Drug Development

Escalating R&D woes spur fresh M&A chatter for cash-rich Gilead

Gilead CSO Norbert Bischofberger

Gilead CSO Norbert Bischofberger

Four years after Gilead acquired momelotinib in its $510 million buyout of YM BioSciences, the big — and what appears to be increasingly unlucky — biotech was forced to report that the drug performed poorly in its two Phase III myelofibrosis trials. And the fourth straight pipeline flop quickly spurred fresh speculation that Gilead will soon have to tap into its big cash reserves for a major acquisition.

The JAK inhibitor scored on a non-inferiority showdown with Jakafi (Incyte’s ruxolitinib) in spleen reduction, but blew the key secondary endpoint of non-inferiority for the total symptom score that was used to measure the drugs. And it failed a separate Phase III superiority comparison against best available treatment at week 24.

It all adds up to a fresh pipeline mess at Gilead, which saw its shares $GILD decline 1.25% Thursday morning, shaving off more than a billion dollars of its $100 billion market cap. Incyte {INCY}, meanwhile, saw its shares shoot up 7% on the news, as speculation mounted that Gilead may now be pressed hard to make a bid for the company.

By the numbers: momelotinib: 6.7%; BAT: 5.8%; 95 percent CI: -8.9% to +10.2%; p=0.90. And because it didn’t succeed on superiority on the primary score, investigators didn’t run the numbers on secondary endpoints.

That’s not what the company wanted or needed to see. But after highlighting some positive trends from the two late-stage studies, Gilead plans to see if regulators are feeling generous about its prospects.

“The results from both the SIMPLIFY-1 and SIMPLIFY-2 studies indicate that momelotinib provides some treatment benefit, including benefit on anemia-related endpoints,” said Norbert Bischofberger, PhD, Executive Vice President of Research and Development and Chief Scientific Officer. “We plan to discuss these results with regulatory authorities to determine the next steps.”

The setback on momelotinib comes near the end of what has turned into a grim year for Gilead. A recent rundown of its work on the NASH drug GS-4997 sparked considerable skepticism from analysts, who want to see much more compelling numbers before they buy in.

Gilead recently wrote off simtuzumab, along with the late-stage drug GS-5745 for ulcerative colitis and Crohn’s. And it’s top cardio prospect — eleclazine (GS-6615) — failed a late-stage study as well, significantly reducing its chances of becoming the big new drug that Gilead needs as hep C wanes.

As the R&D hole keeps getting deeper, some wonder if Gilead will be forced back to the deal table to buy something big. Its hep C franchise may be waning, but it created a huge windfall in cash reserves. And Leerink’s Geoffrey Porges believes that this latest black cloud comes with a silver lining, adding Incyte to the list of big takeover targets. On Thursday morning he noted:

GILD indicated that they plan to discuss these results with regulatory authorities to determine the next steps, but it seems likely that momelotinib, which has been in development since 2009, will be written off, ending the potential of yet another small “bolt on” acquisition. One consequence of this disappointment, however, is that it does restore INCY to the list of feasible candidates for acquisition by Gilead, since they would no longer face the obligation to divest one of the overlapping JAK programs.


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RAPS Regulatory Convergence 2017