TESARO, Inc.
2/28/2017

TESARO Announces Fourth-Quarter 2016 Operating Results

WALTHAM, Mass., Feb. 28, 2017 (GLOBE NEWSWIRE) -- TESARO, Inc. (NASDAQ:TSRO), an oncology-focused biopharmaceutical company, today reported operating results for fourth-quarter 2016 and provided an update on the Company's development programs.

"2017 is poised to be an eventful year for TESARO as we prepare for four product launches across the United States and Europe," said Lonnie Moulder, CEO of TESARO. "2016 was an important year for the Company, highlighted by the landmark NOVA trial results for niraparib, which were published in the New England Journal of Medicine and presented in a presidential session at the European Society of Medical Oncology annual meeting. We intend to build upon these successes in 2017 with the planned launch of niraparib in the U.S. during the first half of this year and in Europe by year end. Looking beyond ovarian and breast cancer, we aim to finalize our registration program for niraparib in lung cancer in the first half of this year. Lastly, we are excited about the progress in our immuno-oncology pipeline, and expect to initiate a registrational program for TSR-042 in the coming months."

Recent Business Highlights

Fourth Quarter 2016 Financial Results

TESARO reported revenue of $4.2 million for the fourth quarter of 2016, compared to revenue of $0.2 million for the fourth quarter of 2015. Net product revenue for the fourth quarter of 2016 totaled $2.5 million and included sales of VARUBI from specialty pharmacy customers to patients and from specialty distributors to providers that were made during the fourth quarter. License, collaboration and other revenue for the fourth quarter of 2016 totaled $1.8 million and included amortization of up-front payments and shipments of clinical materials under our license agreements with Hengrui and Janssen.

Research and development expenses increased to $71.5 million for the fourth quarter of 2016, compared to $42.9 million for the fourth quarter of 2015, driven primarily by higher costs related to the ongoing registration trials of niraparib, manufacturing and other research and development costs related to niraparib, advancement of our immuno-oncology portfolio, and increased headcount.

Selling, general and administrative expenses increased to $54.5 million for the fourth quarter of 2016, compared to $27.9 million for the fourth quarter of 2015, primarily due to commercial activities in support of the launch of VARUBI, pre-launch activities related to niraparib, expansion of the European commercial organization, increased headcount and higher professional service fees.

Acquired in-process research and development expenses totaled $9.0 million for the fourth quarter of 2016 and included milestone payments related to niraparib, compared to $1.0 million for the fourth quarter of 2015, which included a milestone payment related to our immuno-oncology portfolio.

Operating expenses, as described above, include total non-cash, stock-based compensation expense of $14.4 million for the fourth quarter of 2016, compared to $8.4 million for the fourth quarter of 2015.

Net loss totaled $136.9 million, or ($2.60) per share, for the fourth quarter of 2016, compared to a net loss of $75.8 million, or ($1.89) per share, for the fourth quarter of 2015.

As of December 31, 2016, TESARO had approximately $785.9 million in cash and cash equivalents and approximately 53.6 million outstanding shares of common stock. Excluding the proceeds from the November 2016 financing, our cash and cash equivalents balance declined $95.7 million in the fourth quarter.

Full-Year 2016 Financial Results

TESARO reported revenue of $44.8 million for 2016, compared to revenue of $0.3 million for 2015. Net product revenue for 2016 totaled $6.9 million and included sales of VARUBI from specialty pharmacy customers to patients and from specialty distributors to providers through December 31, 2016. License, collaboration and other revenue for 2016 totaled $37.9 million and included amortization of up-front payments and shipments of clinical materials under our license agreements with Hengrui and Janssen.

Research and development expenses increased to $235.1 million for 2016, compared to $155.4 million for 2015, driven primarily by three ongoing registration trials of niraparib, increased headcount, and advancement of our immuno-oncology portfolio.

Selling, general and administrative expenses increased to $158.6 million for 2016, compared to $78.7 million for 2015, primarily due to increased headcount, commercial and pre-launch activities in support of VARUBI and niraparib, expansion of the European commercial organization, and higher professional service fees.

Acquired in-process research and development expenses totaled $18.9 million for 2016 and included milestone payments related to niraparib and our immuno-oncology portfolio, compared to $2.0 million for 2015, which included milestone payments related to our immuno-oncology portfolio.

Operating expenses, as described above, include total non-cash, stock-based compensation expense of $48.5 million for 2016, compared to $25.9 million for 2015.

Net loss totaled $387.5 million, or ($8.13) per share, for 2016, compared to a net loss of $251.4 million, or ($6.38) per share, for 2015.

