Tesaro (TSRO) 10-Q 3 May 18 2018 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2018	Apr. 30, 2018
Document and Entity Information
Entity Registrant Name	TESARO, Inc.
Entity Central Index Key	1,491,576
Document Type	10-Q
Document Period End Date	Mar. 31, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		54,823,563
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q1

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 498,980	$ 643,095
Accounts receivable	44,182	53,416
Inventories	74,444	57,939
Other current assets	38,184	33,511
Total current assets	655,790	787,961
Intangible assets, net	54,947	56,384
Property and equipment, net	10,272	9,652
Restricted cash	2,556	2,552
Other assets	6,127	5,636
Total assets	729,692	862,185
Current liabilities:
Accounts payable	5,079	4,172
Accrued expenses	150,589	154,808
Deferred revenue, current	117	324
Other current liabilities	7,451	6,902
Total current liabilities	163,236	166,206
Convertible notes, net	146,529	143,446
Long-term debt, net	293,888	293,659
Deferred revenue, non-current	188	211
Other non-current liabilities	8,123	9,577
Total liabilities	611,964	613,099
Commitments and contingencies (Note 10)
Stockholders' equity:
Preferred stock, $0.0001 par value; 10,000,000 shares authorized at both December 31, 2017 and March 31, 2018; no shares issued or outstanding at both December 31, 2017 and March 31, 2018
Common stock, $0.0001 par value; 100,000,000 shares authorized at both December 31, 2017 and March 31, 2018; 54,464,039 and 54,801,636 shares issued and outstanding at December 31, 2017 and March 31, 2018, respectively	5	5
Additional paid-in capital	1,755,783	1,724,850
Accumulated other comprehensive loss	(5,357)	(5,882)
Accumulated deficit	(1,632,703)	(1,469,887)
Total stockholders' equity	117,728	249,086
Total liabilities and stockholders' equity	$ 729,692	$ 862,185

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2018	Dec. 31, 2017
Condensed Consolidated Balance Sheets
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	54,464,039	54,801,636
Common stock, shares outstanding	54,464,039	54,801,636

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Net product revenue
Revenue	$ 49,742	$ 3,073
Reversal of license revenue	(1,000)
Expenses:
Cost of sales - product	9,997	444
Cost of sales - intangible asset amortization	1,437	490
Research and development	96,755	66,122
Selling, general and administrative	93,607	69,262
Total expenses	201,796	136,318
Loss from operations	(152,054)	(133,245)
Interest expense	(12,092)	(4,267)
Interest income	1,665	841
Other income	81
Loss before income taxes	(162,400)	(136,671)
Provision for income taxes	416	54
Net loss	$ (162,816)	$ (136,725)
Net loss per share applicable to common stockholders - basic and diluted (in dollars per share)	$ (2.98)	$ (2.55)
Weighted-average number of common shares used in net loss per share applicable to common stockholders - basic and diluted (in shares)	54,615	53,685
Comprehensive income:
Net loss	$ (162,816)	$ (136,725)
Other comprehensive income:
Unrealized gain/(loss) on pension obligation	(63)	(45)
Foreign currency translation adjustments	462	35
Other comprehensive income:	525	80
Comprehensive loss	(162,291)	(136,645)
Product revenue
Net product revenue
Revenue	50,172	2,139
Licenses, collaboration and other revenues
Net product revenue
Revenue		$ 934
Reversal of license revenue	$ (430)

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Operating activities
Net loss	$ (162,816)	$ (136,725)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense	2,455	954
Stock-based compensation expense	26,128	18,401
Non-cash interest expense	3,312	2,757
Changes in operating assets and liabilities:
Accounts receivable	9,287	134
Inventories	(16,200)	(179)
Other assets	(4,731)	(3,345)
Accounts payable	895	5,119
Accrued expenses	(4,834)	(1,847)
Deferred revenues	(230)	(22)
Other liabilities	(898)	172
Net cash used in operating activities	(147,632)	(114,581)
Investing activities
Purchase of property and equipment	(1,619)	(1,790)
Net cash used in investing activities	(1,619)	(1,790)
Financing activities
Proceeds from sale of common stock, net of issuance costs		(8)
Proceeds from exercise of stock options and Employee Stock Purchase Plan	4,497	3,323
Net cash provided by financing activities	4,497	3,315
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	651	45
Decrease in cash, cash equivalents, and restricted cash	(144,103)	(113,011)
Cash, cash equivalents, and restricted cash at beginning of period	645,954	787,866
Cash, cash equivalents, and restricted cash at end of period	501,851	674,855
Non-cash investing and financing activities
Stock option exercise proceeds receivable as of period end		103
Leasehold improvement assets funded by lessor		585
Purchase of property and equipment - cash not paid as of period end	56	301
Supplemental disclosure of cash flow information
Cash paid for interest	12,274	3,019
Milestone obligation not paid as of period end		24,790
Income taxes paid	$ 80	$ 176

Condensed Consolidated Stateme6

Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Condensed Consolidated Statements of Cash Flows
Cash and cash equivalents	$ 498,980	$ 643,095
Restricted cash included in other current assets	315	307
Restricted cash, noncurrent	2,556	2,552
Total cash, cash equivalents and restricted cash	$ 501,851	$ 645,954

Description of Business

Description of Business	3 Months Ended
	Mar. 31, 2018
Description of Business
Description of Business	1. Description of Business TESARO, Inc., or the Company or TESARO, was incorporated in Delaware and commenced operations in 2010. Headquartered in Waltham, Massachusetts, TESARO is a commercial-stage biopharmaceutical company devoted to providing transformative therapies to people bravely facing cancer. TESARO’s primary focus is to develop treatments for solid tumors using various approaches, including small molecules and immuno-oncology antibodies, as monotherapies and in combinations. The Company has in-licensed and is developing several oncology-related product candidates, and has entered into several research collaborations with third parties for the discovery of new candidates. 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. The Company’s two currently marketed products, ZEJULA® and VARUBI®/VARUBY®, are approved in both the U.S. and the European Union, or EU. ZEJULA is approved as a maintenance treatment of adults with recurrent epithelial ovarian, fallopian tube, or primary peritoneal cancer who are in a complete or partial response to platinum-based chemotherapy. VARUBI/VARUBY is approved for use 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 has determined that it will cease marketing and distribution of the intravenous, or IV, formulation of VARUBI and intends to pursue strategic alternatives for the VARUBI brand. 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 through product sales and license and collaboration arrangements. Management expects operating losses and negative operating cash flows to continue for the foreseeable future. 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 believes that its currently available funds, including an additional draw under the Company’s term loan agreement, in addition to cash generated from sales of its products will be sufficient to fund the Company’s operations through at least the next 12 months from the issuance of this Quarterly Report on Form 10-Q. Management’s belief with respect to its ability to fund operations is based on estimates that are subject to risks and uncertainties. If actual results are different from management’s estimates, the Company may need to seek additional funding.

