BY Richard Summerfield
GlaxoSmithKline has agreed to acquire US cancer specialist Tesaro in a deal worth $5.1bn, including Tesaro’s outstanding debt.
Under the terms of the deal, GSK, the UK’s largest drug manufacturer, will pay around $75 a share to acquire Tesaor, a premium of 110 percent on the company’s 30 day average price and a premium of 60 percent on the stock’s closing price on Friday 30 November, the last day of trading before the deal was announced. The transaction is expected to complete in the first quarter of 2019, subject to the satisfaction of customary closing conditions.
The deal is a notable for GSK, granting the company access to Tesaro’s drug Zejula – a poly ADP ribose polymerase (PARP) inhibitor approved for treating ovarian cancer. PARP inhibitors block a family of DNA-repair proteins in cancer cells. Zejula is also being evaluated as a potential treatment for lung, breast and prostate cancer.
Zejula brought in $166m in revenue in the first nine months of 2018, with third-quarter sales growing more than 60 percent. According to Refinitiv data, industry analysts, on average, expect annual Zejula sales to reach $1bn by 2023. Tesaro expects sale of Zejula to be in the $233m to $238m range this year.
“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”, said Emma Walmsley, chief executive of GSK. “This combination will support our aim to deliver long-term sustainable growth and is consistent with our capital allocation priorities. We look forward to working with Tesaro talented team to bring valuable new medicines to patients.”
“This transaction marks the beginning of a new global partnership that will accelerate our oncology business and allow our mission of delivering transformative products to individuals living with cancer to endure,” said Lonnie Moulder, chief executive of Tesaro. “Our board and management team are very pleased to announce this transaction, and we are grateful to the management team at GSK for their tremendous vision and the opportunity to preserve and build upon the impact we have had in the cancer community to date.”