UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 8-K

 


 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): November 1, 2018

 


 

TESARO, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware
(state or other jurisdiction of incorporation)

 

001-35587
(Commission
File Number)

 

27-2249687
(I.R.S. Employer
Identification No.)

 

1000 Winter Street
Waltham, Massachusetts

 

02451

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code:  (339) 970-0900

 

 

(Former name or former address, if changed since last report)

 


 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

o                          Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o                          Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o                          Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o                          Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging Growth Company o

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

 

 

 


 

Section 2 — Financial Information

 

Item 2.02                                           Results of Operations and Financial Condition.

 

On November 1, 2018, TESARO, Inc. (the “Company”) issued a press release announcing its operating results for the quarter ended September 30, 2018 and providing updated revenue, expense, cash balance, and other financial guidance for the year ending December 31, 2018.  A copy of the press release is attached to this current report as Exhibit 99.1 and is incorporated herein by reference.  TESARO, Inc. has scheduled a conference call and webcast for 4:15 p.m. Eastern time on November 1, 2018 to discuss its operating results for the quarter ended September 30, 2018 and provide an update on the Company’s commercial products and development programs.

 

The information contained in this report, including Exhibit 99.1, is being furnished to the Securities and Exchange Commission and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liabilities under that section.  Furthermore, such information shall not be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

 

Section 9 — Financial Statements and Exhibits

 

Item 9.01                                           Financial Statements and Exhibits.

 

(d)                                 Exhibits.

 

Exhibit No.

 

Description

 

 

 

99.1

 

TESARO, Inc. press release dated November 1, 2018 announcing operating results for the quarter ended September 30, 2018.

 

2


 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

TESARO, Inc.

 

 

 

 

By:

/s/ Joseph L. Farmer

 

 

Joseph L. Farmer

 

 

Senior Vice President, General Counsel and Secretary

 

Dated:  November 1, 2018

 

3


Exhibit 99.1

 

 

TESARO ANNOUNCES THIRD-QUARTER 2018 OPERATING RESULTS

 

·                  ZEJULA® Q3 net sales totaled $63 million compared to $39 million for Q3 2017

·                  Top-line results for PRIMA trial of ZEJULA monotherapy for first-line ovarian cancer patients regardless of BRCA mutation status anticipated in late 2019

·                  Data presented at ESMO for TSR-042 indicate robust activity in patients with MSI-high endometrial cancer; TSR-042 BLA submission planned for 2H 2019

 

WALTHAM, Mass., November 1, 2018 — TESARO, Inc. (NASDAQ:TSRO), an oncology-focused biopharmaceutical company, today reported operating results for third-quarter 2018 and provided an update on the Company’s commercial products and development programs.

 

“In the third quarter, we launched several initiatives to grow the use of ZEJULA for recurrent ovarian cancer and we continued to execute on our development strategies focused on gynecologic and lung cancers as we approach a period of significant data readouts,” said Lonnie Moulder, CEO of TESARO. “Following results of the Phase 3 PRIMA trial next year, we intend for ZEJULA to benefit patients throughout all stages of their ovarian cancer journey, including first-line, recurrent, and late-line treatment settings. Our immuno-oncology pipeline continues to advance, led by our anti-PD-1 antibody, TSR-042, for which we are on track to submit a BLA next year. We look forward to initial data from the Phase 1 AMBER trial of our anti-TIM-3 antibody, TSR-022, in combination with TSR-042, which will be presented at the Society for Immunotherapy of Cancer (SITC) Annual Meeting next week.”

 

Recent Business Highlights

 

·                  ZEJULA net revenue increased 61% year-over-year to $63.2 million for the third quarter of 2018. In the U.S. and Europe, approximately 10,000 patients have been treated with ZEJULA since its launch in April 2017.  ZEJULA is now approved in 33 countries and is reimbursed and launched in Germany, the U.K., Italy and several other European countries.

·                  Safety data were presented from the Phase 3 PRIMA trial of ZEJULA monotherapy in first-line ovarian cancer during the European Society for Medical Oncology (ESMO) Annual Congress in October.  Data demonstrated a favorable tolerability profile for niraparib when dosed according to a patient’s weight and platelet count compared to a fixed starting dose.  The PRIMA Phase 3 trial is fully enrolled and top-line results are expected in late 2019.

·                  Based upon the responses observed in the first stage of the study, the second stage of the Phase 2 JASPER study was initiated, which evaluates ZEJULA in combination with TSR-042 as a first-line treatment for patients with non-small cell lung cancer and high levels of PD-L1 expression.

·                  Data were presented from the GARNET trial of TSR-042 monotherapy at ESMO and demonstrated TSR-042 is well tolerated and has robust clinical activity in patients with MSI-H endometrial cancer.

