fifth Street, N.W. 500 West Madison Street 7 World Trade Center
Room 1024 14/th/ Floor Suite 1300
Washington, D.C. Chicago, Illinois New York, New York

Please call the Commission at 1-800-SEC-0330 for more information on its public
reference rooms. The Commission also maintains an Internet Website at
http://www.sec.gov that contains reports, proxy and information statements, and
other information regarding issuers that file electronically with the
Commission.

We have filed with the Commission a registration statement, which contains
this prospectus, on Form S-3 under the Securities Act of 1933. The registration
statement relates to the common stock offered by the selling stockholders. This
prospectus does not contain all of the information set forth in the registration
statement and the exhibits and schedules to the registration statement. Please
refer to the registration statement and its exhibits and schedules for further
information with respect to the Company and the common stock. Statements
contained in this prospectus as to the contents of any contract or other
document are not necessarily complete and, in each instance, we refer you to the
copy of that contract or document filed as an exhibit to the registration
statement. You may read and obtain a copy of the registration statement and its
exhibits and schedules from the Commission, as described in the preceding
paragraph.

DOCUMENTS INCORPORATED BY REFERENCE

The Commission allows us to "incorporate by reference" the information we
file with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be a part of this prospectus, and later information that we file
with the Commission will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
make with the Commission under Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 until this offering is completed. The documents
we incorporate by reference are:

. Our Annual Report on Form 10-K for the year ended December 31, 2000, as
amended by Form 10-K/A filed on May 9, 2001.

. Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2001
filed with the Commission on May 15, 2001.

. Our current reports on Form 8-K filed with the Commission on January 10,
2001, as amended by Form 8-K/A filed on February 5, 2001, and February
13, and February 23, 2001.

. The description of our common stock contained in our registration
statement on Form 8-A filed under the Exchange Act on January 5, 1996.

. The description of our Series A Participating Preferred Stock Purchase
Rights contained in the registration statement on Form 8-A filed under
the Exchange Act on September 30, 1998.

You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address and number:

Investor Relations
Incyte Genomics, Inc.
3160 Porter Drive
Palo Alto, California 94304
Telephone (650) 845-4589

____________________________

We have not authorized anyone to provide you with information or to
represent anything not contained in this prospectus. You must not rely on any
unauthorized information or representations. The selling stockholders are
offering to sell, and seeking offers to buy, only the shares of Incyte common
stock covered by this prospectus, and only under circumstances and in
jurisdictions where it is lawful to do so. The information contained in this
prospectus is current only as of its date, regardless of the time of delivery of
this prospectus or of any sale of the shares.