WALTHAM, Mass., Sept. 23, 2014 (GLOBE NEWSWIRE) -- TESARO, Inc. (Nasdaq: TSRO ) announced today the pricing of $175 million aggregate principal amount of its 3.00% convertible senior notes due 2021 (the "notes") in an underwritten public offering. The size of the offering was increased from the previously announced aggregate principal amount of $165 million. TESARO has granted the underwriters a 30-day option to purchase up to $26.25 million aggregate principal amount of additional notes on the same terms and conditions to cover over-allotments. The offering is expected to close on or about September 29, 2014, subject to customary closing conditions.
The notes will bear interest at a rate of 3.00% per annum, payable semi-annually on April 1 and October 1, beginning from April 1, 2015, and will be convertible into cash, shares of TESARO's common stock or a combination of cash and shares of TESARO's common stock, at TESARO's election. The notes will mature on October 1, 2021, unless earlier converted or repurchased in accordance with their terms. Prior to the close of business on the business day immediately preceding April 1, 2021, the notes will be convertible only upon the occurrence of certain events and during certain periods, and thereafter, at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. The initial conversion price of the notes is approximately $35.13 per share of common stock at an initial conversion rate of 28.4627 shares of TESARO's common stock per $1,000 principal amount of notes, which represents a premium of approximately 35% over $26.025 per share, the last reported sale price of TESARO's common stock on September 23, 2014. Citigroup and Deutsche Bank Securities are acting as joint book-running managers for the offering, with Leerink Partners, Baird and BMO Capital Markets acting as co-managers.
TESARO anticipates that the aggregate net proceeds from the offering will be approximately $169.25 million, after deducting the underwriting discount and estimated offering expenses payable by TESARO, but excluding any exercise of the underwriters' over-allotment option. TESARO intends to use approximately $18.11 million of the net proceeds from the offering to fund the payment of the cost of capped call transactions (described below). TESARO expects to use the remaining net proceeds to fund commercialization activities for rolapitant (oral formulation), clinical trials for rolapitant (intravenous formulation), niraparib and TESARO's other product candidates, to carry out TESARO's immuno-oncology platform strategy, and for working capital and general corporate purposes. TESARO may also use a portion of the proceeds to in-license or acquire, as the case may be, product candidates, technologies, compounds, other assets or complementary businesses, though TESARO has no current understandings, agreements or commitments to do so.
In connection with the pricing of the notes, TESARO is entering into capped call transactions with Citibank, N.A. and Deutsche Bank AG, London Branch (the "option counterparties"). The capped call transactions are expected generally to reduce the potential dilution and/or offset the cash payments TESARO is required to make in excess of the principal amount upon conversion of the notes in the event that the market price of TESARO's common stock is greater than the floor price of the capped call transactions, which will initially correspond to the initial conversion price of the notes, with such reduction and/or offset being subject to a cap based on a cap price of approximately $45.54, subject to adjustment, which represents a premium of approximately 75% over the last reported sale price of TESARO's common stock on September 23, 2014.
TESARO has been advised that in connection with establishing their initial hedges of the capped call transaction, the option counterparties or their respective affiliates expect to enter into various derivative transactions with respect to TESARO's common stock in privately negotiated transactions concurrently with the pricing of the notes and/or purchase shares of TESARO's common stock shortly after the pricing of the notes in open market transactions. This activity could increase (or reduce the size of any decrease in) the market price of the common stock or the notes at that time. In addition, TESARO has been advised that the option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to the common stock and/or purchasing or selling shares of common stock or other securities of TESARO in secondary market transactions following the pricing of the notes and prior to the maturity of the notes (and are likely to do so during any conversion period related to a conversion of notes). This activity could also cause or avoid an increase or a decrease in the market price of the common stock or the notes, which could affect the ability of holders of the notes to convert the notes and, to the extent the activity occurs during any conversion period related to a conversion of notes, it could affect the amount and value of the consideration that holders of the notes will receive upon conversion of the notes.
The notes described above are being offered by TESARO pursuant to its automatic shelf registration statement on Form S-3 filed with the Securities and Exchange Commission (the "SEC") on July 1, 2013. A preliminary prospectus supplement and related prospectus related to the offering has been filed with the SEC and is available on the SEC's website located at http://www.sec.gov . Copies of the preliminary prospectus supplement and related prospectus relating to this offering may be obtained from Citigroup, c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717, via telephone at (800) 831-9146 or email at prospectus@citi.com , or from Deutsche Bank Securities Inc., Attention: Prospectus Department, 60 Wall Street, New York, NY 10005-2836, via telephone at (800) 503-4611 or email at prospectus.cpdg@db.com .
This press release shall not constitute an offer to sell, or the solicitation of an offer to buy, nor will there be any sale of, these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of such state or other jurisdiction.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which involve risks and uncertainties, including statements regarding the proposed public offering. More information about potential factors that could affect TESARO's business and financial results is contained in its annual report on Form 10-K, its quarterly reports on Form 10-Q and other filings with the SEC. TESARO does not intend, and undertakes no duty, to update this information to reflect future events or circumstances.
About TESARO
TESARO is an oncology-focused biopharmaceutical company dedicated to improving the lives of cancer patients by acquiring, developing and commercializing safer and more effective therapeutics.
For further information, please contact: Jennifer Davis Sr. Director, Corporate Development & Investor Relations (339) 970-0900
