Tesaro Scores $101M In A Second Round Of Funding

The Boston biotech has plans to use its Series B financing to fund its current research, as well as invest in other assets to flesh out its pipeline.

Tesaro Inc. announced June 21 that it has raised $101 million in Series B funding to advance and expand its oncology pipeline. The financing came from previous investors New Enterprise Associates (NEA), as well as new investors: Kleiner Perkins Caufield & Byers (KPCB), InterWest Partners, T. Rowe Price, Pappas Ventures, Oracle Partners, Deerfield Management and Leerink Swann. NEA contributed $40 million of the total amount.

According to Elsevier's Strategic Transactions Database, Tesaro's recent financing is the largest Series B round any biotech has conducted in the last two years. Data show 125 biotechs have conducted a second round of financing since the beginning of 2009, securing an average $19.68 million.

"This capital will help us get through 2013 and allow us, along with positive Phase III data for rolapitant, to file an NDA with the FDA," said Tesaro CEO Lonnie Moulder in an interview.

Moulder is the former CEO of MGI Pharma, a cancer and acute care company that was acquired by Eisai Inc. in 2008 (Also see "Eisai Surprise Winner in MGI Auction" - In Vivo, 1 Jan, 2008.). Moulder, along with Mary Lynn Hedley and Rick Rodgers, took a position at Abraxis BioScience following the MGI sale, and then decided with the other former MGI executives to form Tesaro.

NEA general partner David Mott said investing in Tesaro was "a no-brainer."

"When they came to us and said that they wanted to create a new MGI we told them to stop looking for other investors and that we would take care of it," he added. Mott said it was really about the executive team behind the company.

Mott, a former CEO himself (he ran MedImmune prior to its acquisition by AstraZeneca PLC) said he has "great respect" for Lonnie Moulder and "we knew he had the commercialization experience to make this work."

The Boston-based biotech debuted to some fanfare in May 2010 when it secured $20 million in Series A funding, beginning with a $10 million investment from NEA and the company's management team. Another $10 million was pledged to the company within the year ([See Deal]). The original investment was used to acquire the company's first two assets - a preclinical Anaplastic Lymphoma Kinase (ALK) inhibitor from Amgen Inc. and a Phase-III ready treatment for chemotherapy induced nausea and vomiting.

Putting Its Funds to Good Use

The Series B financing will be used to push rolapitant, the company's lead asset, into Phase III testing for chemotherapy induced nausea and vomiting. In December 2010, the company in-licensed the product, a selective neurokinin-1 receptor antagonist, from drug, diagnostic and device company Opko Health Inc. for $6 million upfront, as well as potential regulatory and sales milestones of up to $115 million, plus double-digit royalties. Opko also took a 10% equity stake in the privately held Boston biotech.

Moulder said the chemotherapy-induced nausea and vomiting market is currently worth about $1 billion. If approved, rolapitant will be added to the current standard-of-care - a 5HT3 receptor antagonist and dexamethasone. Rolapitant plus the standard-of-care has shown a 20% improvement in patients over the standard-of-care alone ([See Deal]).

Beyond Phase III testing of rolapitant, funding from the Series B will enable Tesaro to move its ALK inhibitor into the clinic. Moulder expects that to happen in mid-2012.

In March 2011, Tesaro announced that it had acquired its second pipeline asset - rights to small-molecule inhibitors of ALK - from Amgen for an undisclosed upfront payment, as well as development and commercial milestones, and royalties on resulting products. Tesaro intends to develop at least one of the compounds for non-small cell lung cancer (NSCLC) patients who have ALK-positive tumors. Abnormal ALK fusion proteins are being studied as the cause of the certain types of cancers, like NSCLC, lymphoma and neuroblastoma ([See Deal]).

In addition to development of its current pipeline candidates, Tesaro plans to use some of the funding to acquire "one to two more oncology assets." Moulder said that conversations about possible alliances are ongoing, but would not disclose the details or timing of those discussions. Moulder added that Tesaro is looking for a mid-stage asset to fit in between the two other products in its pipeline.

In connection with the financing, Beth Seidenberg, M.D., Partner, KPCB, and Arnold Oronsky, Ph.D., General Partner, InterWest Partners, have joined the Tesaro Board of Directors.

-Lisa LaMotta ([email protected])