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GSK buys cancer firm Tesaro for $5.1bn

Acquisition re-establishes US commercial operations in oncology

GSK

GlaxoSmithKline has made its first major acquisition under new chief executive Emma Walmsley, agreeing a $5.1bn takeover of US cancer specialist Tesaro.

The deal is counterbalanced by GSK’s earlier agreement to sell the Horlicks drink brand to Unilever for £3.1bn ($4bn), but seemed not to be well received by investors with GSK shares dropping 7% after the announcement.

The $75-per-share acquisition – which is at a 63% premium to Tesaro’s share price ahead of the announcement but in line with the stock’s level at the start of the year – gives GSK rights to approved PARP inhibitor Zejula (niraparib), which is jostling for market share with AstraZeneca's Lynparza (olaparib) and Clovis Oncology's Rubraca (rucaparib).

Zejula is approved in the US and Europe for recurrent ovarian cancer patients in response to platinum-based chemotherapy, with and without BRCA mutations, and made $63m in sales in the third quarter – well behind the $438m posted by Lynparza but ahead of the $23m tally for Rubraca which came to market earlier.

Zejula

The takeover news will not be pleasing to Clovis, which will now have to take on two big pharma rivals in the PARP space with plenty of marketing muscle.

GSK’s head of R&D Hal Barron said that PARP inhibitors are “important medicines that have been under appreciated in terms of the impact they can have on cancer patients”, suggesting GSK will be able to push Zejula into new indications.

Despite the confidence in the main asset from the deal, analysts have suggested that GSK’s interest in Tesaro must go beyond Zejula, which is in a tough competitive position with a wave of new PARP inhibitors coming through the pipeline, including Pfizer’s Talzenna (talazoparib) which was approved a few weeks ago for advanced breast cancer.

They point to the potential of pipeline candidates such as PD-1 inhibitor TSR-042, due to be filed for approval in recurrent endometrial cancer next year, which could give GSK a platform on which to build combination immuno-oncology regimens. The phase 2 JASPER trial, for example, pairs Zejula with TSR-042 in first-line non-small cell lung cancer (NSCLC) patients with high levels of PD-L1 expression and should read out next year.

Following behind are two other immuno-oncology candidates, TSR-022 targeting the TIM-3 checkpoint and ant-LAG3 candidate TSR-033. They at currently being tested alone and in combination with TSR-042 in phase 1 trials involving patients with advanced solid tumours.

GSK sold off the bulk of its marketed cancer products to Novartis a few years ago in order to rebuild the portfolio from scratch, and at the moment its most advanced programme is anti-BCMA drug GSK2857916, in mid-stage testing for multiple myeloma.

The transaction is expected to be completed in the first quarter of 2019, and GSK says it will trim earnings by “mid to high single digit percentages” in the first two years.

4th December 2018

From: Marketing

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