M&A

The next PARP M&A deal? Tesaro shares surge on latest buzz about a buyout

Lonnie Moulder, Tesaro CEO

The PARP wars may be about ready to inspire some fresh M&A activity.

In the wake of Pfizer’s big $14 billion acquisition of Medivation last fall, which included the PARP drug talazoparib, sources are telling Reuters that Tesaro $TSRO has been fielding some incoming queries about a buyout. And with its PARP drug niraparib under review at the FDA, Tesaro has become one of the most frequently cited takeover targets in biotech, where promising late-stage assets can be hard to find.

Niraparib is billed as a likely rival to AstraZeneca’s Lynparza, which got an accelerated approval with a thin set of data that the pharma giant has been building on. And back in December Clovis gained an accelerated approval for another PARP, Rubraca (rucaparib).

As we reported a few days ago, niraparib sits high on a list of 15 potential blockbusters ready to hit the market this year, with 2022 sales revenue projected at $1.8 billion for the ovarian cancer market.

That’s why analysts like David Nierengarten at Wedbush remain convinced that a deal almost has to be in the works. He noted:

TSRO remains our top takeout pick for 2017. We believe TSRO’s profile as an oncology company with one approved product (Varubi) and a potential blockbuster in registration (niraparib’s PDUFA date is June 30, 2017), is attractive for big pharma.

Tesaro’s shares are up 14% Wednesday afternoon.

Tesaro, reports Reuters, hasn’t been shopping the company. But then again, that’s not how you get the best price for a biotech. That dance generally involves an unsolicited bid followed by a tussle over valuation and hopefully – from the seller’s perspective – a bidding war among eager rivals. Sanofi has played that role twice, first boosting the value of Medivation and then helping Actelion with its negotiations with J&J – which ended in a $30 billion deal and a spinout of a new company focused on the pipeline.

Last year proved a disappointment on the M&A side. But with several deals done early in 2017, including Actelion, the smart money is betting on a slate of biotech buyouts this year.


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