TESARO, Inc.
8/08/2017

TESARO Announces Second-Quarter 2017 Operating Results

WALTHAM, Mass., Aug. 08, 2017 (GLOBE NEWSWIRE) -- TESARO, Inc. (NASDAQ:TSRO), an oncology-focused biopharmaceutical company, today reported operating results for second-quarter 2017 and provided an update on the Company's commercial products and development programs.

"The U.S. launch of ZEJULA, the first and only PARP inhibitor to be approved for the maintenance treatment of women with recurrent ovarian cancer, regardless of BRCA mutation or biomarker status, is off to an excellent start, and we are gratified by the positive feedback that we have received from patients and prescribers," said Lonnie Moulder, CEO of TESARO. "Following its introduction in late April, ZEJULA quickly became the most frequently prescribed PARP inhibitor in the U.S. The MAA for ZEJULA is under review in Europe, and we are pleased that interest in our expanded access program (EAP) has been high, as we anticipate the European launch of ZEJULA by year end. We continue to globalize our mission with the recently announced Takeda licensing agreement for ZEJULA in Japan, and the launches of VARUBY oral in several EU countries. We are advancing the registration program for TSR-042, our anti-PD-1 antibody, and have initiated a combination clinical study of our anti-TIM-3 antibody, TSR-022, plus TSR-042. We are also pleased with the progress of our earlier stage immuno-oncology antibody and small molecule programs and the potential for this pipeline to establish TESARO as a leading player in the field."

Recent Business Highlights

Second Quarter 2017 Financial Results

TESARO reported net product revenue of $28.8 million for the second quarter of 2017, which included ZEJULA sales of $25.9 million and VARUBI/VARUBY sales of $2.9 million. This compares to net product revenue of $1.2 million for the second quarter of 2016.

Cost of sales totaled $6.6 million for the second quarter of 2017 and included $3.6 million associated with product revenue for the second quarter of 2017 and $3.0 million related to amortization of milestones recorded upon FDA approval of niraparib and first commercial sales of VARUBI/VARUBY in the U.S. and Europe. Cost of sales totaled $0.7 million for the second quarter of 2016.

Research and development expenses increased to $71.4 million for the second quarter of 2017, compared to $50.1 million for the second quarter of 2016, driven primarily by increased headcount, expansion of the TSR-042 and TSR-022 programs, and advancement of our earlier-stage immuno-oncology portfolio.

Selling, general and administrative expenses increased to $93.0 million for the second quarter of 2017, compared to $36.2 million for the second quarter of 2016, primarily due to activities in support of the launches of ZEJULA and VARUBI/VARUBY in the U.S. and Europe, increased headcount, and higher professional service fees.

Acquired in-process research and development expenses totaled $7.0 million for the second quarter of 2017 and included milestone payments related to our immuno-oncology portfolio, compared to $4.0 million for the second quarter of 2016, which also related to a development milestone achieved within our immuno-oncology programs.

Operating expenses as described above include total non-cash, stock-based compensation expense of $23.5 million for the second quarter of 2017, compared to $11.7 million for the second quarter of 2016.

Net loss totaled $152.1 million, or ($2.82) per share, for the second quarter of 2017, compared to a net loss of $59.2 million, or ($1.29) per share, for the second quarter of 2016.

As of June 30, 2017, TESARO had approximately $508 million in cash and cash equivalents and approximately 54.2 million outstanding shares of common stock. This cash and cash equivalents balance does not include the $100 million up-front payment received during the third quarter as part of the Takeda license agreement.

Corporate Objectives

TESARO anticipates achieving the following key objectives:

VARUBI / VARUBY (rolapitant):

ZEJULA (niraparib):

Immuno-Oncology Portfolio:

Today's Conference Call and Webcast
TESARO will host a conference call to discuss the Company's second 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.

