Tesaro: Former MedImmune CEO’s Firm Writes Check, Cancer Drug Vets Build Pipeline
Tumors are kicking our butt in the war on cancer. What’s more, big drugmakers are cutting their budgets at the expense of some cancer treatments under development. But now there’s Tesaro, a drug development outfit that formed this spring to buy some of those promising therapies for cancer in the early stages of development and then work to bring them to the market.
Waltham, MA-based Tesaro jumped onto the cancer drug scene in late May, when it revealed that had raised $20 million in a Series A round of funding from the company’s founders and the venture firm New Enterprise Associates (NEA). The company’s big-named backer is NEA general partner David Mott, the former chief executive of Gaithersburg, MD-based MedImmune, which he sold to the drug giant AstraZeneca in 2007 for a $15.6 billion.
Tesaro doesn’t have technology of its own, like many biotech startups in Boston that are hatched in the labs of renowned research institutions here. Rather, Tesaro plans to acquire drugs for cancer patients from other companies and spend its time and money to do the necessary clinical trials to prove they are safe and effective. So Tesaro won’t have to invest big bucks on the earliest steps of drug discovery. The drugs it does acquire are expected to be ready to test in early- or mid-stage clinical trials, giving the firm a shot at having a marketable product before a typical biotech startup that begins from with raw science.
Tesaro expects to have its pick of plenty of cancer drug inventories because of several trends in its industry, company officials say. For instance, there’s been a string of mega mergers in recent years—including the Pfizer/Wyeth, Merck/Schering-Plough, and Roche/Genentech combos. As these giants combine, they are expected to cut costs and shed drugs from their development pipelines. Also, even small biotechs are expected to have molecules on the block because financial constraints are forcing them to focus their resources on fewer drugs, leaving others without resources to develop.
Mott, who built MedImmune into one of the largest biotechs in the world, says that the current trends in pharma create big opportunities for a startup like Tesaro. New Enterprise Associates has set aside $40 million in additional capital to pump into the company in future rounds, so the venture firm is making a huge bet that the startup’s strategy will work.
“What you have are two or three things happening in Big Pharma which make some compounds available that otherwise wouldn’t be,” Mott says.
In the meantime, advances in DNA research are uncovering an abundance of new data about cancer that are useful for drug development, says Mary Lynne Hedley, Tesaro’s co-founder and chief scientist. The company could, for example, use genetic tests to identify patients that are likely to respond to a certain cancer drug. Such tests are already used to prescribe trastuzumab (Herceptin) for patients with a particular form of breast cancer.Tailoring cancer treatments for people based on their genes and other biological indicators is expected to be how most malignancies will be treated in the future.
Tesaro also wants to focus on drugs that treat the side effects of other cancer treatments, Hedley says. Fungal infections, for example, are common among cancer patients who get radiation treatments. And chemotherapy often causes patients to vomit and develop inflammation in their digestive tracts. Hedley was previously chief scientist at MGI Pharma (now part of Japan’s Eisai), which markets a drug called palonosetron (Aloxi) for nausea and vomiting caused by chemotherapy. So she knows this market segment well.
In fact, Mott says that NEA is making a bet on Hedley and her co-founders as well as its strategy for developing cancer drugs. Hedley led research and development of cancer treatments out of Minnesota-based MGI Pharma’s Lexington, MA, lab, where she stayed on as a senior executive for more than a year after the Japanese drug giant Eisai bought MGI for $3.9 billion in 2008. Tesaro’s other founders are company CEO Lonnie Moulder, who was chief executive at MGI, and Rick Rogers, another former MGI executive, who is Tesaro’s financial chief.
Hedley has the deepest roots in the Boston-area biotech scene. She was previously chief executive of the former Lexington-based biotech firm Zycos, a developer of cancer vaccines, which was acquired by MGI in 2004 for a reported $50 million.
Tesaro, as of last week, had yet to acquire its first cancer drug, Hedley says. Yet she says she is eager to bring patients important treatments, some of which would otherwise be put on hold at drug companies if it weren’t for companies like hers.
“There’s clearly an unmet need,” Hedley said. “Patients are still suffering, and we need to try to bring these medicines to patients as quickly as possible.”