GSK buys Tesaro in $5.1B takeover deal
- GlaxoSmithKline will acquire Tesaro, a Massachusetts-based oncology firm, for $5.1 billion, the two companies announced Monday.
- The takeover will give the British drugmaker control of Zejula, Tesaro's PARP inhibitor and leading therapeutic asset. "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," GSK's chief scientific officer Hal Barron said in a statement.
- GSK will pay $75 a share in its all-cash takeover bid, a 110% premium on Tesaro's 30-day volume weighted average price. Tesaro's stock shot up nearly 60% when markets opened Monday. The companies expect the deal to complete in the first quarter of 2019.
With the deal, GlaxoSmithKline's CEO Emma Walmsley has led the pharmaceutical giant into the hyper-competitive oncology field. By taking on Tesaro's Zejula (niraparib) as its own asset, Glaxo will go toe-to-toe with AstraZeneca and Clovis Oncology in the space.
Tesaro wasn't the only multi-billion dollar move GSK announced on a busy Monday. The company also said it reached a deal worth roughly $4 billion with Unilever to divest its healthcare nutrition brands under GSK Consumer Healthcare, which includes the malted-milk drink Horlicks. That deal is expected to complete by the end of next year, the companies said.
Walmsley said proceeds from the Unilever deal will support other company priorities, namely investing in the pharmaceutical business, which GSK is prominently doing by buying Tesaro.
"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," she said in a statement Monday.
Zejula was approved in the U.S. in March 2017 to treat recurrent ovarian cancer patients who respond to platinum-based chemotherapy. But the therapy has had slower uptake than some expected, leading to Tesaro being shortlisted as a potential takeover target.
Zejula posted $166 million in sales through the first nine months of 2018, while AstraZeneca's Lynparza (olaparib) had distanced itself with consistent quarterly growth.
GSK laid out a strategy Monday to expand Zejula's market by focusing testing on the PARP inhibitor in the first-line setting as well as in other types of cancers, including lung, breast and prostate.
The company highlighted three ongoing clinical trials that are testing Zejula as both a monotherapy and in larger groups of patients. The first of the three, PRIMA, is expected to read out in the second half of 2019, which will test the PARP inhibitor in first-line ovarian cancer regardless of biomarker status.
The takeout price, at about 20 times revenue levels, was a "hefty premium," a Raymond James' note Monday said, above the typical range of 10 to 15 times in mid-cap biotech deals.
An analyst for the investment bank said it is difficult to see other bidders emerge given the price. GSK's stock opened down about 8% on Monday.