Incyte stock popped Thursday after the company's board appointed Bill Meury as its new chief executive, replacing Herve Hoppenot, who is retiring after 11 years.
Meury has a long history in the biopharma space, particularly when it comes to acquisitions. He previously headed up Anthos Therapeutics and Karuna Therapeutics, which Novartis and Bristol Myers Squibb snapped up for up to $3.1 billion and $14 billion, respectively.
He also spent more than two decades at Allergan — before it was acquired by AbbVie for $63 billion — as the chief commercial officer.
"We expect the immediate reaction from investors will be an expectation that INCY could now become an M&A target," RBC Capital Markets analyst Brian Abrahams said in a report.
Incyte stock jumped 4.8%, closing to 70.81.
Incyte Differs From Anthos, Karuna
But RBC's Abrahams notes Incyte's situation differs from Anthos and Karuna which, at the time, didn't have any commercial products.
Incyte, on the other hand, is facing a patent cliff for its big-name drug, Jakafi. This "may still be an obstacle to potential takeout interest" as it will reduce core revenue for this drug by 72% and overall earnings by 76% by the end of the decade, Abrahams said. Jakafi treats graft-versus-host disease and some blood cancers.
"Regardless of takeout potential, we do believe Bill Meury brings beneficial perspectives to INCY's operations," Abrahams said. "He has a track record of leading organizations through successful late stage development."
This will become increasingly important for Incyte, which is in the early stages of developing a suite of new cancer drugs. Incyte is also working on a potential treatment for myelofibrosis and essential thrombocytopenia. The former is a type of blood cancer. Essential thrombocytopenia causes the bone marrow to produce too many platelets, causing blood clots and bleeding.
Further, Meury's history at Allergan could be relevant to Incyte's efforts to maintain Jakafi sales growth and navigate the 2028 patent expiration.
Incyte Stock Outperforms Its Group
Abrahams kept his sector perform rating and 67 price target on Incyte stock.
"New CEO should provide an experienced, well-respected successor and perhaps spark some brief M&A hopes," he said. "Though key will remain whether he can guide INCY at its current crossroads to bring forward more meaningful pipeline wins that can help offset future revenue loss and warrant further stock appreciation."
Incyte stock has mostly traded sideways to down over the past five years, MarketSurge shows. This year, shares have risen 2.5%, outperforming a 12% dive for the entire industry group.
Follow Allison Gatlin on X/Twitter at @AGatlin_IBD.
