IPO year: 2012
Raised: $81 million
Share price: $13.50
Valuation: $360 million
Close Jan. 18, 2019: $74.96
Change: Up 455%
If Axovant was a textbook example of how not to create a company around somebody else’s castoffs, Tesaro was a model of how to do it right.
The oncology startup was founded in 2010 by a trio of veterans who had worked together at MGI Pharma and then Abraxis: CEO Lonnie Moulder, who helmed MGI through its $3.9 billion sale to Eisai, Chief Scientific Officer Mary Lynne Hedley, Ph.D., and financial chief Rick Rodgers.
“We were at Abraxis, and it was obvious that the strategy was changing from what we set out to do," Moulder told FierceBiotech in 2011. "So, we decided, 'Why not start a biotech company from scratch with people that are like-minded with regard to vision, strategy and culture-building, and leverage our experience base and network in oncology.”
Named for “tesouro,” the Galician word for treasure, Tesaro set out to unearth buried treasures and pursue “things that other companies wouldn’t do or couldn’t do,” Hedley said. Unlike the usual model that sees biotech sprout from lab discoveries, Tesaro’s strength lay in its ability to sift through the proliferation of cancer drug prospects and choose a winner. And investors believed in this promise, if Tesaro’s $101 million series B raise was any indication.
The company licensed rolapitant, a neurokinin-1 receptor antagonist to treat nausea in cancer patients, from OPKO Health in 2011. It had been offloaded by Schering-Plough two years before, when it merged with Merck. After facing a phase 3 setback in 2013, it would become Varubi, Tesaro’s first approved drug, in 2015, facing off against Merck’s Emend, the only other NK1 blocker on the market for chemo-induced vomiting.
Though the company would eventually sell off Varubi, it was a steppingstone to the jewel in Tesaro’s crown: niraparib, a PARP inhibitor licensed from Merck in 2012.
Tesaro planned to go public in the second half of 2013, Moulder told FierceBiotech in 2011, but the company ended up doing so a year early. Just three weeks after snagging niraparib, the company raised $81 million in its IPO, pricing 6 million shares in the middle of its $12 to $15 range.
Niraparib sped through FDA review and was approved in March 2017, months ahead of schedule. It was the third PARP inhibitor to hit the market. Now known as Zejula, the drug scored a broader approval than AstraZeneca’s Lynparza—it was OK’d as a second-line treatment for all women with recurrent ovarian, fallopian tube or peritoneal cancer who have previously undergone platinum chemotherapy, not just those who test positive for the BRCA mutation.
With its broad label, Zejula stood to shake up the PARP inhibitor landscape that had been dominated by Lynparza and Clovis Oncology’s Rubraca. And it did—a few months after launch, the drug jumped to the top of the field, holding 60% of market share.
It hasn’t all been smooth sailing for Tesaro, however. Manufacturing issues held up the intravenous version of Varubi in early 2017. And even though it eventually got past the FDA, Tesaro had to update the safety warning for Varubi the next year after some patients experienced anaphylaxis and anaphylactic shock soon after receiving the injected version of the drug.
Halfway through 2017, Tesaro put itself up for sale, according to sources quoted by The Wall Street Journal. Though it requested offers from a number of potential bidders, those would-be acquirers weren’t exactly falling over themselves to secure a deal.
As Zejula neared approval in 2017, Tesaro’s stock peaked at $190, making it a very expensive prospect. A year after its initial meetings, Tesaro’s stock had nosedived to around $60 a share, and the company expected to take a sales hit after selling Varubi to TerSera Therapeutics for $40 million upfront.
The company continued to entertain suitors, eventually tying the knot with GlaxoSmithKline, which agreed to buy Tesaro for $5.1 billion, or $75 a share—a 62% premium on Tesaro’s $46 closing price the previous day. In the deal, Glaxo picked up three clinical-stage cancer drugs, as well as Zejula and an oncology sales force.
GSK recently scored an FDA priority review for the drug in late-stage ovarian cancer, a niche where its rivals don’t have approvals. And in July, the drug turned up positive data in the first-line maintenance setting for ovarian cancer, beating placebo at keeping cancer at bay in patients who responded to one round of platinum-based chemo, regardless of their BRCA status.
Tesaro weathered its share of ups and downs, but given the promise of Zejula and its successful folding into GSK, we are chalking its IPO story up as a winner.