Attached files
| file | filename |
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| 8-K - 8-K - TESARO, Inc. | a18-17398_18k.htm |
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
On July 12, 2018, TESARO, Inc. (the “Company”) completed the sale to TerSera Therapeutics LLC (“TerSera”) of the Company’s rights to rolapitant (the “Sale”) in the United States and Canada (the “Territory”). The Sale was pursuant to the Asset Purchase Agreement (the “APA”) between the Company and TerSera previously announced by the Company in a Current Report on Form 8-K filed on June 29, 2018. The Sale includes both the oral formulation of rolapitant distributed and sold under the brand name VARUBI® and the intravenous formulation of rolapitant sold under the brand name VARUBI® IV (the “IV Product”).
At the closing, the Company was paid $35,000,000 in cash. Pursuant to the terms of the APA, an additional $5,000,000 in cash will be paid by TerSera to the Company by January 12, 2020. The Company will also be eligible to receive certain post-closing royalties and milestone payments. For a period of twelve years after consummation of the Sale (the “Royalty Term”), TerSera will pay to the Company a percentage of any consideration for (i) the transfer of intellectual property rights relating to future sales of rolapitant and (ii) the license or sublicense of any intellectual property rights related to rolapitant, in each case, to the extent allocable to non-oncology indications. TerSera will also pay to the Company milestone payments of (a) $10,000,000 each time the marketing approval for a new indication of rolapitant in the United States is first granted and (b) $10,000,000 the first time aggregate net sales of a reformulated version of the IV Product during a calendar year reach or exceed $50,000,000. In addition, during the Royalty Term, TerSera will pay to the Company a royalty at the rate of 20% of the aggregate net sales of the IV Product in the Territory for any calendar year in which such sales reach or exceed $100,000,000 on the net sales that exceed such threshold.
The unaudited pro forma condensed consolidated balance sheet as of March 31, 2018 has been prepared to give effect to the Sale as if it occurred on March 31, 2018. The unaudited pro forma condensed consolidated statements of operations for the three months ended March 31, 2018 and the year ended December 31, 2017 have been prepared to give effect to the Sale as if it occurred on January 1, 2017.
The unaudited pro forma condensed consolidated financial information was prepared utilizing the Company’s historical financial data derived from the unaudited condensed consolidated financial statements included in its Quarterly Report on Form 10-Q filed with the U.S. Securities and Exchange Commission (“SEC”) on May 3, 2018 and from the audited consolidated financial statements for the year ended December 31, 2017 included in its Annual Report on Form 10-K filed with the SEC on February 28, 2018. The unaudited pro forma condensed consolidated financial statements reflect pro forma adjustments that are based on preliminary estimates and assumptions and other information available at the time of preparation. The Company believes that all such adjustments are (i) directly attributable to the Sale, (ii) factually supportable, and (iii) expected to have a continuing impact on the Company’s future consolidated results of operations or financial condition. The pro forma adjustments are described in the notes to the unaudited pro forma information and are based upon available information and assumptions that the Company believes are reasonable.
The unaudited pro forma condensed consolidated financial information included herein is for informational purposes only and is not necessarily indicative of what the Company’s financial performance and financial position would have been had the Sale been completed on the dates assumed, nor is such unaudited pro forma condensed consolidated financial information necessarily indicative of the results to be expected in any future period. Actual results may differ significantly from those reflected in the unaudited pro forma condensed consolidated financial statements for various reasons, including but not limited to, the differences between the assumptions used to prepare the unaudited pro forma condensed consolidated financial statements and actual results.
TESARO, Inc.