·                  Zai Lab Limited announced ZEJULA approval in Hong Kong on October 22, 2018. ZEJULA is the first and only PARP inhibitor approved in Hong Kong for the maintenance treatment of platinum-sensitive relapsed ovarian cancer regardless of BRCA mutation status.

 

1


 

·                  In October, TESARO and actress Cobie Smulders launched Not on My Watch, a national movement to empower the ovarian cancer community, especially women with recurrent ovarian cancer, to take informed and proactive steps against the threat of disease recurrence.

·                  Development milestones were achieved in October related to Janssen’s ongoing GALAHAD trial of niraparib monotherapy for the treatment of men with metastatic castration-resistant prostate cancer (mCRPC) and DNA-repair anomalies.  The achievement of these milestones triggered an $18 million payment from Janssen to TESARO.

 

Third Quarter 2018 Financial Results

 

TESARO reported net product revenue of $63.6 million for the third quarter of 2018, compared to a total of $41.8 million for the third quarter of 2017.  ZEJULA net revenue increased 61% to $63.2 million for the third quarter of 2018, compared to $39.4 million for the third quarter of 2017.  Cost of goods sold increased to $14.2 million for the third quarter of 2018, compared to $6.2 million for the same period in 2017, primarily related to increased volume and new supplier set-up expenses.

 

Research and development expenses increased to $94.2 million for the third quarter of 2018, compared to $73.4 million for the third quarter of 2017, driven primarily by higher manufacturing and clinical development costs associated with TSR-042, TSR-022, and ZEJULA, and research collaborations.

 

Selling, general and administrative expenses increased to $93.5 million for the third quarter of 2018, compared to $84.0 million for the third quarter of 2017, primarily due to increased headcount and activities in support of the launches of ZEJULA in the U.S. and Europe.

 

Operating expenses as described above include total non-cash, stock-based compensation expense of $24.8 million for the third quarter of 2018, compared to $25.0 million for the third quarter of 2017.

 

Net loss totaled $137.1 million, or ($2.49) per share, for the third quarter of 2018, compared to a net loss of $25.3 million, or ($0.47) per share, for the third quarter of 2017.  The increase in net loss was primarily due to the $100.0 million up-front payment received and recorded as revenue in the third quarter of 2017 as part of the license agreement with Takeda, partially offset by a $17.6 million gain in the third quarter of 2018 associated with the divestiture of VARUBI in the U.S., for which TESARO received an up-front payment of $35 million.

 

2


 

(in thousands, except per share

 

Three Months Ended
September 30,

 

amounts)

 

2018

 

2017

 

 

 

 

 

 

 

Product revenue, net

 

 

 

 

 

ZEJULA®

 

$

63,226

 

$

39,375

 

VARUBI®/VARUBY®

 

$

386

 

$

2,380

 

Total product revenue, net

 

$

63,612

 

$

41,755

 

License, collaboration, and other revenue

 

$

787

 

$

101,011

 

Total revenues

 

$

64,399

 

$

142,766

 

 

 

 

 

 

 

Net loss

 

$

(137,088

)

$

(25,277

)

 

 

 

 

 

 

Net loss per share, basic and diluted

 

$

(2.49

)

$

(0.47

)

 

 

 

Three Months Ended
September 30,

 

(in thousands)

 

2018

 

2017

 

Cost of sales - product

 

$

14,225

 

$

6,216

 

Cost of sales - intangible asset amortization

 

$

728

 

$

1,254

 

Research and development (R&D)

 

$

94,188

 

$

73,388

 

Selling, general and administrative (SG&A)

 

$

93,497

 

$

83,998

 

Acquired in-process R&D

 

$

 

$

 

 

Cash and Cash Equivalents

 

As of September 30, 2018, TESARO had approximately $476.8 million in cash and cash equivalents and approximately 55.0 million outstanding shares of common stock.

 

3


 

2018 Financial Guidance

 

TESARO is updating its 2018 financial guidance for ZEJULA:

 

Total Revenue, net, worldwide (FY)

 

$258 to $265 million
(previously $250 to $265 million)

 

 

 

ZEJULA (FY)

 

$233 to $238 million
(previously $225 to $235 million)

 

 

 

ZEJULA (Q4)

 

$67 to $72 million

 

 

 

Other revenue, including licensing and VARUBY oral (FY)

 

$25 to $27 million
(previously $25 to $30 million)

 

 

 

Interest expense (FY)

 

Approximately $60 million,
including non-cash interest expense of $14 million

 

In the third quarter, TESARO’s cash and cash equivalents balance declined by approximately $98 million.  TESARO anticipates year-end 2018 cash and cash equivalents to be approximately $400 million.

