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This Biotech’s Stock Just Doubled and It’s Bad News for Sanofi

Nasdaq Trading Glitch Sparks Debate About Markets' StabilityNasdaq Trading Glitch Sparks Debate About Markets' Stability
Biopharma company Tesaro's stock rocketed to a 108% gain on Wednesday.Photograph by Spencer Platt — Getty Images

Tesaro’s (TSRO) stock shot off to the moon today. Shares of the Massachusetts-based biopharma skyrocketed as much as 120% in Wednesday trading before closing up more than 108% thanks to positive late-stage clinical trial data for its experimental ovarian cancer drug niraparib.

But Tesaro’s market cap fortune could come, in part, at Sanofi’s expense, complicating the French pharma giant’s already contentious pursuit of California biotech Medivation (MDVN).

Medivation has refused to engage with Sanofi since the latter firm extended it a $9.3 billion buyout bid in April. The situation turned openly hostile when the drugmaker named eight nominees to replace Medivation’s entire board and fill it with people more amenable to Sanofi’s takeover ambitions. A proxy shareholder vote endorsing Sanofi’s board moves would have to happen before August 2, and Medivation is strongly urging its shareholders to rebuff Sanofi’s advances, which it has said “significantly undervalues” the company.

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But the biotech’s shareholders may be less likely to be swayed by Sanofi now that Tesaro has set off, at least for the moment, a Wall Street money bomb. The reason? Medivation has a late-stage experimental cancer drug of its own called talazoparib that shares similarities with Tesaro’s niraparib. Like niraparib, the Medivation treatment is a so-called PARP inhibitor that is being tested in patients with the BRCA gene mutation (Tesaro’s drug was most effective in delaying cancer progression in these patients).

That means that PARP inhibitors in general are getting a boost out of Tesaro’s success. In fact, Medivation, which has about a $10.2 billion market cap, saw shares spike more than 5% on Wednesday.

Medivation has been telling its investors to toe the line and hold out for a better offer than Sanofi’s $9.3 billion bid, promising that it can deliver far greater shareholder value—and multiple pharma giants are reportedly pursuing it at the moment, including AstraZeneca, Pfizer (PFE), Gilead (GILD), and Celgene (CELG).

Now that Wall Street is waxing optimistic about a class of cancer drugs which encompasses one of Medivation’s main late-stage candidates, there’s a distinct possibility the biotech’s shareholders will take a moment to see what other kinds of offers may come to the table.