Unaudited Pro Forma Condensed Consolidated Balance Sheet
As of March 31, 2018
(all amounts in 000’s, except share and per share data)
|
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TESARO, Inc. |
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Impact of |
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TESARO, Inc. |
| |||
|
|
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Historical |
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Sale |
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Pro Forma |
| |||
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Assets |
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|
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|
|
|
| |||
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Current assets: |
|
|
|
|
|
|
| |||
|
Cash and cash equivalents |
|
$ |
498,980 |
|
$ |
35,000 |
(a) |
$ |
533,980 |
|
|
Accounts receivable |
|
44,182 |
|
— |
|
44,182 |
| |||
|
Inventories |
|
74,444 |
|
(5,458 |
)(b) |
68,986 |
| |||
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Other current assets |
|
38,184 |
|
— |
|
38,184 |
| |||
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Total current assets |
|
655,790 |
|
29,542 |
|
685,332 |
| |||
|
|
|
|
|
|
|
|
| |||
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Intangible assets, net |
|
54,947 |
|
(17,598 |
)(c) |
37,349 |
| |||
|
Property and equipment, net |
|
10,272 |
|
— |
|
10,272 |
| |||
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Restricted cash |
|
2,556 |
|
— |
|
2,556 |
| |||
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Other assets |
|
6,127 |
|
5,000 |
(d) |
11,127 |
| |||
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Total assets |
|
$ |
729,692 |
|
$ |
16,944 |
|
$ |
746,636 |
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|
|
|
|
|
|
|
|
| |||
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Liabilities and stockholders’ equity |
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|
|
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Current liabilities: |
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|
|
|
|
|
| |||
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Accounts payable |
|
$ |
5,079 |
|
$ |
— |
|
$ |
5,079 |
|
|
Accrued expenses |
|
150,589 |
|
— |
|
150,589 |
| |||
|
Deferred revenue, current |
|
117 |
|
— |
|
117 |
| |||
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Other current liabilities |
|
7,451 |
|
— |
|
7,451 |
| |||
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Total current liabilities |
|
163,236 |
|
— |
|
163,236 |
| |||
|
|
|
|
|
|
|
|
| |||
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Convertible notes, net |
|
146,529 |
|
— |
|
146,529 |
| |||
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Long-term debt, net |
|
293,888 |
|
— |
|
293,888 |
| |||
|
Deferred revenue, non-current |
|
188 |
|
— |
|
188 |
| |||
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Other non-current liabilities |
|
8,123 |
|
— |
|
8,123 |
| |||
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Total liabilities |
|
611,964 |
|
— |
|
611,964 |
| |||
|
|
|
|
|
|
|
|
| |||
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Stockholders’ equity: |
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|
|
|
|
|
| |||
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Preferred stock, $0.0001 par value; 10,000,000 shares authorized; no shares issued or outstanding at March 31, 2018 |
|
— |
|
— |
|
— |
| |||
|
Common stock, $0.0001 par value; 100,000,000 shares authorized; 54,801,636 shares issued and outstanding at March 31, 2018 |
|
5 |
|
— |
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5 |
| |||
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Additional paid-in capital |
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1,755,783 |
|
— |
|
1,755,783 |
| |||
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Accumulated other comprehensive loss |
|
(5,357 |
) |
— |
|
(5,357 |
) | |||
|
Accumulated deficit |
|
(1,632,703 |
) |
16,944 |
(e) |
(1,615,759 |
) | |||
|
Total stockholders’ equity |
|
117,728 |
|
16,944 |
|
134,672 |
| |||
|
Total liabilities and stockholders’ equity |
|
$ |
729,692 |
|
$ |
16,944 |
|
$ |
746,636 |
|
See accompanying notes to unaudited pro forma condensed consolidated financial information.
TESARO, Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Three Months Ended March 31, 2018
(all amounts in 000’s, except share and per share data)
|
|
|
TESARO, Inc. |
|
Impact of |
|
TESARO, Inc. |
| |||
|
|
|
Historical |
|
Sale |
|
Pro Forma |
| |||
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Revenues: |
|
|
|
|
|
|
| |||
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Product revenue, net |
|
$ |
50,172 |
|
$ |
(948 |
)(f) |
$ |
49,224 |
|
|
License, collaboration and other revenues |
|
(430 |
) |
— |
|
(430 |
) | |||
|
Total revenues |
|
49,742 |
|
(948 |
) |
48,794 |
| |||
|
|
|
|
|
|
|
|
| |||
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Expenses: |
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|
|
|
|
|
| |||
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Cost of sales — product |
|
9,997 |
|
(3,471 |
)(f) |
6,526 |
| |||
|
Cost of sales — intangible asset amortization |
|
1,437 |
|
(773 |
)(f) |
664 |
| |||
|
Research and development |
|
96,755 |
|
(1,669 |
)(f) |
95,086 |
| |||
|
Selling, general and administrative |
|
93,607 |
|
(1,366 |
)(f) |
92,241 |
| |||
|
Acquired in-process research and development |
|
— |
|
— |
|
— |
| |||
|
Total expenses |
|
201,796 |
|
(7,279 |
) |
194,517 |
| |||
|
Loss from operations |
|
(152,054 |
) |
6,331 |
|
(145,723 |
) | |||
|
|
|
|
|
|
|
|
| |||
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Interest expense |
|
(12,092 |
) |
— |
|
(12,092 |
) | |||
|
Interest income |
|
1,665 |
|
— |
|
1,665 |
| |||
|
Other income |
|
81 |
|
— |
|
81 |
| |||
|
Loss before income taxes |
|
(162,400 |
) |
6,331 |
|
(156,069 |
) | |||
|
|
|
|
|
|
|
|
| |||
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Provision for income taxes |
|
416 |
|
— |
|
416 |
| |||
|
|
|
|
|
|
|
|
| |||
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Net loss |
|
$ |
(162,816 |
) |
$ |
6,331 |
|
$ |
(156,485 |
) |
|
|
|
|
|
|
|
|
| |||
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Net loss per share applicable to common stockholders - basic and diluted |
|
$ |
(2.98 |
) |
$ |
0.11 |
|
$ |
(2.87 |
) |
|
|
|
|
|
|
|
|
| |||
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Weighted-average number of common shares used in net loss per share applicable to common stockholders - basic and diluted |
|
54,615 |
|
— |
|
54,615 |
| |||
See accompanying notes to unaudited pro forma condensed consolidated financial information.
