Why Tesaro, Inc. Shares Skyrocketed

Tesaro shares soar after announcing a collaborative agreement. Will this deal change everything for Tesaro or is it not all that it's cracked up to be?

Mar 13, 2014 at 1:43PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Tesaro (NASDAQ:TSRO), a clinical-stage biopharmaceutical company focused on developing therapies to treat cancer, rocketed higher by as much as 33% after announcing a collaborative agreement with privately held AnaptysBio for its immuno-oncology antibody program targeting PD-1, TIM-3, and LAG-3.

So what: Under the terms of the agreement, Tesaro will pay an up-front licensing fee of $17 million and provide funding of costs incurred by AnaptysBio during the drug development process. For each development program AnaptysBio is eligible to receive $18 million in milestone payments based on drug development achievements and an additional $90 million based on U.S. and rest-of-world submissions and approvals. To boot, AnaptysBio would also receive a single-digit royalty on all commercially sold therapies. The companies will collaborate on development in a preclinical setting with Tesaro taking over once development hits the clinical stage. Tesaro would handle manufacturing and marketing if approved as well.

In return, Tesaro gains exclusive access to AnaptysBio's immunotherapy platform, SHM-XEL. In the words of Mary Lynne Hedley, president of Tesaro, "In our view, immunotherapy-based approaches are likely to transform the way that cancer is treated and may become the foundation of many future cancer therapy regimens."

Now what: If you needed any confirmation that immunotherapy programs, which work by retraining the body's immune system to recognize and attack cancer, are incredibly hot, then let Tesaro's 33% move higher today serve as a blatant reminder. I wholeheartedly agree with Tesaro's president that a world of opportunity awaits in regulating the body's immune system to recognize and fight cancer. I am, however, a bit concerned by the enormity of today's run-up considering how little is known about AnaptysBio's cancer immunotherapy pipeline. Its anti-PD-1 antibody, for example, is only in preclinical studies, and a lot can change when going from preclinical to human trials. I'm ultimately hoping for success with this partnership for Tesaro, but I feel at this level its valuation simply doesn't make much sense.

Tesaro shares are skyrocketing today, but even it may find it difficult to keep pace with this top stock in 2014
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool has no position in any companies mentioned in this article. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers