In our last piece on TESARO Inc (NASDAQ:TSRO), we expressed the view that the buyout rumors were very plausible. We noted in that piece that the movement in the stock off the rumors was likely not simple short covering due to the rumors, but was instead based on a well-reasoned appreciation that the company “makes very good sense as a take-out candidate and would fit extremely well under a number of different very well-capitalized umbrellas.”

Now, naturally, the rest of the world has an easier time agreeing with that conclusion following yesterday’s move by GlaxoSmithKline to gobble Tesaro up for $5.1 billion.

TESARO Inc (NASDAQ:TSRO) is one of just a handful of successful programs in the PARP inhibitor field. PARP inhibitors block an enzyme used by cancer cells for maintaining and repairing DNA damage. They are particularly in focus right now for treatment of ovarian and prostate cancers with a great deal of active R&D potential when combined with immunotherapy drugs.

AZN, CLVS, and TSRO basically make up the field, with AZN being the most advanced, and CLVS being the newest horse in the race.

Tesaro offers ZEJULA (niraparib), an orally active and potent poly polymerase inhibitor for the maintenance treatment of women with recurrent epithelial ovarian, fallopian tube, or primary peritoneal cancer; and VARUBI (rolapitant), a neurokinin-1, or NK-1, receptor antagonist for the prevention of chemotherapy induced nausea and vomiting.

The move by GSK to lock in the PARP asset has actually already been shamed a bit on the sell side with a few downgrades in place for GSK shares out on Tuesday, and the stock sitting down rather steeply since making the deal.

The main reason here is because the company came out on the heels of the deal to announce that it wouldn’t be accretive until 2022 and that “the transaction and associated R&D expenses and commercial investments will impact co’s Adj. EPS for the first two years post-close by mid-to-high single digit percentages.”

In other words, it was a big bite to chew. The market is downgrading its discounted EPS view and adding a small risk of choking into the mix.

However, TSRO investors are dancing in the streets. It will be interesting to see if CLVS investors get the chance to do the same dance next.

 

Elevator Pitch

TESARO Inc (NASDAQ:TSRO) trumpets itself as an oncology-focused biopharmaceutical company that identifies, acquires, develops, and commercializes cancer therapeutics and oncology supportive care products in the United States.

It offers ZEJULA (niraparib), an orally active and potent poly polymerase inhibitor for the maintenance treatment of women with recurrent epithelial ovarian, fallopian tube, or primary peritoneal cancer; and VARUBI (rolapitant), a neurokinin-1, or NK-1, receptor antagonist for the prevention of chemotherapy induced nausea and vomiting.

The company also develops Niraparib for the treatment of various tumors. In addition, it is developing immunotherapy antibody product candidates, including TSR-042, which is in a phase I clinical trial targeting programmed cell death protein 1; TSR-022 that is in phase I clinical trial targeting T-cell immunoglobulin domain and mucin domain-3; and TSR-033, an antibody candidate, which is in phase I clinical trial targeting lymphocyte-activation gene-3.

The company has collaboration and exclusive license agreement with AnaptysBio, Inc., as well as collaboration agreements with Janssen Biotech, Inc., Millennium Pharmaceuticals, Inc., Zai Lab (Shanghai) Co., Ltd, Jiangsu Hengrui Medicine Co., Ltd., Merck Sharp & Dohme B.V., and Jiangsu Hengrui Medicine Co., Ltd., as well as Genentech.

Tesaro, Inc. was founded in 2010 and is headquartered in Waltham, Massachusetts.

TESARO Inc (NASDAQ:TSRO) pulled in sales of $64.4M in its last reported quarterly financials, representing top line growth of -54.9%. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($476.8M against $190.4M).

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