TESARO, Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 2017
(all amounts in 000’s, except share and per share data)
|
|
|
TESARO, Inc. |
|
Impact of |
|
TESARO, Inc. |
| |||
|
|
|
Historical |
|
Sale |
|
Pro Forma |
| |||
|
Revenues: |
|
|
|
|
|
|
| |||
|
Product revenue, net |
|
$ |
120,700 |
|
$ |
(11,799 |
)(f) |
$ |
108,901 |
|
|
License, collaboration and other revenues |
|
102,626 |
|
— |
|
102,626 |
| |||
|
Total revenues |
|
223,326 |
|
(11,799 |
) |
211,527 |
| |||
|
|
|
|
|
|
|
|
| |||
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Expenses: |
|
|
|
|
|
|
| |||
|
Cost of sales — product |
|
41,137 |
|
(25,335 |
)(f) |
15,802 |
| |||
|
Cost of sales — intangible asset amortization |
|
6,158 |
|
(4,508 |
)(f) |
1,650 |
| |||
|
Research and development |
|
308,742 |
|
(15,685 |
)(f) |
293,057 |
| |||
|
Selling, general and administrative |
|
336,808 |
|
(24,458 |
)(f) |
312,350 |
| |||
|
Acquired in-process research and development |
|
10,000 |
|
— |
|
10,000 |
| |||
|
Total expenses |
|
702,845 |
|
(69,986 |
) |
632,859 |
| |||
|
Loss from operations |
|
(479,519 |
) |
58,187 |
|
(421,332 |
) | |||
|
|
|
|
|
|
|
|
| |||
|
Interest expense |
|
(19,758 |
) |
— |
|
(19,758 |
) | |||
|
Interest income |
|
4,147 |
|
— |
|
4,147 |
| |||
|
Other income |
|
328 |
|
— |
|
328 |
| |||
|
Loss before income taxes |
|
(494,802 |
) |
58,187 |
|
(436,615 |
) | |||
|
|
|
|
|
|
|
|
| |||
|
Provision for income taxes |
|
1,324 |
|
— |
|
1,324 |
| |||
|
|
|
|
|
|
|
|
| |||
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Net loss |
|
$ |
(496,126 |
) |
$ |
58,187 |
|
$ |
(437,939 |
) |
|
|
|
|
|
|
|
|
| |||
|
Net loss per share applicable to common stockholders - basic and diluted |
|
$ |
(9.17 |
) |
$ |
1.07 |
|
$ |
(8.10 |
) |
|
|
|
|
|
|
|
|
| |||
|
Weighted-average number of common shares used in net loss per share applicable to common stockholders - basic and diluted |
|
54,080 |
|
— |
|
54,080 |
| |||
See accompanying notes to unaudited pro forma condensed consolidated financial information.
TESARO, Inc.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
Sale Transaction
On July 12, 2018, TESARO, Inc. (the “Company”) completed the previously disclosed sale of its rights to rolapitant in the United States and Canada to TerSera Therapeutics LLC (“TerSera”) pursuant to the Asset Purchase Agreement dated June 28, 2018 (the “APA”) by and between TerSera and the Company (the “Sale”). At the closing of the Sale, the Company received $35.0 million in cash. Pursuant to the terms of the APA, an additional $5.0 million in cash will be paid by TerSera to the Company by January 12, 2020. The Sale includes both the oral formulation of rolapitant distributed and sold under the brand name VARUBI® and the intravenous formulation of rolapitant sold under the brand name VARUBI® IV.
Pro Forma Adjustments
(a) Represents consideration of $35.0 million of cash received at the closing of the Sale.
(b) Represents the disposition of VARUBI inventory associated with the Sale.
(c) Represents the disposition of intangible assets related to VARUBI (acquired and in-licensed rights) associated with the Sale.
(d) Represents the delayed cash payment of $5.0 million due to the Company from TerSera included in the APA.
(e) Represents the pro forma gain arising from the Sale.
(f) Represents the elimination of net product revenues, cost of sales—product, cost of sales—intangible asset amortization, research and development expenses, and selling, general and administrative expenses related to VARUBI, giving effect to the Sale as if it occurred on January 1, 2017. For the three months ended March 31, 2018 and for the year ended December 31, 2017, cost of sales—product related to VARUBI includes $1.9 million and $18.3 million, respectively, in lower of cost or market write-downs for excess and obsolete inventories and losses on firm purchase commitments. The adjustment amounts for expenses include allocations of certain expenses, which are based in part on the use of judgments and estimates which the Company believes are reasonable.