Lots of folks want Incyte Corporation (NASDAQ:INCY) to be part of a major acquisition. Many of them would love to see Gilead Sciences (NASDAQ:GILD) buy Incyte. Could another acquisition involving Incyte be more likely, though? Here are some potential 2017 acquisition scenarios for Incyte: with Gilead, Agenus (NASDAQ:AGEN), Lilly (NYSE:LLY), and Novartis (NYSE:NVS).

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The spreadsheet factor

There are plenty of reasons why Gilead might want to buy Incyte next year. The big biotech has plenty of cash to spend. Many observers think Gilead needs to make an acquisition following a string of clinical setbacks. And the company's CEO has said that his team is focusing on finding opportunities to beef up its oncology portfolio.

Incyte would check off plenty of boxes for Gilead. Jakafi is one of the most exciting cancer drugs around. It's already approved for two indications (myelofibrosis and polycythemia vera) and could have another one on the way in graft-versus-host disease. There are probably some investors who would do cartwheels if Gilead announced that it was buying Incyte.

However, my gut tells me that it just isn't going to happen. Consider some of Gilead CEO John Milligan's comments when asked about potential acquisitions. He noted that some want the company to make an acquisition "prices be damned," adding that some deals "might look good on spreadsheets" but would probably be tough to manage.

Incyte's current market cap stands north of $19 billion. The stock trades at over 70 times forward earnings. To buy Incyte, Gilead would have to pay more than that -- perhaps much more. I suspect Milligan has seen plenty of spreadsheets chock-full of details on a potential Incyte acquisition and come away skeptical. 

Other potential suitors

What about Lilly as a possible buyer of Incyte? The two companies already have a close relationship that dates back to 2009. The first fruit from that collaboration could be ready for picking soon. Lilly expects to launch baricitinib as a treatment for rheumatoid arthritis early next year.

Incyte wouldn't be a bad fit for Lilly. Jakafi would be a solid addition to the big drugmaker's cancer portfolio of drugs including Alimta, Erbitux, and Cyramza. Incyte's pipeline would also dovetail in nicely with Lilly's research efforts.

However, Lilly doesn't have nearly as much cash as Gilead. To buy Incyte, Lilly would have to increase its debt significantly. I'm not sure that the company would choose that route.

The relationship between Novartis and Incyte also began in 2009. Novartis sells Jakafi outside the U.S. as Jakavi. The Swiss drugmaker would probably love to have the U.S. market as well. Rumors swirled earlier this year about a potential megamerger between Novartis and AstraZeneca (NASDAQ:AZN). That didn't happen, but Novartis CEO Joe Jimenez has hinted that he's interested in more than just small bolt-on deals.

Incyte could be the right size. Although Novartis' cash position is only around $7.8 billion, the company could raise perhaps $14 billion more by selling its stake in Roche (OTC:RHHBY)

For now, though, it seems that Novartis is content to keep making smaller acquisitions. The company just bought two privately held companies, Encore Vision and Ziarco Group Limited, for undisclosed amounts. In November, Novartis acquired Selexys Pharmaceuticals in a deal that could amount to up to $665 million.

Incyte as acquirer?

Incyte has already bought a sizable stake in small biotech Agenus. As part of their collaboration deal announced in January 2015, Incyte spent $35 million to purchase around 11% of Agenus. Is there a chance that Incyte might buy the rest of Agenus?

Incyte could certainly afford to buy Agenus if it wanted to do so. Agenus' current market cap is roughly $380 million. Incyte reported a cash stockpile (including cash, cash equivalents, and marketable securities) of $716.6 million at the end of September. 

However, I doubt Incyte would move forward with a deal anytime soon. Agenus isn't far away from needing more cash to fund its development programs. Although the small biotech has potential with its experimental brain cancer vaccine Prophage and checkpoint inhibitors, it will be a few years before any financial gains might be realized. Incyte seems more likely to wait and see how things unfold for Agenus.

Most likely deal

I think Gilead will look elsewhere. Lilly doesn't really need Incyte at this point. Novartis is a possibility, but it would have made more sense for the company to have bought Incyte at an earlier time. As for Incyte making its own acquisition of Agenus, my view is that such a deal would be premature.

So what's the most likely deal for Incyte in 2017? Remember the television game show Deal or No Deal? My guess is that most likely scenario for Incyte next year is no deal. But participants on that game show were often wrong. I could be, too.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.