What happened

Shares of Tesaro (NASDAQ: TSRO) dropped 13.8% on Wednesday, as the biotech continues to struggle from the data onslaught at the European Society for Medical Oncology (ESMO) Congress. All told, Tesaro is down 25.7% from Friday's close before the meeting started.

So what

Tesaro presented data at ESMO for its anti-PD-1 antibody, TSR-042, and while positive, it was early stage phase 1 data in a competitive space, so it wasn't likely to move the needle positively.

On the downside, Tesaro's ovarian cancer drug, Zejula, got bad news from competitors AstraZeneca (NASDAQ:AZN) and Merck (NYSE:MRK), which reported promising data for Lynparza, is a poly ADP ribose polymerase (PARP) inhibitor just like Zejula. Clovis Oncology (NASDAQ:CLVS), which has a PARP inhibitor of its own called Rubraca, also saw shares fall dramatically on the news.

A solid 60% of patients treated with AstraZeneca and Merck's Lynparza hadn't progressed and were still alive after three years, compared with just 27% for the group that got a placebo. The trial tested Lynparza as a first-line maintenance therapy, while Zejula and Lynparza are currently approved for women with recurrent ovarian cancer. The use of Lynparza in first-line therapy should result in fewer patients available with recurrent cancer, and it sets a high bar for what Zejula will have to put up from its phase 3 first-line ovarian cancer study, dubbed Prima, which is scheduled to report out in late 2019.

Woman holding hands with a woman wearing a head scarf

Image source: Getty Images.

Now what

There doesn't seem to be any additional reason Tesaro would continue to fall today, but that doesn't mean we've hit the bottom, either. After a data release, it can sometimes take investors a while to decide the new appropriate valuation for a company.

Investors looking for some solace might get it from the third-quarter earnings report, scheduled to be released next week, in which management is looking for Zejula sales of $58 million to $62 million. Management blew through its first-half guidance -- upping fiscal revenue guidance for the drug by $30 million at the bottom of the range after the second quarter -- so it'll be interesting to see where the third-quarter sales came in and how management thinks the ESMO data might affect off-label use of Lynparza before AstraZeneca and Merck are able to gain approval as a first-line treatment.

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