The Tesaro takeout rumors turned out to be true.
The cancer-focused biotech is being acquired by pharma giant GlaxoSmithKline for $5.1 billion, the companies announced Monday. The deal values Tesaro at $75 per share, or a 63 percent premium to Friday’s closing price.
Tesaro’s drug Zejula belongs to a class of cancer drugs called PARP inhibitors that work by blocking an enzyme that cancer cells use to repair damage in their DNA. PARP inhibitors are also believed to be active in ovarian and prostate cancers, and are being studied in combination with immunotherapy drugs.
Zejula sales are expected to be in range of $233 to $238 million this year, according to Tesaro.
The pace of M&A in biotech has been generally lackluster this year, so GSK buying Tesaro right before 2018 closes will likely spark renewed optimism for new deals to come in 2019. It should be noted, however, that biotech company valuations have come down. Tesaro shares were trading for $75 at the beginning of the year, so this GSK buyout only gets the stock to break even.
Tesaro, based in Waltham, Mass., sells Zejula for ovarian cancer. Chatter about the company seeking a sale has swirled repeatedly over the past year, most recently resurfacing last month and sending its stock price higher. Company executives also recently canceled appearances at an investor conference, spurring more speculation that a deal was in the works.
“The acquisition of TESARO will strengthen our pharmaceuticals business by accelerating the build of our oncology pipeline and commercial footprint, along with providing access to new scientific capabilities,” GSK CEO Emma Walmsley said in a statement.
Tesaro is also the first big acquisition by GSK since noted scientist and pharma veteran Hal Barron joined as its chief scientific officer.