 

Key Development Milestones

 

Gynecologic Cancers:

·                  Submit QUADRA sNDA for treatment of late-line ovarian cancer beyond BRCAmut near year-end

·                  Results of the AVANOVA Phase 2 study of ZEJULA in combination with bevacizumab for treatment of recurrent ovarian cancer to be submitted for presentation at a medical meeting in 1H 2019

·                  Report Phase 2 OVARIO results of ZEJULA in combination with bevacizumab in first-line ovarian cancer maintenance in late 2019

·                  Report Phase 3 PRIMA results of ZEJULA in first-line ovarian cancer maintenance in late 2019

 

Lung Cancer:

·                  Report initial data for the AMBER trial of TSR-022 in combination with TSR-042 at the Society for Immunotherapy of Cancer’s (SITC) Annual Meeting on November 9

·                  Report additional data from the NSCLC cohort of the GARNET trial of TSR-042 at SITC

·                  Initiate Phase 2 registration enabling trial of TSR-042 versus standard of care in first-line NSCLC in early 2019

·                  Report additional data from the Phase 2 JASPER study of ZEJULA in combination with anti-PD-1 at a medical meeting in 1H 2019

 

Breast Cancer:

·                  Submit BRAVO data for ZEJULA in germline BRCAmut breast cancer patients for publication in Q4 2018

·                  Complete protocol development for registration study of ZEJULA in combination with TSR-042 and other agents in breast cancer

 

4


 

Prostate Cancer:

·                  Janssen to advance GALAHAD trial of ZEJULA in mCRPC and DNA-repair anomalies to support global regulatory filings in 2019

·                  Planning underway by Janssen for a future Phase 3 trial that will assess the clinical benefit of niraparib in combination with abiraterone acetate + prednisone in mCRPC patients

 

Immuno-oncology Pipeline:

·                  Continue dose-escalation in the CITRINO trial (combination of TSR-033 plus TSR-042) and report Phase 1 monotherapy dose-escalation data for TSR-033 at SITC

·                  Advance IND-enabling studies of PD-1/LAG-3 bi-specific antibody (TSR-075)

 

Today’s Conference Call and Webcast

 

TESARO will host a conference call to discuss the Company’s third quarter operating results and provide an update on the Company’s commercial products and development programs today at 4:15 P.M. Eastern time.  The accompanying slide presentation and live webcast of the conference call can be accessed by visiting the TESARO website at www.tesarobio.com.  The call can be accessed by dialing (877) 853-5334 (U.S. and Canada) or (970) 315-0307 (international).  A replay of the webcast will be archived on the Company’s website for 30 days following the call.

 

About ZEJULA (niraparib)

 

ZEJULA (niraparib) is a poly (ADP-ribose) polymerase (PARP) inhibitor indicated for the maintenance treatment of adult patients with recurrent epithelial ovarian, fallopian tube, or primary peritoneal cancer who are in a complete or partial response to platinum-based chemotherapy.  In preclinical studies, ZEJULA concentrates in the tumor relative to plasma, delivering greater than 90% durable inhibition of PARP 1/2 and a persistent antitumor effect.  Myelodysplastic Syndrome/Acute Myeloid Leukemia (MDS/AML), including some fatal cases, was reported in patients treated with ZEJULA. Discontinue ZEJULA if MDS/AML is confirmed.  Hematologic adverse reactions (thrombocytopenia, anemia and neutropenia), as well as cardiovascular effects (hypertension and hypertensive crisis) have been reported in patients treated with ZEJULA. Monitor complete blood counts to detect hematologic adverse reactions, as well as to detect cardiovascular disorders, during treatment.  ZEJULA can cause fetal harm and females of reproductive potential should use effective contraception.  Please see full prescribing information, including additional important safety information, available at www.zejula.com.

 

About TESARO

 

TESARO is an oncology-focused biopharmaceutical company devoted to providing transformative therapies to people bravely facing cancer.  For more information, visit www.tesarobio.com, and follow us on Twitter and LinkedIn.

 

Investor/Media Contact:

Kate Rausch

Director, Investor Relations

1.781.257.2505

krausch@tesarobio.com

 

5


 

Forward Looking Statements

 

To the extent that statements contained in this press release are not descriptions of historical facts regarding TESARO, they are forward-looking statements reflecting the current beliefs and expectations of management made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  Words such as “may,” “will,” “expect,” “anticipate,” “estimate,” “intend,” and similar expressions (as well as other words or expressions referencing future events, conditions, or circumstances) are intended to identify forward-looking statements.  Examples of forward-looking statements contained in this press release include, among others, statements regarding: our 2018 revenue, interest expense, and cash balance guidance; the design and expected timing of initiation, enrollment, and data readouts and publications from our various ongoing and planned ZEJULA, TSR-042, TSR-033, TSR-022, combination, and other clinical trials; the expected timing of our various BLA, sNDA and other regulatory filings; and our expectation to achieve our various development milestones.  Forward-looking statements in this release involve substantial risks and uncertainties that could cause our research and development programs, future financial and other results, performance, or achievements to differ significantly from those expressed or implied by the forward-looking statements.  Such risks and uncertainties include, among others, risks related to the acceptance of our products in the marketplace, competition, the uncertainties inherent in the execution and completion of clinical trials, uncertainties surrounding the timing of availability of data from clinical trials, uncertainties surrounding potential actions by regulatory authorities, uncertainties regarding the expected timing and magnitude of certain expenditures, risks related to manufacturing and supply, risks related to intellectual property, the terms of our term loan facility, other matters that could affect our financial results, the results of our ongoing and planned development programs, and/or the availability or commercial potential of our products and drug candidates.  TESARO undertakes no obligation to update or revise any forward-looking statements.  For a further description of the risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to the business of the Company in general, see TESARO’s Annual Report on Form 10-K for the year ended December 31, 2017 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2018.

