Glaxo To Buy Zejula Maker TESARO For $5.1B, Stock Down 8%
Zacks Investment Research | Dec 03, 2018 08:27PM ET
GlaxoSmithKline plc (NYSE:GSK) has signed a definitive agreement to acquire small cancer biotech, TESARO, Inc. (NASDAQ:TSRO) for $5.1 billion including the latter’s debt. The acquisition price of $75 per share in cash represents a premium of 110% to TESARO’s 30-day average price.
Emma Walmsley, the U.K pharma giant’s chief executive officer, has since long made it clear that Glaxo will focus on growing its pharmaceuticals business. The acquisition of TESARO will add its ovarian cancer drug, Zejula to Glaxo’s product portfolio and strengthen the latter’s position in the oncology market.
Zejula, an orally-available PARP inhibitor, was approved in the United States and EU last year as a second-line maintenance treatment of recurrent ovarian cancer patients. Zejula recorded sales of $166 million in the first nine months of 2018.
Meanwhile, TESARO is looking to expand Zejula’s label into other treatment settings for ovarian cancer and additional cancer types like lung, prostrate and breast, which, if approved, can increase the drugs’ sales prospects. In addition to Zejula, TESARO has three other candidates in its pipeline, which are being evaluated in early-stage studies in multiple tumor types.
Glaxo’s shares declined around 8% on Monday as the investor community felt Glaxo is overpaying for TESARO considering that Zejula is at an early stage of commercialization in a fiercely competitive market. So far this year, Glaxo’s shares have underperformed the Zacks Investment Research
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