Jefferies has downgraded TESARO Inc TSRO to Hold from Buy after the stock climbed 108 percent Wednesday on positive Phase3 NOVA data for niraparib in ovarian cancer.
"We move to Hold as we await full data & competitor data in 2H16-2017. Risks to our downgrade include (1) potential take-out; (2) competitor data not as good as niraparib; & (3) expansion of niraparib indications," analyst Eun Yang wrote in a note.
Yang said the stock could gain if AstraZeneca plc (ADR) AZN's olaparib data in 2L ovarian cancer maintenance not as good as niraparib. The data is expected in the second half of 2016.
Another risk to the downgrade includes greater-than-expected niraparib sales. Yang expects about $1.4 billion in peak sales.
The upcoming events include:
- (1) "Phase 2 niraparib data in >4L ovarian cancer treatment (QUADRA) in 2016";
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(2) "initiation of Ph1 trial of TSR-022 (anti-TIM-3 Ab) in ~mid-2016";
- (3) "identification of dose & schedule in Ph1 trial of TSR-042 (anti-PD-1 Ab) by YE16";
- (4)" selection of >1 bispecific Ab I/O candidate by YE16"; and
- (5) "NDA/MAA filings for niraparib in >2L ovarian cancer maintenance in 4Q16."
Yang also raised price target to $75 from $53, driven by increased probability of niraparib success in ovarian cancer.
At time of writing, shares of Tesaro rose 5.50 percent to $81.66.
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