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12:00 AM
Jun 27, 2011
 |  BioCentury  |  Finance

What to do with $101M

Last week's $101M tranched series B round for oncology play Tesaro Inc. is expected to get the company to NDA submission for its lead candidate, in-license up to two additional compounds and advance a preclinical program into the clinic, David Mott of New Enterprise Associates told Ebb & Flow.

The offering is the largest biotech series B round since the $169.4 million for cancer company OncoMed Pharmaceuticals Inc. at the end of 2008.

Tesaro was founded in March 2010 by executives from specialty oncology and acute care company MGI Pharma Inc., which Eisai Co. Ltd. (Tokyo:4523; Osaka:4523) acquired for $3.9 billion in 2008.

Tesaro's rolapitant is expected to start Phase III testing to prevent chemotherapy-induced nausea and vomiting (CINV) in 4Q11. The company has exclusive, worldwide rights to the neurokinin 1 (NK1) substance P receptor (TACR1) antagonist from Opko Health Inc. (NYSE-A:OPK).

The only other marketed TACR1 antagonist is Emend aprepitant, for which Merck & Co. Inc. (NYSE:MRK) recorded sales of $378 million in 2010.

According to clinical guidelines from the National Comprehensive Cancer Network (NCCN), standard of care for preventing CINV from moderate and high-risk chemotherapies includes some combination of a serotonin (5-HT3) receptor antagonist, a corticosteroid and Emend.

If the NCCN guidelines were followed, about 70% of all cancer patients would receive Emend, according to Tesaro. But only about 20% receive the drug due to potential drug-drug interactions, including for some chemotherapies (see BioCentury, March 7, 2011).

The expectation is that rolapitant will have fewer safety limitations.

Mott said the company also will use the financing to round out its pipeline, possibly bringing in another cancer therapeutic and a supportive care product. One would be in the clinic and the other could be late preclinical.

Last March, Tesaro in-licensed small molecule inhibitors of anaplastic lymphoma kinase (ALK) from Amgen Inc. (NASDAQ:AMGN). The company plans to use some of the series B proceeds to move a compound from this deal into the clinic in an oncology indication (see BioCentury, March 28).

Mott expects the series B round to last Tesaro through roughly the end of 2013, at which time he expects the company will be "well positioned to go public."

New money

NEA is Tesaro's largest and founding investor, accounting for $58 million of the $121 million in venture capital invested.

The B round includes a mix of large venture and crossover public investors. New investor Kleiner Perkins Caufield & Byers led the round, joined by other new investors InterWest Partners; T. Rowe Price; Pappas Ventures; Oracle Partners; Deerfield Management; and Leerink, along with NEA.

The financing is tranched, and the company declined to provide details.

Kleiner Perkins' Beth Seidenberg and InterWest's Arnold Oronsky joined the board.

In the clover

VCs have put $75.5 million into Clovis Oncology Inc. - a little more than half of the $145 million series A round originally committed after the company was formed in April 2009. Now the cancer play is looking to raise up to $149.5 million in an IPO on NASDAQ.

The original bet was on the management team, which came from Pharmion Corp. after it sold to Celgene Corp. (NASDAQ:CELG) for $2.9 billion in 2008. In November 2009, Clovis in-licensed what is now its lead candidate from Clavis Pharma ASA (OSE:CLAVIS).

Clovis paid $15 million up front and committed to up to $365 million in milestones for rights to CO-101, a lipid-conjugated form of gemcitabine in the U.S., Europe, Canada, and Central and South America. It expanded the deal last year to gain worldwide rights for a further $10 million...

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