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TESARO, Inc (NASDAQ:TSRO)

32nd Annual J.P. Morgan Healthcare Conference Call

January 16, 2014 1:30 PM ET

Executives

Lonnie Moulder – Chief Executive Officer

Analysts

Matthew Lowe – JPMorgan & Co

Matthew Lowe – JPMorgan & Co

Hi everybody I’m Matt Lowe of the J.P. Morgan Biotech Team. Our next company to present is TESARO. We will have a breakout out session afterwards down the corridor in the Olympic Room. I will hand over to Lonnie Moulder the CEO. Thank you.

Lonnie Moulder

Thank you all for joining us we really appreciate JP Morgan giving us the opportunity to present today. I’ll be making some forward-looking statements, so I refer you to our SEC documents.

Well since the inception of TESARO in 2010 we’ve made some great progress along the way in reaching our mission of improving lives of cancer patients from a capital raising standpoint in licensing of three compounds and executing on quite a few clinical trials, more than a dozen that have accrued, close to 3000 patients in over 25 countries associated with this pipeline which includes Rolapitant an NK-1 receptor antagonist that we’re pursing ultimately for the indication of chemotherapy induced nausea and vomiting and that program consists of three Phase III trials for the oral formulation, two of those trials have concluded successfully and I’ll speak about that in just a moment along with one trial that we’ll be wrapping shortly. In addition, an IV formulation of Rolapitant that is in clinical development.

We have our first anti-cancer agent in Phase III trials Niraparib and the agent that we obtained from Merck a PARP inhibitor and the first two pivotal trials are under way with one targeting ovarian cancer another breast cancer and in addition we recently announced a collaboration with SARC to evaluate Niraparib with temozolomide in Ewing’s sarcoma.

Finally, TSR-011 a compound that came along with a transaction, we executed on back in 2012 with Amgen is a novel and potentially best-in-class ALK and TRK inhibitors and I’ll also speak briefly about TSR-011, but let’s start out with Rolapitant which is potentially a best-in-class NK-1 receptor antagonist with some differentiation in an area that really has some unmet need. We intend to file the new drug application mid-year for Rolapitant and of course, expect approximately a one year review ultimately launching this product in 2015 as we again begin to build the commercial business as part of TESARO.

There are established guidelines in place that suggest one in NK-1 receptor antagonist should be used and for specifically what types of patients in chemotherapy regimens. And there is a real opportunity to meet a need that’s based upon those guideline and I’ll into that. Again, two Phase III trials completed successfully for this product that has some convenience associated with it, with an oral and an IV dosage form that both are only administrated once prior to chemotherapy and potentially protect the patients for the full at risk five days following their chemotherapy.

In addition, cancer patients have comorbidities and are required to take a number of different drugs and Rolapitant has a potential differentiation in this marketplace ultimately where it is not a CYP 3A4 inhibitor and does not require adjustments of drugs used along with it but it that happened to be metabolized through this pathway CYP 3A4. The strategy will be based upon helping physicians practice networks adhere with the guidelines and will do that through collaboration – collaborating on education, but also in partnering through contracting with the key accounts through the country.

This is clinically meaningful product and it really will help establish us as an integrated oncology company. I referred to the guidelines and here is a brief summary of the National Comprehensive Cancer Network guidelines or NCCN which are quite aligned with the American Society of Clinical Oncology the MASCC, EORTC guidelines that clearly state that patients that are receiving anthracycline, cyclophosphamide based regimens or AC and cisplatin require a 5-HT3 receptor antagonist steroid and an NK-1 receptor antagonist it’s a best prevent chemo induced nausea and vomiting.

In addition, patients receiving carboplatin that are at high risk, we think of that primarily as women receiving carboplatin can benefit by the use of an NK-1 receptor antagonist. So it’s important that we educate the community about these guidelines, many physicians are quite familiar with the NCCN guidelines as it relates to treatment of many cancers, but the supportive care guidelines aren’t as well known or adhered to.

In addition, there is an interesting perception that has been demonstrated in a variety of surveys that have been published or even presented at medical meetings, relative to how healthcare professionals view chemo induced nausea and vomiting compared to true patients experience. And this is just one example, if you look at the delayed phase and that’s from day two through five, healthcare professionals in this survey believed about three quarters of the patients were protected from nausea in the delayed phase, but the actual patient experience was half that, half that level of control.

