As Tesaro jumps 108%, Medivation can raise its price, and even Clovis climbs

Wall Street Bull

Tesaro posted stellar Phase III results yesterday for its PARP inhibitor in ovarian cancer. But following on its good vibes have been other PARP R&D players that all saw their shares jump. The results could make a major difference to the acquisition hopes of Sanofi and Medivation while pulling Clovis out of its shares rut.

Tesaro ($TSRO) ended the day up 108% when the markets closed yesterday, reversing an 8% fall it posted the day before. Why? Because its cancer candidate niraparib produced progression-free survival (PFS) in BRCA-positive ovarian cancer patients nearly five times higher than placebo.

And even in those without this mutation--which some analysts believed would not see statistically significant results--PFS was still more than doubled compared to controls, while another subset--those without the BRCA mutation but expressing HRD tumors--saw PFS more than three times higher.

The drug will now be submitted to the FDA in Q4 as a maintenance therapy for pretreated women with ovarian cancer, with further trials assessing its use as a first-line therapy and with other meds, including Roche’s ($RHHBY) Avastin (bevacizumab), also in the works. This is a real boon for the company, a 2011 Fierce 15 honoree, which looks to have a blockbuster-in-waiting in its hands.

On the back of its shares jump and trial success, Tesaro wasted no time and this morning announced that it will offer $300 million of its common stock, while granting the underwriters an option to purchase up to an additional $45 million.

The drug that produced these results is an oral poly ADP-ribose polymerase (PARP) inhibitor and although this has not garnered the same sort of excitement that checkpoint inhibitors, CAR-T and CRISPR have in recent years, yesterday’s results really put this class of cancer drugs under the spotlight.

A PARP is already on the market for ovarian cancer in the form of AstraZeneca’s ($AZN) Lynparza (olaparib), which has a second-line setting and is expected to reach $2 billion in peak sales--but others are in late-stage testing that are all hoping to produce the same kind of survival benefit, or better, than Tesaro has achieved.

Medivation ($MDVN), which has its own PARP in late-stage testing, was a big winner from Tesaro’s news--closing up nearly 5.5% Wednesday evening. Its PARP inhibitor talazoparib, licensed from BioMarin ($BMRN) last year, is currently in Phase III for patients with deleterious germline BRCA1 or BRCA2 mutations and locally advanced and/or metastatic breast cancer.

In a note to clients from analysts at Barclays, the firm said: “Given the results [from Tesaro], we view these as validating for the overall PARP class--with positive read-through to the clinical and commercial potential for Medivation’s PARP inhibitor, talazoparib, in both the BRCA population and beyond. Indeed, we view these data as incrementally de-risking for Medivation’s EMBRACA study of talazoparib in BRCA+ breast cancer, which is expected to read-out early next year.”

Good news for Medivation--bad news however for Sanofi ($SNY), which in March bid $9.3 billion, or $52.50 per share, to buy out Medivation along with its oncology pipeline and U.S. rights to prostate cancer blockbuster Xtandi (enzalutamide).

Its jump in share price combined with its greater attractiveness make Sanofi’s original low-ball offer seem even further off the mark, which may embolden the white knights waiting in the wings who are reported to be weighing up higher bids.

Barclays said: “Sanofi’s bid of $52.50/sh for Medivation only becomes further untenable in light of this data.” Medivation’s shares closed at $60.95 on Wednesday.

And then there is Clovis Oncology ($CLVS). The company also has a PARP and last year gained a “breakthrough” designation from the FDA for its Pfizer ($PFE)-licensed drug rucaparib in advanced ovarian cancer in patients who have received at least two lines of prior platinum-containing therapy, with BRCA-mutated tumors, inclusive of both germline BRCA and somatic BRCA mutations.

As with Medivation, its long-battered shares jumped nearly 22% at the end of play yesterday on the news. But, as ever with Clovis, this is not the whole story. On Tuesday the FDA was meant to approve or reject another drug from the biotech, its lung cancer EGFR inhibitor rociletinib--but no message from the FDA came.

In May, Clovis was told to expect a complete response letter (CRL) from the agency, and according to reports from Bloomberg, this is what it received. The biotech did not respond to FierceBiotech, however, and has not posted the CRL on its news site. The FDA is not obligated to publish a CRL notice.

Caroline Chen, a biotech reporter at Bloomberg, tweeted yesterday: “$CLVS confirms CRL on rociletinib, but investors already have forgotten that debacle, pushing shares up 22% on PARP hopes.”

This also comes after Clovis cut 35% of its staff in May due to the expected CRL, with its future for the program highly uncertain.

Not everyone was convinced about the PARP market boost, however, especially for Clovis, with TheStreet analyst Adam Feuerstein saying: “A more competitive, crowded PARP field is WORSE for $CLVS.”

- check out its SEC-3 form

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