- Company Name
- Tesaro, Inc.
- Stock Symbol
- Class Period
- November 4, 2016 to November 14, 2016
- Motion Deadline
- January 8, 2019
- District of Massachusetts
The complaint charges Tesaro and certain of its officers with violations of the Securities Exchange Act of 1934. Tesaro is an oncology-focused biopharmaceutical company that identifies, acquires, develops, and commercializes cancer therapeutics and oncology supportive care products in the United States, including VARUBI, a drug to prevent delayed nausea and vomiting associated with chemotherapy. On July 7, 2016, Tesaro announced the closing of an underwritten public offering of common stock pursuant to which the Company sold 5,347,500 Tesaro shares to the public at $81.00 per share for net proceeds from of approximately $409 million (the “July Offering”).
Throughout the Class Period, defendants made materially false and misleading statements and/or failed to disclose adverse information regarding the Company’s business and financial condition. Specifically, defendants failed to disclose that, notwithstanding the completion of the July Offering, Tesaro’s liquidity position was insufficient to meet its cash flow requirements and fund its existing operations and, accordingly, an additional public offering of Tesaro common stock was imminent. As a result of this information being withheld during the Class period, Tesaro securities traded at artificially inflated prices of more than $158 per share.
At the beginning of the Class Period, on November 4, 2016, Tesaro filed a quarterly report on Form 10-Q with the SEC reporting the Company’s financial and operating results for the third quarter ended September 30, 2016. The Form 10-Q stated that “[o]ur balance of cash and cash equivalents as of September 30, 2016, and the cash we expect to generate from sales of VARUBI, are expected to be sufficient to meet our existing cash flow requirements and fund our existing operations at their currently planned levels through at least the twelve months.”
Then, after the market closed on November 14, 2016 – less than four months after the July Offering, and just ten days after assuring investors that VARUBI sales would be sufficient to fund the Company’s cash flow requirements and necessary operational funding for the next 12 months – Tesaro abruptly announced another proposed public offering (the “November Offering”). In a press release, Tesaro stated that the Company had “commenced an underwritten public offering of 1,750,000 shares of its common stock” “pursuant to its automatic shelf registration statement on Form S-3 filed with the [SEC] on June 30, 2016.” That same day, Tesaro filed a preliminary prospectus supplement and related prospectus for the November Offering with the SEC. On November 15, 2016, Tesaro issued a second press release announcing that the offering price for the November Offering would be $135.00 per share – roughly 9% lower than the price of Tesaro stock at market close on November 14, 2016 ($148.50), the last trading day prior to the announcement of the November Offering. Following these announcements, Tesaro’s share price plunged $17.46 per share, or roughly 12%, to close at $131.04 per share on November 15, 2016.