Same for vomiting, the expectation of healthcare professionals about what really happens with patients maybe about 60% of that and that’s because if you think about this, the patients receive their chemotherapy in the clinic, they interact primarily with the nurses and then they go home and patients when they are home they have certain expectations about their chemotherapy that makes them sick.

Many of us personally have interacted with people that have been treated for cancer and frankly they are concerned about complaining about the side effects, they don’t want their chemo reduced or perhaps their chemo is delayed, because what they are focused on is curing the cancer. So there is a reason for this, so it’s important to work with the nurses, the other healthcare professionals as part of the overall education strategy in the marketplace.

We think Rolapitant’s differentiation from a PK and PD standpoint is important as we go about communicating ultimately in the marketplace, why this is a compelling product for these patients, has very long half-life 180 hours related to the 120 hour at risk period and we know from a pet study that was conducted that five days after a single dose, five days after a single dose the 200 milligram dose of Rolapitant provided about 90% receptor occupancy in this pet study. So clearly the drug is in the plasma for a long duration, but the actual side of activity the NK-1 receptors in the brain we have 90% occupancy five days after a single dose.

So the Phase III that I mentioned look like this, three trials, a moderately emetogenic chemotherapy trial, which consists of 50% AC patients, Carboplatin and a few other chemotherapy regimens and then two highly emetogenic chemo trials, which are 100% cisplatin. The MEC trial and one of the HEC trials completed successfully, and as I said, the third trial this HEC trial is still ongoing and we’ll complete shortly.

And what I mean completed successfully, the primary endpoint in these trials consisted of something called complete response, which is no vomiting or no rescue medication over the day two through five or 24 hours to 120 hour period. Now there were additional endpoints and this – these endpoints are analyzed on a hierarchical bases in our statistical plan agreed to with the FDA that included the acute phase for CR zero hour o 24 hours and then the overall the full five days and then a variety of other secondary endpoints.

I want to just give you a qualitative feel for the outcome on the MEC program, because that’s complete, we still have another HEC trial ongoing. In addition, the MEC program including AC patients is really the majority of the market opportunity here. So what I have listed our three NK-1 receptor antagonist Aprepitant that’s approved by the FDA, Netupitant is a fixed oral combination with Palonosetron that’s under review by the FDA and of course Rolapitant.

And what I have tried to describe here is what is the difference between in these registration trials, what the drug, the investigational drug demonstrated over controls, control being a 5-HT3 receptor antagonist plus corticosteroid. This is not a head-to-head comparison and there is no statistical analysis associated with it, I just want to give you a sense that of course for the delayed endpoint of Rolapitant was successful.

Our delta where difference over control is favorable; in addition, the difference over control and the overall phase for complete response is quite favorable; Aprepitant had a greater difference over control in acute phase in its registration trial. In addition, there is another endpoint that we listed up here that’s a quite important to as it relates to patient experience, complete protection looks at no emesis, no rescue, but also looks at no significant nausea and again you can see how we have designated that Rolapitant had a substantial difference as compared to control in both the delayed and overall phase.

We know that substance P is what’s being blocked at the NK-1 receptor and that is most irrelevant in the delayed phase, so all of this lines out with the science. Something else that’s listed here that I think is important that although there was a hierarchical analysis and we achieved the delayed endpoint P values are associated with all of the other endpoints on an unadjusted basis under the statistical analysis.

Having not achieve the acute endpoint, those endpoints – the rest of the endpoint cant be analyzed statistically for the purposes of the FDA, but from a publication standpoint and understanding what actually happens here clinically, the unadjusted P values we know for the overall phase of CR and also for the delayed an overall phase for a complete protection or clearly less than 0.05.

So how does this data relate to the market opportunity? I displayed the MEC data Moderately Emetogenic Chemotherapy data which includes AC for breast cancer. Well the market opportunity we believe in the U.S. is about 5 million doses that would translate to 1.5 billion for the entire class based on current class pricing. The cisplatin or HEC trials really support an indication for about 10% of the market, but AC breast cancer and carboplatin make up the bulk of the market.

