When a group of MGI Pharma veterans set up Tesaro only two years ago, they quickly made their mark in the cancer drug field. Backed with some serious venture cash--$101 million in its second round--they set out to in-license and develop a pipeline of oncology programs as Big Pharma companies were reevaluating their portfolios and changing strategies. And now they've outlined the terms for what they hope will be a rare IPO success in the biotech field.
Tesaro is betting that its management's rep and a late-stage program will help entice investors to snap up 6 million shares at $12 to $15 a share, worth an estimated $86.3 million. The biotech is betting that investors will overcome their distaste for risk in favor of a willingness to gamble on three oncology programs: rolapitant, now in Phase III, TSR-011 and the newly acquired niraparib, which was reeled in from Merck recently.
On the one hand investors can consider the track record of CEO Lonnie Moulder and his crew, which engineered the $3.1 billion sale of MGI. And on the other hand there's Tesaro's brief two-year track record, which like all such biotechs is a short history of expenses and risk. Since the 2008 financial crisis, fear of risk has put a big crimp on biotech IPOs, often forcing companies to take far less than they angled for in their initial terms. But Tesaro's betting that it can steer clear of much of the wreckage.
One point in its favor: Company insiders have given the nod to buying as much as $25 million worth of those shares, which has become a standard operating procedure for drug developers looking to go public.