Source: The News Journal

Lilly, Gilead Sciences, Novartis, or Agenus could play an important role in the acquisition scenarios for Incyte next year. Several people want Incyte Corporation to be a part of a big company. Most of them would want see Gilead Sciences acquiring Incyte while some would love to see Lilly buying Incyte. But, could another acquisition involving Incyte be likely now?

Here are some potential 2017 acquisition scenarios for Incyte

Why Gilead would buy Incyte: There are many reasons why Gilead would want to purchase Incyte next year. Firstly, because Gilead has plenty of cash to spend and secondly, because the company needs to make an acquisition after a string of clinical setbacks.

In addition to this, the chief executive of the company had said that his team is concentrating on discovering opportunities to hike up its oncology portfolio. The company Incyte would finish several tasks for Gilead. One of the most exciting drugs is Jakafi.  For two indications, polycythemia vera and myelofibrosis, this drug has already been approved. There are many investors who would be very happy if Gilead announced that it was acquiring Incyte.

However, the recent comments by Gilead CEO John Milligan say the opposite. Milligan said some people want the company to make an acquisition, “prices be damned”. Further, the CEO said that some deals might look good on spreadsheets but it would possibly be tough to handle.

The current market cap of Incyte stands at $19 billion. Its stock trades at around 70 times the forward earnings. Gilead would have to pay more than $19 billion to buy Incyte.


Other potential suitors for Incyte

Lilly could be a potential suitor of Incyte as well. Lilly and Incyte have a close relationship which dates back to 2009. The company Lilly is expecting to release baricitinib, which is in collaboration with Incyte, as a treatment for rheumatoid arthritis in 2017. Lilly and Incyte would be a great fit. The pipeline of Incyte would dovetail with the research efforts of Lilly as well.

But, Lilly does not have as much money as Gilead. Lilly would have to hike up its debt significantly to purchase Incyte. In 2009, another relationship started between Incyte and Novartis. Novartis sells Jakafi outside the United States as Jakavi. The Swiss drug making company would also like the Unites States market. Earlier this year, rumors whirled about potential merger between AstraZeneca and Novartis.

Joe Jimenez, the chief executive officer of Novartis, has said that he is “interested in more than just small bolt-on deals.’ The right size would be Incyte. Currently, the cash position of Novartis is only $7.8 billion, but by selling its stake in Roche, it could raise probably $14 billion.

The last potential partner is small biotech Agenus. In January 2015, as part of a collaboration deal with Agenus, Incyte spent around $35 million to acquire about 11% of Agenus. If it wanted to do so, Incyte could clearly afford to purchase Agenus.