And where does the – where is the market today with the Aprepitant? Well Aprepitant last year probably had just over a million day of chemotherapy doses associated with it, that means this green area right here approximately 4 million doses are available that would adhere to the guidelines, the NCCN, ASCO, MASCC guidelines and ultimately its our job to assist in educating and partnering with the large oncology networks so that their pathway will adapt to the NCCN guidelines and deliver the type of value we think potentially exists in this market.

So what does that mean? Ultimately for the product and for the business what we’ve laid out here is taking those 5 million doses, understanding that 80% in this marketplace approximately are administered intravenously 20% orally and at market pricing what does that mean at various market shares for the product. Clearly it’s a compelling opportunity for TESARO.

So as I mentioned we have some differentiation here, we’re obviously leverage in the marketplace, we of course will be highly committed to this product, we’ll deploy a commercial organization that will be completely dedicated to this product at launch, our educational effort and support of obtaining guideline adherence will be a big part of our overall strategy in the marketplace, clearly there is reimbursement that already takes place in this marketplace and finally partnering with the clinics on that education and obviously from a business relationship standpoint.

I’ll turn to Niraparib now, if you can imagine once Rolapitant has launched and we are ramping up revenue, the next products that move into our commercial portfolio really take advantage of the operating model that exists on oncology. There is a lot of leverage that then takes place, because its not required to add many more sales reps or a lot of additional spending for the next product that would drop in.

So that next product is already in Phase III, this is a compound we obtained from Merck and when we brought this compound in it already had its dose and regimen, tolerance profile, well characterized in a Phase I trial in over 100 patients and today we have two Phase III trials up in running as I mentioned I’ll go into those just a bit.

In addition, an evaluation of the compound in combination with chemotherapy in the Ewing’s sarcoma setting, we’re collaborating on our Phase III trials with two very important groups. First of all ENGOT for the ovarian trial, this is really an umbrella organization for a verity of the gynecologic oncology clinical groups in country by countries throughout Europe, and then the Breast International Group BIG is obviously working under our relationship to help us identify sites and execute along with ERTC on the breast cancer trial for Niraparib. Of course, we’ve engaged and will be conducting our trial in a verity of U.S. sites including a number of the large oncology networks, that we have relationships with.

So the Phase I results briefly represented at last years American Society of Clinical Oncology meeting and I’ll point to this bar right here. This is the platinum sensitive high grade serous ovarian cancer population, that is the population that we’re targeting in our first trial, but this at the dose we’re bringing forward into Phase III the 300 milligram dose quite a compiling response rates 75%, across other ovarian cancer subsets response rate close to 50%, breast cancers specifically BRCA breast cancer response rate of 50%.

These are in patients that were heavily pre-treated as a frequently occurs in Phase I, but I would say a bit tougher patient population that is then what is even typically seen. The ovarian patients had at least six prior regimens, the breast cancer patients at least five prior regimens, and those who responded on Niraparib actually had a substantial duration well over a year on the drug. We’ve identified of course from that Phase I trial, the does limiting toxicity and we have a compelling tolerance profile associated with Niraparib.

So what does the program look like through ovarian? What does it look like breast cancer? This is a study, the NOVA Study in ovarian cancer that is evaluating 360 high grade serous ovarian cancer patients, who were platinum sensitive that means they responded to a platinum regimen, they did not relapse until six months after that first platinum regimen, but eventually relapsed we’re put into platinum response again on a platinum regimen, and now are randomized either to placebo or Niraparib and then measuring PFS, so they are in response and we’re looking to prolong response.

There are two cohorts in this study, one consists of germline BRCA patients, the other is non-germline. The basis of this study in addition to our Phase I data in the ovarian population, is a study that was conducted with another PARP inhibitor and published in the New England Journal of Medicine in final results presented at last years ASCO meeting that actually demonstrated in a study that was quite similar that the germline BRCA patients had a hazard ratio for PFS of 0.18 and for non-germline 0.5, we think that’s a really compelling basis to execute on this study.

In addition, the breast cancer study that we are screening for patients on at this time of 306 patients looks at BRCA breast cancer patients that are metastatic and have seen no more than two lines of prior therapy. Again, a two to one randomization Niraparib versus investigators choice listed here. So this is a treatment study versus the maintenance study for ovarian cancer.

