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A savvy decision by Tesaro (NASDAQ: TSRO) to buy the rights to a novel anti-tumor drug from Merck & Co. (MRK 0.14%) for $7 million up front in 2012 has just paid off big for patients and Tesaro investors.

This past week, Tesaro reported results from a large late-stage study showing that niraparib effectively delays the progression of ovarian cancer in patients previously treated with platinum-based therapies. Those results are important, because up to 85% of ovarian cancer patients see their cancer return, and despite advances in care, ovarian cancer remains the second most deadly cancer facing women.

A big bargain delivers a big breakthrough

Tesaro handed Merck & Co. $7 million in cash to secure the rights to niraparib and a second tumor-fighting compound, MK-2515, back in 2012. At the time, niraparib was in the infancy of early stage studies, and Merck was eager to shrink its R&D footprint ahead of revenue-depleting patent expirations.

Based on niraparib's phase 3 trial results, niraparib's low upfront cost appears to have been a bargain.

Niraparib, which is taken once daily, has now been shown to delay the return of ovarian cancer. It does that by inhibiting the activity of PARP, which are proteins that are responsible for quickly repairing damage to DNA. While PARP activity is a good thing in healthy patients, it can be a bad thing for cancer patients because it reduces the damage that chemotherapy does to cancer DNA.

In trials, patients who were identified as carriers of the germline BRCA mutation and were given niraparib had a median 21 months of progression-free survival. That was miles better than the median 5.5 months for patients who weren't given niraparib.

Niraparib also delayed disease progression in patients who weren't carriers of the BRCA mutation, but who were positive for homologous recombination deficiency (HRD). Progression-free survival for HRD patients was 12.9 months, versus 3.8 months for patients not given niraparib.

Additionally, median progression free survival in patients who were negative for germline BRCA mutation irrespective of HRD status was 9.3 months versus 3.9 months for the control arm of the study.

Looking forward

Tesaro is the first drug developer working on a PARP inhibitor to prove the approach effective in late-stage trials involving this patient population. That first-mover advantage could prove to be significant, assuming that the company can make good on its timeline to file niraparib for FDA approval by the end of this year. 

The FDA will need to review all of niraparib's trial data, including data related to its safety, before approving it. However, the safety data doesn't seem to raise too many eyebrows. There were no deaths among patients during the study period, and most adverse events niraparib patients suffered were manageable by adjusting the patients' dosage of the drug.

Assuming the FDA agrees that niraparib's results warrant an approval, this drug could quickly become a standard that's used in a lot of ovarian cancer patients who are in remission thanks to previous treatment. Overall, about 200,000 people are diagnosed with ovarian cancer, and another 22,000 new cases are diagnosed every year the United States. Therefore, niraparib could prove to be an important win for patients and Tesaro's shareholders.