Tesaro's deal struggles? They're actually a good omen for Clovis: analyst

PARP drugmaker Tesaro may have had a tough time finding a buyer in GlaxoSmithKline. But that doesn’t mean rival Clovis won’t be able to land its own, one analyst says.

As Tesaro’s recently released deal proxy shows, after nearly two years of searching for suitors and plenty of initial interest, the company was nearly out of options when it inked the $5.1 billion agreement to sell itself to Glaxo. But "while investors may interpret the lack of additional take-out offers in the home stretch as suggesting there is no buyer for Clovis," Leerink Partners’ Andrew Berens doesn’t think they should.

"We caution that differences in the company’s profiles would likely draw different types of offers and partners, in our view," he wrote in a note to clients.

One key reason? Tesaro boasts an immuno-oncology pipeline and a "more substantial" commercial infrastructure in addition to PARP entrant Zejula—and that drove up its price. Many larger drugmakers already have I-O portfolios and marketing machines of their own, making it logical that they wouldn’t want to pay up for those assets.

A Clovis acquisition, on the other hand, "would be a pure-play PARP acquisition, without economics for the I-O franchise like Tesaro," Berens pointed out.

Plus, while wannabe Tesaro buyers may have bailed near the end of the sale process, Berens sees it as a good sign that they were ever there at all. Early interest in Tesaro "demonstrates interest in PARP economics, despite lack of competitive acquisition bids," he wrote.

Clovis will have to hope he’s right. Once Glaxo’s deal closes, all three rivals to its PARP therapy Rubraca be sold by Big Pharma players—or, in the case of AstraZeneca’s Lynparza, two of them—and that could make it even tougher for the struggling drug to compete.

"It strikes us that this asset would be much better off in a larger organization where it can more quietly grow as part of an oncology portfolio, as opposed to being judged on a quarterly basis within a single-product company (as is currently the case)," JPMorgan analyst Cory Kasimov wrote to clients after Rubraca’s consensus-missing $22.8 million showing in the third quarter.

But if there’s one silver lining, it’s this: If there is a company out there that wants to bring PARP into the fold, Clovis is now its only option.

"We continue to believe there is substantial interest in the PARP class, and that Clovis is now well-positioned as the remaining standalone PARP-focused company," Berens wrote.