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GlaxoSmithKline Agreed to Acquire Tesaro

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Dec. 4 2018, Updated 8:08 a.m. ET

Acquisition 

On December 3, GlaxoSmithKline (GSK) entered into an agreement with Tesaro (TSRO). GlaxoSmithKline will acquire Tesaro for ~$5.1 billion in an all-cash transaction. Tesaro’s primary commercialized product is Zejula—a poly ADP ribose polymerase inhibitor for treating individuals with ovarian cancer.

Tesaro is also investigating Zejula’s potential label expansion. Tesaro is investigating Zejula as a potential treatment for prostate cancer, lung cancer, and breast cancer.

GlaxoSmithKline will acquire Tesaro at $75.00 per share. Tesaro has a strong pipeline of investigational drugs, which includes drug candidates targeting PD-1, TIM-3, and LAG-3.

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Stock performance

After the acquisition announcement, Tesaro’s stock price rose ~58.47%. On December 3, Tesaro’s stock price closed at $73.50, which represents ~58.47% growth from its close of $46.38 on November 30.

Tesaro’s stock price grew from $28.80 at the close of the market on October 31 to $73.50 at the close of the market on December 3, which represents ~155% growth in the stock price from the end of October.

On December 3, GlaxoSmithKline’s stock price closed at $38.61, which represents an ~7.79% decline from its close of $41.87 on November 30. GlaxoSmithKline’s stock price closed at $38.67 on December 3, which is ~12% growth from its 52-week low of $34.52 on December 6, 2017. GlaxoSmithKline hit its 52-week high of $42.36 on June 14.

GlaxoSmithKline’s stock price fell after the acquisition deal with Tesaro. Tesaro’s leading drug Zejula is a peer drug to Clovis Oncology’s Rubraca. In the marketplace, Rubraca could give Zejula stiff competition.

Analysts’ recommendations

Among the 19 analysts tracking Tesaro in December, three recommended a “strong buy,” five recommended a “buy,” and 11 recommended a “hold.”

On December 4, Tesaro had a consensus 12-month target price of $64.39, which represents an ~12.39% decline over the next 12 months.

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