Personal Finance
PFE

Tesaro Inc. Is Flying High Today (and Could Go Higher From Here)

G
G

In terms of cash burn, despite a $35 million payout of licensing revenue from J&J on its prostate cancer agreement, Tesaro reported a net loss of $58.4 million last quarter. But that's not going to lead to any urgency on Tesaro's part to do a deal. Tesaro had cash and cash equivalents of approximately $320 million at the end of June. And it raised an additional $409 million in a follow-on offering one month later. That will get the biotech comfortably through launch on niraparib.

Image source: Tesaro.

In terms of cash burn, despite a $35 million payout of licensing revenue from J&J on its prostate cancer agreement, Tesaro reported a net loss of $58.4 million last quarter. But that's not going to lead to any urgency on Tesaro's part to do a deal. Tesaro had cash and cash equivalents of approximately $320 million at the end of June. And it raised an additional $409 million in a follow-on offering one month later. That will get the biotech comfortably through launch on niraparib.

Could Clovis also be a target?

As I see it, Big Pharma may decide to pay up for Tesaro and its superior PARP inhibitor, or it might seek a discount with Clovis. Clovis suffered an implosion last year, losing 73% of its value in two days in November, after the FDA questioned the reliability of data on its PARP inhibitor targeting lung cancer, a program Clovis ended up shuttering. Since then, Clovis has been bouncing around, having recaptured 31% of its value on Aug. 23, when the FDA accepted Clovis' NDA for its new lead drug, rucaparib. But it dropped 14.5% just last week, based on recently released data showing that 63% of patients had a severe adverse event to that drug.

I can't count Clovis out as an acquisition target, but Tesaro looks like a much better long-term investment. M&A activity is always just the icing on the cake, and Tesaro doesn't need to be acquired to be a worthwhile stock. While Tesaro has been bid up on its ovarian-cancer hopes, what hasn't been accounted for yet in the stock price is the possible widespread potential of PARP inhibitors. Make no mistake: Tesaro is in the high-risk zone, with multiple hurdles ahead. But it's a potentially exciting stock and well worth investigating further.

A secret billion-dollar stock opportunity

The world's biggest tech company forgot to show you something, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here .

Cheryl Swanson owns shares of Johnson and Johnson. The Motley Fool owns shares of and recommends Gilead Sciences. The Motley Fool has the following options: short October 2016 $85 calls on Gilead Sciences. The Motley Fool recommends Johnson and Johnson. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

PFE CLVS PFS JNJ

Other Topics

Stocks

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More