J.P. Morgan Reiterates Overweight Rating on Gilead Sciences

In a report published Wednesday, J.P. Morgan & Co. reiterated its Overweight rating on Gilead Sciences GILD. J.P. Morgan noted, “This morning, Gilead announced the acquisition of YM Biosciences for approximately $510M ($2.95/share) in cash. The transaction has been unanimously approved by YM's board and is expected to close in 1Q13. YM's lead assed is CYT387, a janus kinase inhibitor (JAK), being developed for myelofibrosis (positive phase 1-2 data). Overall, the transaction makes sense to us given Gilead's recent strategy of expanding into hematology/oncology. Indeed, CYT387 will complement Gilead's current hematology/oncology pipeline which currently includes idelalisib (GS-1101) in phase 3 (CLL/iNHL) and simtuzumab (GS-6624) in phase 2 testing (myelofibrosis, colorectal cancer, pancreatic and certain fibrotic disease). Gilead intends to initiate a phase 3 trial of CYT387 in myelofibrosis in 2H13. We are encouraged by the expanding hematology/oncology pipeline which provides additional shots on goal, beyond the core anti-viral franchise. We reiterate our Overweight rating largely based on a strong core HIV business and a significant opportunity in hep-C, as well as the optionally beyond the anti-viral franchises.” Gilead Sciences closed on Tuesday at $76.34.