How Incyte Just Became A Major M&A Target

Incyte Corporation INCY shares are up more than 4.7 percent Thursday following three new analyst notes focusing on new data from Gilead Sciences, Inc. GILD’s SIMPLIFY 1 and 2 Phase III studies on patients with myelofibrosis (MF).

Leerink analyst Michael Schmidt believes the results likely mean a dead end for Gilead.

“Results from both trials are disappointing, in our view making it highly unlikely that GILD would be able to obtain regulatory approval,” Schmidt explains.

However, Gilead’s loss may be Incyte’s gain.

“We view these results as a positive for INCY given Momelotinib is the only late-stage competitor in MF,” Goldman Sachs analyst Terence Flynn writes.

Schmidt takes things one step farther and believes Incyte is now a prime buyout target.

“Removal of uncertainty on the revenue outlook of INCY’s key product [Jakafi] combined with increasing prospects of a repatriation holiday should make the company more attractive from an M&A standpoint,” Schmidt says.

RBC Capital analyst Michael Yee agrees that a buyout is a likely scenario at this point.

Yee believes that Gilead could choose to “go after INCY if their IDO data works in lung cancer… and try to buy it for their oncology assets, leadership, and expertise as well as for Jakafi.”

Incyte shares are down 3.1 percent year-to-date.