Tuesday, December 18, 2018

Tesaro Antitrust Filings

It looks like all of the required antitrust filings for GlaxoSmithKline’s acquisition of Tesaro has been completed:

1. US Antitrust (HSR) filed on 12/14/18 with an expiration of 12/31/18
2. German Antitrust (FCO) filed on 12/18/18 with an expiration of 1/18/19
3. Austrian Antitrust (FCA) filed on 12/18/18 with an expiration of 1/15/19

The tender offer expires on 1/14/19, which I see as a high likelihood of occurring. Could possibly see a tender extension based on the time frame in the completion of the FCO and FCA antitrust reviews. The spread has widened a bit, which is likely attributed to the overall market. Lots of other arb spreads have started widening a bit as players are in a risk off mentality.

Friday, December 14, 2018

Tesaro Arb Play

I really like the Tesaro arb play at this current price (~$73 and change). GlaxoSmithKline (Ticker: GSK) announced a definitive agreement to acquire Tesaro (Ticker: TSRO) for $75.00 in cash on December 3rd. The company initiated the tender offer today with the tender expiring on January 14th. The company has stated that it plans to file for antitrust clearance on December 17th, which would equate to a HSR decision by January 4th. I don’t see any antitrust issues. The company does not have any scheduled clinical read outs prior to the closing of the tender offer. Of course there can be a curve ball such as adverse clinical events resulting in a clinical hold or Zejula (PARP inhibitor for ovarian cancer) being pulled from the market, which will result in a material adverse event. These are risks you face with any pharma / biotech buyouts. At the current price, you are looking at a mid-teens annualized return, which I find attractive. I am playing this deal via short puts and long common.

Edit: Company filed for antitrust clearance on December 14th with the HSR 15 day waiting period expiring on December 31st.

Monday, December 03, 2018

November 2018 Performance

Well, I got walloped again in November as my portfolio was not able to escape the sell-off. I’m basically in hibernation mode with a ~ 13% cash position. I did come out of the cave today by initiating a position in Tesaro (Ticker: TSRO) via short puts, which is being acquired by GlaxoSmithKline (Ticker: GSK) for $75.00 in cash. This is the type of deal I like, a tender offer situation with low antitrust risk. I’m going to keep this post short as there really is nothing else new to report…

2018 Performance = +5.96% with the running monthly returns as follows:

January +2.80%
February +2.82%
March -0.03%
April +2.10%
May +6.25%
June -1.51%
July +1.53%
August +5.1%
September -0.60%
October -8.78%
November -3.00%