M&A

Tesaro is reportedly on the auction block, but who can afford it?

Tesaro is up on the auction block, The Wall Street Journal is reporting. But don’t be surprised if no one comes up and gobbles this one up fast. Analysts believe Tesaro has a blockbuster on its hands with its newly approved PARP inhibitor Zejula and it won’t go cheap.

The Journal says that Waltham, MA-based Tesaro has sent out a request for bids over the last few weeks, but interest seems tepid.

Lonnie Moulder, Tesaro CEO

One likely bidder in any deal this size would be Pfizer, which has already bought its own late-stage PARP (talazoparib) with its jaw-dropping $14 billion deal for Medivation — which in turn delivered a marketed cancer therapy with suddenly declining revenue.

That would make any short list of potential buyers very brief, considering Tesaro’s newly engorged $8 billion market cap $TSRO on Wednesday afternoon, with shares up 4%. Competition from a bullish AstraZeneca $AZN and Clovis $CLVS won’t make it any easier. J&J $JNJ has already licensed rights for prostate cancer, its core interest.

A group of pharma giants like Roche have vowed to stay away from what could easily prove to be a megablockbuster acquisition worth $10 billion or more. The prospect of tax reform and overseas repatriation evidently has sidelined a few as they wait for the accountants to weigh in. Gilead has an interest in cancer therapies, but so far has refused to pull the trigger on a big one. Sanofi has been satisfied with second place in at least two bidding wars for Medivation and Actelion. It won’t want to pay unlimited sums to buy what it wants, but that could always change.

So how about Novartis $NVS?

In a detailed review of the pharma giant’s pipeline with company execs, Leerink’s Seamus Fernandez highlighted just how important PARP is to Novartis. But the company team rained cold water all over the idea of a buyout. Fernandez noted:

NVS acknowledged that the lack of a PARP inhibitor was a gap in its oncology portfolio, but commented that valuations were too high to justify a major deal in the space.

That would seem to eliminate Novartis from the running, unless they’re just being coy for strategic purposes.

That doesn’t leave a lot to pick from, unless an outsider like Takeda comes along, avid to make a name for itself.

To be continued….


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