Shares of Incyte (INCY) jumped in post-market trading after Gilead (GILD) reported mixed clinical results for its myelofibrosis drug candidate momelotinib, a potential competitor to Incyte's Jakafi treatment.

GILEAD DATA: Shortly after the market close on Wednesday, Gilead announced top-line data from two Phase 3 trials, SIMPLIFY 1 and 2, evaluating momelotinib against Jakafi in treatment-naive patients, and evaluating it against best available therapy in patients previously treated with Jakafi. The SIMPLIFY-1 study achieved its primary endpoint of momelotinib non-inferiority as measured by splenic response rate at week 24. Non-inferiority was not achieved for the key secondary endpoint of response in total symptom score, though momelotinib did outperform Jakafi on the study's three anemia-related secondary endpoints. Turning to safety outcomes, 10% of patients receiving momelotinib reported peripheral neuropathy versus 5% of Jakafi patients. There was no grade 3 or higher peripheral neuropathy in momelotinib patients, as compared to one case in the ruxolitinib group. SIMPLIFY-2, meanwhile, did not achieve its primary endpoint of superiority, although the company noted that "differences in favor of momelotinib" were observed for the secondary endpoints of symptom score as well as transfusion independence, one of the three anemia-related endpoints. Commenting on the news, Gilead said that "we plan to discuss these results with regulatory authorities to determine the next steps."

PIPER UNSURPRISED AT DATA, SEES M&A STRATEGY FOR GILEAD: Weighing in on tonight's news, Piper Jaffray's Joshua Schimmer called the Gilead data "disappointing" but unsurprising. The analyst states flatly that "it's unclear what value this product has moving forward," adding that he has consistently viewed momelotinib as "flawed and not a meaningful competitive threat" to Jakafi. However, despite the data again reinforcing Schimmer's belief that Gilead's "low-quality R&D engine" will deliver a series of setbacks, he explains that the continued clinical misses "will likely force the company into a value-creating science overhaul, pipeline reset and aggressive M&A transactions," leading him to reiterate his Overweight rating and $102 target on the stock while predicting an "inevitable" strategic pivot to acquisitions. Incyte's Jakafi, on the other hand, seems now "fully entrenched" in the myelofibrosis treatment paradigm, he says.

PRICE ACTION: Shares of Incyte are up 3.97% to $104.74 in after-hours trading. Gilead has slipped 0.47% to $75.64.