TESARO Inc (NASDAQ:TSRO) has announced that it has reached an agreement with Janssen Pharmaceutical, a subsidiary of Johnson & Johnson. As per the agreement, the two companies would collaborate on the development and commercialization of niraparib, worldwide. The drug is targeted at patients suffering from prostate cancer. The drug is also undergoing phase-3 trials for ovarian and breast cancer.
The CEO of TESARO, Lonnie Moulder, expressed excitement at working with Janssen, claiming that the later was a leader in the field of prostate cancer. Moulder also stated that with this agreement, the two companies can accelerate efforts to provide sufferers with treatment options. The CEO also hinted at possibly expanding the franchise, to increase its value. It should be noted here that Janssen would still not be allowed to commercialize the drug in Japan.
As per the details of the agreement, Janssen would pay $35 million, to TESARO as upfront, with another $415 million to be paid in several milestones. Moreover, Janssen would also be liable to pay royalties on sales of the drug. Furthermore, the company would also be responsible to pay for all future development and commercialization activities related to the drug, in prostate cancer. Even with Janssen doing all the heavy lifting, Johnson & Johnson has also decided to separately invest in TESARO. This would be done through an equity investment, worth $50 million, at a share price of $44.24.
The main reason for Johnson & Johnson taking a special interest in the drug is mainly the fact that the company’s own drug for prostate cancer, Zytiga, is losing significant market share. This is due to the growing competitiveness in the market and the rising popularity of Medivation Inc’s Xtandi. Zytiga was responsible for generating revenues of $2.23 billion, making it the company’s third best-selling drug.
TESARO Inc (NASDAQ:TSRO) closed trading at a share price of $47.59, after gaining 11.19% in terms of its share value, during the April 6 trading session.