In anticipation of four product launches in 2017, TESARO will continue to invest in pre-launch inventory manufacturing and development of supply chain capabilities and capacity, in addition to making milestone payments for regulatory submissions. TESARO expects its cash and cash equivalents balance to decline by approximately $110 to $120 million on average, per quarter, during the first half of 2017, excluding one-time regulatory milestones of $35 million expected to be paid at the time of the first commercial sale of VARUBY oral in Europe and approval of niraparib in the U.S.

2017 Corporate Objectives

TESARO anticipates achieving the following key objectives:

VARUBI (rolapitant):

      Niraparib:

      Immuno-Oncology Portfolio:

Today's Conference Call and Webcast

TESARO will host a conference call to discuss the Company's fourth quarter operating results and provide an update on the Company's development programs and the VARUBI® launch 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 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.

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 the expected timing of the launches of niraparib and VARUBI IV in the U.S., the expected timing of our planned commercial launches of niraparib and oral rolapitant in Europe, the expected launch of our EAP in Europe, the expected timing of finalizing our registration program for niraparib in lung cancer, the expected timing of initiation of our TSR-042 registration program, the expected approval of the rolapitant IV NDA, the expected timing of data from our TOPACIO, AVANOVA and other ongoing clinical trials, our expected cash utilization during the first half of 2017, and our expectation to achieve our various key 2017 corporate objectives. Forward-looking statements in this release involve substantial risks and uncertainties that could cause our research and pre-clinical development programs, clinical development programs, future results, performance, or achievements to differ significantly from those expressed or implied by the forward-looking statements. Such risks and uncertainties include, among others, the uncertainties inherent in the execution and completion of clinical trials,  uncertainties surrounding our ongoing discussions with and potential actions by regulatory authorities, uncertainties regarding regulatory approvals, including with respect to the ultimate approval and indication for niraparib, uncertainties regarding certain expenditures, risks related to manufacturing and supply, and other matters that could affect the availability or commercial potential of our 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, 2015, and Quarterly Report on Form 10-Q for the quarter ended September 30, 2016.

TESARO, Inc.
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
          
   Three Months Ended
December 31,
 Twelve Months Ended
December 31,
   2015
 2016
 2015
 2016
          
Revenues:        
 Product revenue, net $-  $2,469  $-  $6,877 
 License, collaboration and other revenues  230   1,756   317   37,946 
Total revenues  230   4,225   317   44,823 
          
Expenses:        
 Cost of sales - product  -   518   -   1,256 
 Cost of sales - intangible asset amortization  268   464   268   1,855 
 Research and development (1)  42,852   71,514   155,390   235,144 
 Selling, general and administrative (1)  27,910   54,526   78,701   158,578 
 Acquired in-process research and development  1,000   9,000   2,000   18,940 
Total expenses  72,030   136,022   236,359   415,773 
Loss from operations  (71,800)  (131,797)  (236,042)  (370,950)
Interest income (expense), net  (3,959)  (3,670)  (15,366)  (15,047)
Loss before income taxes  (75,759)  (135,467)  (251,408)  (385,997)
Provision for income taxes  -   1,475   -   1,475 
Net loss $(75,759) $(136,942) $(251,408) $(387,472)
          
Net loss per share applicable to        
 common stockholders - basic and diluted $(1.89) $(2.60) $(6.38) $(8.13)
          
Weighted-average number of common        
 shares used in net loss per share applicable
to common stockholders - basic and diluted
  40,151   52,589   39,387   47,652 
          
          
(1) Expenses include the following amounts of non-cash stock-based compensation expense:  
          
 Research and development $3,274  $5,957  $11,082  $19,783 
 Selling, general and administrative  5,130   8,434   14,832   28,672 
                  


TESARO, Inc.
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
      
   December 31,
2015
 December 31,
2016
      
Assets    
Current assets:    
 Cash and cash equivalents $230,146 $785,877
 Accounts receivable  679  5,343
 Inventories  1,106  14,700
 Other current assets  4,560  8,919
Total current assets  236,491  814,839
      
Intangible assets, net  14,732  12,877
Property and equipment, net  2,779  6,640
Restricted cash  500  1,694
Other assets  779  3,795
 Total assets $255,281 $839,845
      
Liabilities and stockholders' equity    
Current liabilities:    
 Accounts payable $8,019 $5,236
 Accrued expenses  36,628  68,271
 Deferred revenue, current  500  288
 Other current liabilities  1,534  2,978
Total current liabilities  46,681  76,773
      
Convertible notes, net  121,325  131,775
Deferred revenue and customer deposit, non-current  288  15,000
Other non-current liabilities  113  5,086
 Total liabilities  168,407  228,634
      
Total stockholders' equity  86,874  611,211
 Total liabilities and stockholders' equity $255,281 $839,845
        
Investor/Media Contact:

Jennifer Davis
+1.781.325.1116 or jdavis@tesarobio.com

Kate Rausch
+1.781.257.2505 or krausch@tesarobio.com