 

6


 

TESARO, Inc.

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2018

 

2017

 

2018

 

2017

 

Revenues:

 

 

 

 

 

 

 

 

 

Product revenue, net:

 

 

 

 

 

 

 

 

 

ZEJULA®

 

$

63,226

 

$

39,375

 

$

165,989

 

$

65,321

 

VARUBI®/VARUBY®

 

386

 

2,380

 

4,323

 

7,402

 

Total product revenue, net

 

63,612

 

41,755

 

170,312

 

72,723

 

License, collaboration and other revenues

 

787

 

101,011

 

1,037

 

102,580

 

Total revenues

 

64,399

 

142,766

 

171,349

 

175,303

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

Cost of sales - product

 

14,225

 

6,216

 

37,735

 

10,280

 

Cost of sales - intangible asset amortization

 

728

 

1,254

 

3,663

 

4,723

 

Research and development (1)

 

94,188

 

73,388

 

288,551

 

210,910

 

Selling, general and administrative (1)

 

93,497

 

83,998

 

287,137

 

246,239

 

Acquired in-process research and development

 

 

 

 

7,000

 

Total expenses

 

202,638

 

164,856

 

617,086

 

479,152

 

Loss from operations

 

(138,239

)

(22,090

)

(445,737

)

(303,849

)

Gain on sale of business

 

17,627

 

 

17,627

 

 

Interest and other income (expense), net

 

(16,154

)

(3,048

)

(37,715

)

(9,941

)

Loss before income taxes

 

(136,766

)

(25,138

)

(465,825

)

(313,790

)

Provision for income taxes

 

322

 

139

 

730

 

271

 

Net loss

 

$

(137,088

)

$

(25,277

)

$

(466,555

)

$

(314,061

)

 

 

 

 

 

 

 

 

 

 

Net loss per share applicable to common stockholders - basic and diluted

 

$

(2.49

)

$

(0.47

)

$

(8.51

)

$

(5.82

)

 

 

 

 

 

 

 

 

 

 

Weighted-average number of common shares used in net loss per share applicable to common stockholders - basic and diluted

 

54,957

 

54,241

 

54,807

 

53,971

 

 


(1) Expenses include the following amounts of non-cash stock-based compensation expense:

 

Research and development

 

$

7,128

 

$

8,545

 

$

23,137

 

$

23,532

 

Selling, general and administrative

 

17,630

 

16,471

 

56,158

 

43,393

 

 

7


 

TESARO, Inc.

Unaudited Condensed Consolidated Balance Sheets

(in thousands)

 

 

 

September 30,

 

December 31,

 

 

 

2018

 

2017

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

476,812

 

$

643,095

 

Accounts receivable

 

31,362

 

53,416

 

Inventories

 

108,822

 

57,939

 

Other current assets

 

31,382

 

33,511

 

Total current assets

 

648,378

 

787,961

 

 

 

 

 

 

 

Intangible assets, net

 

35,897

 

56,384

 

Property and equipment, net

 

9,923

 

9,652

 

Restricted cash

 

8,610

 

2,552

 

Other assets

 

8,032

 

5,636

 

Total assets

 

$

710,840

 

$

862,185

 

 

 

 

 

 

 

Liabilities and stockholders’ equity (deficit)

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

28,160

 

$

4,172

 

Accrued expenses

 

150,933

 

154,808

 

Deferred revenue, current

 

530

 

324

 

Other current liabilities

 

10,819

 

6,902

 

Total current liabilities

 

190,442

 

166,206

 

 

 

 

 

 

 

Convertible notes, net

 

153,057

 

143,446

 

Long-term debt, net

 

490,525

 

293,659

 

Deferred revenue, non-current

 

141

 

211

 

Other non-current liabilities

 

7,467

 

9,577

 

Total liabilities

 

841,632

 

613,099

 

 

 

 

 

 

 

Total stockholders’ equity (deficit)

 

(130,792

)

249,086

 

Total liabilities and stockholders’ equity (deficit)

 

$

710,840

 

$

862,185

 

 

###

 

8