Lake Street Says Buy-Rated Tesaro Holds An Attractive Portfolio Of Cancer Therapies

Lake Street reaffirmed its Buy rating on TESARO Inc TSRO given its launch of VARUBI (rolapitant).

Varubi is an NK1 receptor antagonist for delayed Chemotherapy-Induced Nausea & Vomiting (CINV), with peak sales potential well in excess of $500 million, and total available market of more than $1 billion.

"With NK-1 RA usage well below guideline recommendations, it is our view that VARUBI could expand the TAM to $1B and capture 50%+ market share in the U.S. alone. Simply put, our current peak sales projection of $350MM could prove conservative," analyst Bruce Jackson wrote in a note.

The brokerage said TESARO's oncology development program includes a potentially best-in-class PARPi –niraparib, with peak sales potential in excess of $1.3 billion. The initial targets for niraparib are ovarian and breast cancer.

The company remains on track to submit the niraparib NDA (U.S.) and MAA (EU) in Q4 2016, followed by commercial launch in the United States (H1 2017) and the EU (H2 2017), respectively.

In addition, TESARO has a strong balance sheet with approximately $700 million in cash following an equity offering that raised net proceeds of $409 million in early July. The company anticipates $100 million cash burn per quarter in the second half of 2017.

At time of writing, shares of Tesaro rose 1.48 percent to $86.13. The analyst has a price target of $114.