British drug giant GlaxoSmithKline (NYSE: GSK) has entered a new oncology arena with its acquisition of Tesaro Inc. (NASDAQ: TSRO) for approximately $5.1 billion.
Tesaro is a commercial-stage biopharmaceutical company whose major marketed product, Zejula (niraparib), an oral poly ADP ribose polymerase (PARP) inhibitor, is currently approved for use in ovarian cancer. Specifically, it is in use in the United States and Europe as a treatment for adulta patients with recurrent ovarian cancer who are in response to platinum-based chemotherapy, regardless of BRCA gene mutation or biomarker status.
More tests are under way to assess its use in “all-comers” patient populations, as a monotherapy and in combinations, for the significantly larger opportunity of first-line maintenance treatment of ovarian cancer. Results from these clinical trials are expected to be available in the second half of 2019.
Tests are also beginning to assess Zejula’s efficacy against lung, breast and prostate cancer.
In addition to Zejula, Tesaro has several oncology assets in its pipeline, including antibodies directed against PD-1, TIM-3 and LAG-3 targets.
Zejula posted revenue of $166 million between January and September 2018.
While the oppportunity is large, the premium GlaxoSmithKline is paying is potentially larger. The price of $75 per share in cash represents a 110% premium to Tesaro’s 30-day volume weighted average price of $35.67 and an aggregate consideration of approximately $5.1 billion, including the assumption of Tesoro’s net debt. Tesaro posted a net loss of $648.6 million on a trailing 12-month basis.
That’s either a lot of optimism, or GSK grabbed the target before other rivals in this arena got to it. Those include AstraZeneca (NYSE: AZN) and Clovis Oncoogy (NASDAQ: CLVS).