TESARO, Inc.

 

Notes to Consolidated Financial Statements

 

1. Nature of Business

 

The Company

 

TESARO, Inc., or the Company or TESARO, was incorporated in Delaware on March 26, 2010 and commenced operations in May 2010.  Headquartered in Waltham, Massachusetts, TESARO is an oncology-focused biopharmaceutical company dedicated to improving the lives of cancer patients.  TESARO acquires, in-licenses and develops oncology product candidates and, if approved for marketing, commercializes these products.  Since incorporation, primary activities have consisted of acquiring product candidates, advancing development of these product candidates, developing intellectual property, recruiting personnel and raising capital.  As part of its business strategy, the Company intends to continue to in-license or acquire additional product candidates across various stages of development.  The Company operates in one segment. The Company is subject to a number of risks, including dependence on key individuals, regulatory and manufacturing risks, the need to develop additional commercially viable products, risks associated with competitors, many of which are larger and better capitalized, risks related to intellectual property, and the need to obtain adequate additional financing to fund the development and potential commercialization of its product candidates and further its in-licensing and acquisition activities.

 

On September 1, 2015, the Company’s first commercial product, VARUBI® (oral formulation of rolapitant), was approved by the U.S. Food and Drug Administration, or FDA, in combination with other antiemetic agents in adults for the prevention of delayed nausea and vomiting associated with initial and repeat courses of emetogenic cancer chemotherapy, including, but not limited to, highly emetogenic chemotherapy.  The Company commenced shipments of VARUBI during the fourth quarter of 2015.

 

Liquidity

 

The Company has incurred significant operating losses since inception and has relied on its ability to fund its operations through private and public equity and debt financings, and to a lesser extent license and collaboration arrangements, and management expects operating losses and negative operating cash flows to continue for the foreseeable future.  The Company believes its existing cash and cash equivalents and the cash it expects to generate from sales of VARUBI will be sufficient to fund its existing cash flow requirements and its operations at their currently planned levels through at least the 12 months following the filing of this Annual Report on Form 10-K.  As the Company continues to incur losses, the transition to profitability is dependent upon the successful development, approval, and commercialization of its products and product candidates and the achievement of a level of revenues adequate to support its cost structure.  The Company may never achieve profitability, and unless and until it does, the Company will continue to need to raise additional capital.  Management may seek additional capital through additional private or public equity or debt financings, through arrangements with strategic partners or from other sources.  If such funding is not obtained on a timely basis, the Company would be required to change its current operating plans to reduce its future expenses, in order to continue to fund operations, at such reduced levels.