TESARO Contacts:
Jennifer Davis
Vice President, Corporate Communications & Investor Relations
+1.781.325.1116 or jdavis@tesarobio.com

Kate Rausch
Associate Director, Investor Relations
+1.781.257.2505 or krausch@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 launch of VARUBI IV in the U.S., the expected timing of our planned commercial launches of ZEJULA and VARUBY in Europe, the expected approval of the rolapitant IV NDA and the timing thereof, the design and expected timing of initiation and data from our various ongoing and planned niraparib, TSR-042, TSR-033, TSR-022, combination, and other clinical trials, and our expectation to achieve our various key 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 risks related to 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 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 in Europe, uncertainties regarding certain expenditures, risks related to manufacturing and supply, risks related to intellectual property, and other matters that could affect 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, 2016, and Quarterly Report on Form 10-Q for the quarter ended March 31, 2017.

TESARO, Inc.  
Unaudited Condensed Consolidated Statements of Operations  
(in thousands, except per share amounts)  
              
    Three Months Ended
June 30,
 Six Months Ended
June 30,
   
     2016   2017   2016   2017    
    (as revised)(1)   (as revised)(1)     
Revenues:           
 Product revenue, net:           
  ZEJULATM $-  $25,945  $-  $25,945    
  VARUBI®/VARUBY®  1,242   2,884   1,518   5,023    
 Total product revenue, net  1,242   28,829   1,518   30,968    
 License, collaboration and other revenues  34,568   635   34,592   1,569    
Total revenues  35,810   29,464   36,110   32,537    
              
Expenses:           
 Cost of sales - product  234   3,620   313   4,064    
 Cost of sales - intangible asset amortization  463   2,979   927   3,469    
 Research and development (2)  50,138   71,400   102,847   137,522    
 Selling, general and administrative (2)  36,218   92,979   66,367   162,241    
 Acquired in-process research and development  4,000   7,000   8,000   7,000    
Total expenses  91,053   177,978   178,454   314,296    
Loss from operations  (55,243)  (148,514)  (142,344)  (281,759)   
Interest income (expense), net  (3,911)  (3,467)  (7,790)  (6,893)   
Loss before income taxes  (59,154)  (151,981)  (150,134)  (288,652)   
Provision for income taxes  -   78   -   132    
Net loss $(59,154) $(152,059) $(150,134) $(288,784)   
              
Net loss per share applicable to           
 common stockholders - basic and diluted $(1.29) $(2.82) $(3.46) $(5.36)   
              
Weighted-average number of common           
 shares used in net loss per share applicable
to common stockholders - basic and diluted
  45,808   53,982   43,387   53,834    
              
              
(1) The Company adopted Financial Accounting Standards Board Accounting Standards Update No. 2014-09 effective January 1, 2017,
 with full retrospective application to January 1, 2015.  Results for periods prior to January 1, 2017 have been revised accordingly.      
                  
(2) Expenses include the following amounts of non-cash stock-based compensation expense:          
                  
 Research and development $4,479  $7,862  $8,222  $14,987        
 Selling, general and administrative  7,206   15,646   12,924   26,922        
                  


TESARO, Inc. 
Unaudited Condensed Consolidated Balance Sheets 
(in thousands) 
           
       December 31,
2016
 June 30,
2017
 
       (as revised)(1)   
Assets         
Current assets:        
 Cash and cash equivalents   $785,877 $507,941 
 Accounts receivable     6,195  23,149 
 Inventories      14,700  28,285 
 Other current assets     10,515  23,045 
Total current assets     817,287  582,420 
           
Intangible assets, net     12,877  44,408 
Property and equipment, net    6,640  9,958 
Restricted cash     1,694  2,522 
Other assets      3,795  6,087 
 Total assets    $842,293 $645,395 
           
Liabilities and stockholders' equity      
Current liabilities:        
 Accounts payable    $5,236 $45 
 Accrued expenses     68,700  99,589 
 Deferred revenue, current    95  95 
 Other current liabilities     2,978  2,701 
Total current liabilities     77,009  102,430 
           
Convertible notes, net     131,775  137,447 
Deferred revenue, non-current    305  258 
Other non-current liabilities    5,086  5,346 
 Total liabilities     214,175  245,481 
           
Total stockholders' equity     628,118  399,914 
 Total liabilities and stockholders' equity  $842,293 $645,395 
           
(1) The Company adopted Financial Accounting Standards Board Accounting Standards 
 Update No. 2014-09 effective January 1, 2017, with full retrospective application to January 1, 
 2015.  Results for periods prior to January 1, 2017 have been revised accordingly.