Speculations are rife about potential Gilead interest in Incyte Corporation (NASDAQ: INCY), and Credit Suisse says a Gilead-Incyte combo makes sense.
“We think that it is reasonable that Gilead would consider acquiring Incyte since they are a small molecule hematology-oncology platform. Gilead are very capable co-formulators of small molecules,” analyst Alethia Young wrote in a note.
The speculation of Gilead’s interest in Incyte was triggered by the former’s hiring of Alessandro Riva as its head of oncology from Novartis AG (ADR) (NYSE: NVS). Incyte is partnered on Jakafi ex-US with Novartis which continued to fuel the discussion of a Gilead takeout on the horizon.
Incyte’s lead candidate is Jakafi for myelofibrosis and polycythemia vera. Beyond that, Incyte has a treasure trove of novel oncology targets. Incyte also gets a royalty from Lilly on baricitinib (their rheumatoid arthritis immunology asset).
“Perhaps Gilead would sell the asset back to Lilly as we think that they are quite happy with Galapagos' filgotinib that is in Phase 3 behind baricitnib,” Young noted.
“Incyte has a PD-1 but are not currently dosing more patients since they want to conduct a thorough assessment of the compound. Gilead doesn’t have a PD-1 so this could be a question before completing the deal,” Young added.
Young has an Outperform rating on Gilead shares, with a price target of $79.
Potential Targets For Gilead
Gilead is at the epicenter of M&A speculations. The company is looking at potential targets in oncology and immunology space due to slowdown in HCV sales. The company has more than $30 billion in cash for deals.
Recently, Michael Yee of RBC Capital Markets said Gilead could acquire Kite Pharma Inc (NASDAQ: KITE), which would give Gilead exposure to an un-traditional cancer product that will generate revenue growth.
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