The market opportunity here is substantial, we have based on our assessment over the ovarian cancer population, we think the number of patients in U.S. that match our inclusion exclusion criteria is about 10,000 also in Europe. For the breast cancer population we know from data provided by Decision Resources that there are probably about 90,000 patients in the U.S. with metastatic breast cancer that are treated annually that meet our inclusion exclusion criteria and then apply a 10% for BRCA germline BRCA you end up with just over 9,000 patients in the U.S. and just over 10,000 in Europe.

If you dollarize this to typical oncology pricing, this market opportunity is over $3 billion, we know in ovarian cancer that we have other PARP inhibitors being developed Olaparib and potential Rucaparib. In breast cancer, we have what most likely Olaparib and also BMN 673. We think this market opportunity and our profile even with other agents competing for the same indication is a great opportunity for our first anti-cancer agent here at TESARO.

We will be investigating overtime other potential pass to new indications, most likely first in a Phase II program, some of them are listed here as I mentioned before you Ewing’s sarcoma is already up in running. As we progress throughout the year we’ll bring to light our plans for additional trials of Niraparib. Finally, TSR-011 a potentially best-in-class ALK and first-in-class TRK inhibitor is an agent that we have moved fairly rapidly through a dose identifying Phase I trial and we’re now expanding that Phase I trial into only those patients who are ALK positive or TRK positive.

This is – this agent is quite interesting, it’s highly, highly potent and highly specific and we really like the tolerance profile. We actually dosed it up to 480 milligrams in our Phase I trial without seeing any grade 2, 3 or 4 events until we did a DLT. We’re now actually assessing a 60 milligram dose where we know based on activity seen in patients, we have activity and also projected from pre-clinical work.

What’s depicted here is a scan and the reason I showed the scan here, is that this is a patient that was diagnosed with ALK positive non-small cell lung cancer, which prescribed the first ALK inhibitor on the market crizotinib and went into a response, but eventually progressed. This patient was put into our study and as you can see here, the lung, his lung is almost encapsulated by a tumor. You can’t measure this and you really can’t evaluate this patient for a resist response, but after four cycles of TSR-01 a rather dramatic change and also significant clinical benefit was seen in this patient.

So overall from a summary standpoint, we’ve had three ALK positive non-small cell lung cancer patients that each progressed on crizotinib in this study and all three have responded. I showed you that non-resist PR, there is another one similar and then there was a resist PR. So as we move forward, we’ll continue to evaluate patients that have progressed on crizotinib, but our goal is to bring in ALK Inhibitor naïve patients. They have not seen ALK inhibitor and also TRK positive patients and we’ll be updating the TSR-011 results of this Phase I trial at future medical meetings.

So in summary, we think we’re well positioned for our success as we move forward here with a compelling pipeline Rolapitant in a market that could be up to $1.5 billion in the U.S. a $3 billion market opportunity at least worldwide for Niraparib and some important differentiation and opportunities for Rolapitant in the marketplace with the right strategy. Two Phase III trials already up in running with Niraparib and additional opportunities that we can bring forward based on the profile this PARP inhibitor and of course 011 although early showing great promise.

The company finished the third quarter with a $156 million in cash and we are burning between $20 million and $25 million per quarter throughout 2013. Obviously sometime this quarter we’ll report year end results. This team that we have in place as a lot of experience in oncology, in supportive care and in therapeutics and great relationships throughout the community to really help us establish our commercialization for Rolapitant and layering in the other products as we move into the future along with any other products that we may bring in and because we are very active from a business developments standpoint.

So for this year, we look to complete the final Phase III program the cisplatin study that remains for Rolapitant, advance the IV clinical program for Rolapitant with the intent of that launching approximately one year after the oral product launches, data presentations on our pipeline at upcoming medical meetings ASCO, MASCC, ESMO including the full presentation of the Rolapitant data.

Submitting the NDA for Rolapitant at mid-year and continuing of course to enroll into NOVAs trial, advances the BRAVO trial and in addition to finalizing some plants for Phase II for Niraparib and other tumor types advance the Ewing’s sarcoma trial along with as I said earlier, enrolling patients who are ALK inhibitor naive and TRK patients into our TSR-011 program.

Thank you for your attention and thank you again J.P. Morgan for hosting us.

Question-and-Answer Session

[No Q&A session for this event]

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