GlaxoSmithKline to buy Tesaro for $5.1 billion, gaining PARP inhibitor Zejula

GlaxoSmithKline announced Monday an agreement to acquire Tesaro for around $5.1 billion in cash, gaining the latter's oral PARP inhibitor Zejula (niraparib). GlaxoSmithKline CEO Emma Walmsley said the deal "will strengthen our pharmaceuticals business by accelerating the build of our oncology pipeline and commercial footprint, along with providing access to new scientific capabilities."

Zejula is currently approved in the US and Europe as a treatment for adults with recurrent ovarian cancer who are in response to platinum-based chemotherapy, regardless of BRCA mutation or biomarker status. The drug, which generated sales of $63 million in the third quarter, is also being investigated in "all-comers" patient populations, as a monotherapy and in combinations, for the first-line maintenance treatment of ovarian cancer. Results from the first of these trials, dubbed PRIMA, are expected in the second half of 2019.

Outside of ovarian cancer, Zejula is also being studied for use as a possible treatment in lung, breast and prostate cancer, both as a monotherapy and in combination with other medicines, including with Tesaro's experimental anti-PD-1 antibody dostarlimab, formerly known as TSR-042. Tesaro's pipeline also contains several other oncology assets, including antibodies directed against TIM-3 and LAG-3.

Hal Barron, chief scientific officer at GlaxoSmithKline, said "our strong belief is that PARP inhibitors are important medicines that have been under appreciated in terms of the impact they can have on cancer patients." There are three other PARP inhibitors on the market, with AstraZeneca and Merck & Co.'s Lynparza (olaparib) generating third-quarter revenue of $169 million and Clovis Oncology's Rubraca (rucaparib) pulling in sales in the same period of about $23 million.

Under the deal, GlaxoSmithKline will acquire Tesaro for $75 per share, which represents a premium of about 62 percent to the company's closing share price on November 30. Last month, shares in Tesaro jumped after sources suggested that the company was considering a sale after reporting disappointing results from a study combining dostarlimab and the anti-TIM-3 antibody TSR-022 in patients with non-small-cell lung cancer who progressed following anti-PD-1 therapy.

According to GlaxoSmithKline, the purchase of Tesaro will impact adjusted earnings per share for the first two years by mid to high single digit percentages, reducing thereafter and starting to be accretive by 2022. The transaction, which has been approved by Tesaro's board, is expected to close in the first quarter of 2019.

Johnson & Johnson gained exclusive rights in 2016 to Zejula in prostate cancer under a deal potentially worth up to $450 million, with the former also making a $50 million equity investment in the company.