Pappas Capital Announces the Passing of…

Just two years after getting started, the experienced cancer pros at Tesaro ($TSRO) have pulled off a successful IPO--a rarity in an industry that has been starved of IPO cash since 2007. On Thursday Tesaro made the switch to a public company, started trading at the middle of its range and actually went up a bit by the end of the day.

Tesaro, though, is different from many of the biotechs making a risky leap into the public markets these days. Its executive team, led by Lonnie Moulder, orchestrated the $3.9 billion sale of MGI Pharma. At Tesaro, they quickly raised $101 million in their second round, executing on a series of in-licensing deals for experimental cancer drugs.

There was one strategy in its IPO game plan that Tesaro shares with other newly public biotechs. It gained commitments from its insiders to buy up to $25 million in shares, helping to give its stock a boost as it came out of the gate.

The biotech--a 2011 Fierce 15 company--ended up selling 6 million shares at $13.50 a share, within its $12 to $15 range, raking in $81 million. Then it bumped up 1.4% by the end of the day. VC backers include New Enterprise Associates, set to become the largest shareholder with 39% of the stock, as well as Kleiner Perkins, Caufield Byers and Venrock.

Tesaro nabbed niraparib, a cancer drug in Merck's ($MRK) pipeline, recently. It has also in-licensed rolapitant and pushed the cancer treatment into a Phase III study, with an eye to delivering top-line data in the second half of next year. An IND for TSR-011 as a new therapy for non-small cell lung cancer, in-licensed from Amgen ($AMGN) in the spring of last year, is being prepped for filing in the second half. 

 
June 6,2012

Tesaro of Waltham, Mass., a tiny biotech now preparing for its initial public offering, just licensed a promising anti-cancer drug from Merck. The startup is attempting to repeat the success its top executives had turning Big Pharma’s castoffs into hits at MGI Pharma, which was bought by Eisai for $3.9 billion in 2008.

The drug, known as niraparib or MK-4827, is a medicine that targets a mutation that can cause certain hard-to-treat breast and ovarian cancers. AstraZeneca, Abbott Laboratories and Pfizer are also developing similar medicines. The deal was disclosed in a filing with the Securities and Exchange Commission.

At the same time that big drug companies are increasingly buying new medicines developed outside their own walls, they are also selling more of the medicines that they invent but don’t plan on developing to smaller biotechs. This has always happened – Cubist Pharmaceuticals’ antibiotic Cubicin was licensed from Eli Lilly more than a decade ago. But now it is becoming more commonplace, with Pfizer, for instance, talking about the option of selling experimental drugs to outside companies as a central part of its strategy.

Tesaro of Waltham, Mass., a tiny biotech now preparing for its initial public offering, just licensed a promising anti-cancer drug from Merck. The startup is attempting to repeat the success its top executives had turning Big Pharma’s castoffs into hits at MGI Pharma, which was bought by Eisai for $3.9 billion in 2008.

The drug, known as niraparib or MK-4827, is a medicine that targets a mutation that can cause certain hard-to-treat breast and ovarian cancers. AstraZeneca, Abbott Laboratories and Pfizer are also developing similar medicines. The deal was disclosed in a filing with the Securities and Exchange Commission.

At the same time that big drug companies are increasingly buying new medicines developed outside their own walls, they are also selling more of the medicines that they invent but don’t plan on developing to smaller biotechs. This has always happened – Cubist Pharmaceuticals’ antibiotic Cubicin was licensed from Eli Lilly more than a decade ago. But now it is becoming more commonplace, with Pfizer, for instance, talking about the option of selling experimental drugs to outside companies as a central part of its strategy.

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