April 12, 2017
By Mark Terry, BioSpace.com Breaking News Staff
In a study by Evercore ISI last year that surveyed 244 biotech industry observers, Wilmington, Del.-based Incyte Corporation was cited as the top target for acquisition. Ever since, there has been a bit of a cottage industry in speculating who the buyer will be. Keith Speights, writing for The Motley Fool, provides his top three picks.
The primary reason Incyte is such a tasty target is its two products on the market, Jakafi and Iclusig. Jakafi is a JAK1 and JAK2 inhibitor to treat polycythemia vera. It has the potential to hit $3 billion in peak sales. Iclusig is used to treat chronic myeloid leukemia and acute lymphoblastic leukemia. It also has epacadostat, which is a selective oral inhibitor of the IDO1 enzyme that reverses tumor-associated immune response. It is being evaluated in a clinical trial with Merck ’s Keytruda in melanoma. If approved, it could pull in $1.6 billion annually. And Incyte’s baricitinib, which is licensed to Eli Lilly , has the potential of $1.8 billion in peak sales. Incyte’s market cap is about $23 billion.
Gilead Sciences is probably everybody’s top pick as a buyer of Incyte. Its hepatitis C franchise is faltering, a victim of its own success and patent expirations, and it has expressed an interest in expanding into oncology. It also wants to improve its inflammation and non-alcoholic steatohepatitis (NASH) potential.
Speights writes, “Incyte would help Gilead in two of those areas. The biotech’s Jakafi is already a big winner in treating two forms of blood cancer, myelofibrosis and polycythemia vera. Incyte’s pipeline also includes several other experimental cancer drugs, most notably epacadostat. In addition, the company has partnered with Lilly on anti-inflammatory JAK inhibitor baricitinib.”
Gilead also has about $32 billion in cash, so it could probably buy Incyte without going into much, if any, debt.
Speights’ choice of Amgen is a bit unusual. It doesn’t usually make the list of potential buyers. The company’s chief executive officer, Robert Bradway, discussed the possibility of large or small deals during its fourth-quarter earnings conference calls. It also has plenty of money, with cash, cash equivalents, and marketable securities totaling more than $38 billion.
Speights writes, “Incyte’s drugs would be a good fit with Amgen’s current product lineup. The big biotech already markets several cancer treatments, most notably multiple myeloma drug Kyprolis. Amgen’s top seller, Enbrel, targets some of the same indications as Incyte’s baricitinib. However, Enbrel is injected whereas baricitinib is a pill taken once per day. The oral medication should be a good addition for Amgen if it chose to acquire Incyte.”
Bristol-Myers Squibb already has a partnership with Incyte, a collaboration deal to develop combination therapeutics with Bristol-Myers’ Opdivo and Incyte’s epacadostat. On April 2, the two companies announced that they will advance their program into Phase III registrational trials in first-line non-small cell lung cancer across the spectrum of PD-L1 expression as well as first-line head and neck cancer. In addition, they plan to expand the ECHO-204 Phase I/II trial to include anti-PD-1/PD-L1 relapsed/refractory melanoma cohorts.
Speights writes, “An acquisition of Incyte would likely generate investor excitement about BMS again. Certainly, epacadostat would be a great addition to the big pharmaceutical company’s lineup. So would Jakafi, for that matter.”
One problem for BMS is cash. It only has about $9 billion, which would put them at a disadvantage if any kind of bidding war were to develop.
Other companies often bandied about include Eli Lilly & Co (LLY) and Novartis . Still, the smart money seems to be on Gilead.
