Who owns Dostarlimab? The small company behind a miracle drug

By Chege Karomo — ON Jun 10, 2022
Dostarlimab
GlaxoSmithKline

Rarely has the world been so invested in and excited about the results of a drug trial: Dostarlimab, a cancer drug, cured 100% of rectal patients in its drug trial. Such perfect results seldom appear in clinical trials – experts have referred to it as a first in the history of cancer. 

The cherry on top is that the patients experienced no significant side effects during the treatment. Dostarlimab doesn’t attack cancer cells – it makes them visible to the body’s immune system, which then destroys them. 

Experts expected trial patients to undergo chemotherapy and surgery following the trial. However, six months after the twelve patients stopped taking the drug, their cancer had disappeared. 

Key Takeaways

  • GlaxoSmithKline, a British pharmaceutical giant, manufactured Dostarlimab with the help of its American subsidiary Tesaro.
  • Tesaro accepted GSK’s buyout offer after failing to find a company to acquire or collaborate with the Massachusetts-based company. 
  • Analysts opined that GSK overpaid for Tesaro, but several years later, GSK’s expensive gamble on Tesaro looks like it’ll pay off. 

Tesaro, a subsidiary of GlaxoSmithKline, developed Dostarlimab

Tesaro, a subsidiary of GlaxoSmithKline, is based in Waltham, Massachusetts, and focuses on drug development for cancer. It was founded in 2010 and had its first commercial product, Varubi, approved by the FDA in October 2015. 

GlaxoSmithKline (GSK) acquired Tesaro to boost the parent company’s oncology department. GSK owns Dostarlimab via its subsidiary Tesaro. 

Tesaro’s work with Dostarlimab has excited experts, but they opine that the results must reoccur for them to label the drug a cancer cure. “I am incredibly optimistic,” Dr. Hanna Sanoff of the University of North Carolina’s Lineberger Comprehensive Cancer Center told NPR. “We have never seen anything work in 100% of people in cancer medicine.”

Dr. Sanoff said that the side effects experienced by the patients were ‘surprisingly few.’ “Most people had no severe adverse effects at all,” she said. She described the drug as a potentially major breakthrough for rectal cancer patients who require surgery. 

Dr. Sanoff said surgery often cures rectal cancer but leaves the patient with life-altering side effects. She explained:

“I have had patients who, after their rectal cancer, have barely left the house for years – and in a couple of cases, even decades – because of the consequences of incontinence and the shame that’s associated with this.”

She explained that the next step for Dostarlimab is a larger trial that she believes won’t yield similar results. Dr. Sanoff explained:

“It’s not going to end up being 100 percent. I hope I bite my tongue on that in the future, but I can’t imagine it will be 100 percent. And so when we see what the true response rate is, that’s when I think we can really do this all the time.”

Tesaro had a difficult time finding suitors before GSK stepped in 

In early 2017, a large pharma company teased Tesaro with the prospect of acquisition. Tesaro’s stock soared to nearly $190 per share as it awaited FDA clearance for the ovarian cancer drug Zejula. 

Later that year, Tesaro hired Citi to find companies willing to acquire the relative newcomer in the drug development industry. However, negotiations with Tesaro proved difficult: by June 2017, talks with four companies had yielded no results. 

A year later, with no potential bids on the horizon, Tesaro executives started planning for the company’s future. By then, the stock price had dropped to about $60 per share. 

Tesaro could partner with a bigger company, do a royalties deal to raise capital, or explore opportunities outside the United States or Europe. It saw China as an ideal location to set up a new company. 

Dr. Mary Lynne Hedley the co-founder of Tesaro | Joe Tabacca/The Boston Globe

Mary Lynne Hedley, the president and co-founder of Tesaro, started talks with a company only referred to as Party A about a proposed marketing deal for Zejula. By mid-April 2018, however, Tesaro and Party A were miles away from a deal – the company wasn’t willing to match Tesaro’s asking price. 

Zejula’s poor sales weakened Tesaro’s position in the negotiation. In late May 2018, reports claimed that Tesaro had started talks with two large pharma companies. 

Tesaro and GSK got in touch in June 2018, prompting Party A to float a potential buyout before reverting to its initial copromotion offer. In October 2018, Party A sent two proposals – $1.79 billion and $2.34 billion – to Tesaro to facilitate a global collaboration project. 

Tesaro rejected the offers and continued talks with GSK. In late October, GSK offered to buy the company for $66 per share. Bloomberg’s report on the potential sale forced GSK to increase its offer to $69 per share. 

Still, Tesaro declined to commit to GSK – it marketed itself to other pharma companies, but only one expressed interest in a purchase. In November, GSK presented a final offer of $75 per share, and Tesaro accepted. 

GSK’s gamble on Tesaro increasingly looks likely to pay off

Acquiring Tesaro cost GSK a mammoth $5.1 billion. Per Forbes, an analyst at the investment bank Leerink estimated Tesaro’s value at $3.3 billion. 

However, GSK saw promise in the cancer drugs sector and decided to gamble on Tesaro. Emma Walmsley, GSK’s CEO, said: 

“The acquisition of Tesaro will strengthen our pharmaceuticals business by accelerating the build of our oncology pipeline and commercial footprint, along with providing access to new scientific capabilities.”

Despite Zejula’s poor sales and predictions, Hal Barron, GSK’s Chief Scientific Officer, believed that Zejula would prove more effective than observers expected. The acquisition would also give GSK a presence in Boston, a city Forbes dubbed a biotech hothouse. 

Nevertheless, some executives from both companies considered $5.1 billion too high a price for Tesaro. Via a press call, Emma predicted that it would take up to 2022 for the deal to show its true value. 

However, Tesaro’s executives and investors wouldn’t have to wait until 2022 to reap big from the acquisition: Tesaro’s CEO, Lonnie Moulder, earned $155.8 million, and President Mary Lynne Hedley earned $112.5 million. NEA, Tesaro’s top investor, walked away with $783 million. 

Tesaro’s CEO, Lonnie Moulder and President Mary Lynne Hedley

2022 has arrived, and Zejula’s sales have picked up. It still lags behind competitors like Lynparza but recorded an increase in sales from $339 million in 2020 to $395 in 2021. 

Perhaps the biggest vindication of GSK’s gamble on Tesaro is the results of Dostarlimab’s drug trial. If Dostarlimab proves to be a cancer-curing drug, it will net GSK astronomical profits. 

Hal Barron, GKS’s head of Research and Development and a respected veteran in the Pharma industry, said in 2018 that he saw promise in two experimental drugs in Tesaro’s pipeline that improved the immune system’s ability to attack cancer. Dostarlimab was likely one of the two drugs Barron mentioned.