Cancer, M&A

Tesaro stock soars on another report the PARP player is exploring a sale

At some point somebody might buy cancer drugmaker Tesaro $TSRO, but until then it looks like investors will be subjected to a seemingly endless array of reports suggesting the PARP player is putting itself up on the auction block.

Fresh on the heels of underwhelming drug data presented at a conference earlier this month that sent the company’s shares into a tailspin, Tesaro’s anemic stock price this year may make it an attractive target for oncology-focused players, suggested Bloomberg on Friday in a report that said the company was exploring a sale, citing people familiar with the matter.

The Waltham, Massachusetts-based company is working with financial advisers after receiving takeover interest, and advisers have also begun to contact potential suitors, the report said, lifting the company’s shares up more than 31% on Friday. Tesaro’s stock has taken a hit over the past year as its PARP cancer drug Zejula struggles with competition.

Two years after getting started, Tesaro pulled off a rare, successful IPO in 2012. By 2016, the rumour mills were swirling as the company’s cancer drug Zejula edged closer to approval following successful phase III data. In February 2017, Reuters reported the company was discussing its options with investment banks after receiving acquisition interest from several drugmakers, citing people familiar with the matter. A few months later after Zejula won the FDA nod, WSJ in May reported Tesaro was exploring a sale, citing sources. At this juncture, the company was valued at a pricey $8 billion – but interest was reportedly lukewarm most likely due to its high valuation, a reason analysts concurred with. If Bloomberg’s report is accurate, price may not be an unsurmountable barrier for a potential acquirer this time round, as the company was valued about $1.9 billion at Friday’s close.

Quarterly sales of Zejula reported in November, which modestly beat Baird’s expectations, were largely driven by growth in Europe and increased prices in the United States, where the drug is losing market share to competition, the analysts wrote. In the note published on Nov. 1 Baird analysts remained cautiously optimistic: “Overall, we are encouraged by early EU launch trends (Germany and UK), which should continue as additional countries are launched. In the US, however, volume growth remained modest, and though we believe educational efforts could have a positive impact, it will likely take some time to play out.”

Last month, Pfizer joined the PARP crowd, securing the approval of talazoparib, its PARP inhibitor for a genetically defined line of breast cancer. The drug will compete against AstraZeneca’s Lynparza — which currently wears the PARP crown — as well as offerings from Clovis $CLVS and Tesaro. The drugs work by disrupting DNA mechanisms for self repair and putting cancer cells on a path to destruction.


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Biotech Investment Analyst
SV Health Investors Boston, MA
Research Scientist - Disease Biology
Recursion Pharmaceuticals Salt Lake City, UT
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Recursion Pharmaceuticals Salt Lake City, UT
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Cadent Therapeutics Cambridge, MA
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