Basis of Presentation and Signi

Basis of Presentation and Significant Accounting Policies	3 Months Ended
	Mar. 31, 2018
Basis of Presentation and Significant Accounting Policies
Basis of Presentation and Significant Accounting Policies	2. Basis of Presentation and Significant Accounting Policies Basis of Presentation The accompanying condensed consolidated financial statements are unaudited and have been prepared by TESARO in conformity with accounting principles generally accepted in the United States of America, or GAAP. The Company’s condensed consolidated financial statements reflect the operations of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The Company currently operates in one business segment, which is the identification, acquisition, development and commercialization of oncology-related therapeutics, and has a single reporting and operating unit structure. Certain information and footnote disclosures normally included in the Company’s annual financial statements have been condensed or omitted. These interim financial statements, in the opinion of management, reflect all normal recurring adjustments necessary for a fair presentation of the Company’s financial position and results of operations for the interim periods ended March 31, 2017 and 2018. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full fiscal year. These interim financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2017 and the notes thereto, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. The significant accounting policies used in preparation of these condensed consolidated financial statements for the three months ended March 31, 2018 are consistent with those discussed in Note 2 to the consolidated financial statements in the Company’s 2017 Annual Report on Form 10-K and are updated below as necessary. Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, other comprehensive income (loss) and the related disclosures. Significant estimates in these condensed consolidated financial statements include estimates made in connection with accrued research and development expenses, stock-based compensation expense, revenue, valuation of convertible notes, inventory, intangible assets and related amortization. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. Actual results may differ from those estimates or assumptions. Fair Value of Financial Instruments The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. The fair value hierarchy prioritizes valuation inputs based on the observable nature of those inputs. The fair value hierarchy applies only to the valuation inputs used in determining the reported fair value of the investments and is not a measure of investment credit quality. The hierarchy defines three levels of valuation inputs: Level 1 inputs Quoted prices in active markets for identical assets or liabilities Level 2 inputs Observable inputs other than Level 1 inputs, including quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active Level 3 inputs Unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability The following table presents information about the Company’s financial assets and liabilities that have been measured at fair value as of December 31, 2017 and March 31, 2018 and indicates the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands): December 31, 2017 Description Balance Sheet Classification Total Level 1 Level 2 Level 3 Assets: Money market funds Cash and cash equivalents $ 593,955 $ 593,955 $ — $ — Total assets $ 593,955 $ 593,955 $ — $ — March 31, 2018 Description Balance Sheet Classification Total Level 1 Level 2 Level 3 Assets: Money market funds Cash and cash equivalents $ 403,121 $ 403,121 $ — $ — Total assets $ 403,121 $ 403,121 $ — $ — The carrying amounts of accounts payable and accrued expenses approximate their fair values due to their short-term maturities. In September 2014, the Company issued $201.3 million aggregate principal amount of 3.00% convertible senior notes due October 1, 2021, or the Convertible Notes. Interest is payable semi-annually in arrears on April 1 and October 1 of each year. As of March 31, 2018, the carrying value of the Convertible Notes, net of unamortized discount and debt issuance costs, was $146.5 million and the estimated fair value of the principal amount was $369.0 million. As of March 31, 2018, the carrying value of the Company’s borrowing under its term loan agreement approximated its fair value. The Convertible Notes and the term loan agreement are discussed in more detail in Note 5, “Debt”. Revenue Recognition The Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To determine revenue recognition, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. For a further discussion of accounting for net product revenue and license, collaboration and other revenues, see Note 11, “Revenue Recognition”. Intangible Assets The Company maintains definite-lived intangible assets related to milestone payments made to third parties subsequent to regulatory approval for acquired and in-licensed product candidates. These assets are amortized over their remaining useful lives, which are generally estimated to be the remaining patent life. If the Company’s estimate of the product’s useful life is shorter than the remaining patent life, then the shorter period is used. Intangible assets are amortized using the economic consumption method if anticipated future revenues can be reasonably estimated. The straight-line method is used when future revenues cannot be reasonably estimated, with a cumulative catch-up of amortization expense for milestone payments that do not result in additional intellectual property rights and/or incremental cash flows. Amortization expense is recorded as a component of cost of sales in the condensed consolidated statements of operations and comprehensive loss. The Company assesses its intangible assets for impairment if indicators are present or changes in circumstance suggest that impairment may exist. Events that could result in an impairment, or trigger an interim impairment assessment, include the receipt of additional clinical or nonclinical data regarding one of the Company’s drug candidates or a potentially competitive drug candidate, changes in the clinical development program for a drug candidate or new information regarding potential sales for the drug. If impairment indicators are present or changes in circumstance suggest that impairment may exist, the Company performs a recoverability test by comparing the sum of the estimated undiscounted cash flows of each intangible asset to its carrying value on the condensed consolidated balance sheet. If the undiscounted cash flows used in the recoverability test are less than the carrying value, the Company would determine the fair value of the intangible asset and recognize an impairment loss if the carrying value of the intangible asset exceeds its fair value. Comprehensive Loss Comprehensive loss is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Comprehensive loss consists of net loss and other comprehensive loss. Other comprehensive loss includes foreign currency translation adjustments and unrealized gains and losses on pension obligations. The following table presents changes in the components of accumulated other comprehensive loss (in thousands): Foreign currency translation adjustments Unrealized loss on pension liability Total Balance at December 31, 2016 $ (142) $ (2,782) $ (2,924) Other comprehensive (loss) income 35 45 80 Balance at March 31, 2017 $ (107) $ (2,737) $ (2,844) Balance at December 31, 2017 $ 259 $ (6,141) $ (5,882) Other comprehensive (loss) income 462 63 525 Balance at March 31, 2018 $ 721 $ (6,078) $ (5,357) New Accounting Pronouncements - Recently Adopted In August 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2016-15, which is intended to simplify and clarify how certain transactions are classified in the statement of cash flows, and to reduce diversity in practice for such transactions. This ASU addresses eight specific issues regarding classification of cash flows. The standard is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company adopted this ASU effective January 1, 2018. The adoption of this guidance did not have an impact on the Company’s condensed consolidated financial statements and related disclosures. In October 2016, the FASB issued ASU No. 2016-16, which removes the prohibition in ASC Topic 740 against the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. As a result, the income tax consequences from the intra-entity transfer of an asset, other than inventory, and associated changes to deferred taxes will be recognized when the transfer occurs. The Company adopted this new standard effective January 1, 2018 using the modified retrospective method. Upon adoption, the Company recorded a deferred tax asset and corresponding valuation allowance of $52.7 million. There was no cumulative effect adjustment to accumulated deficit as of the beginning of the period of adoption. In November 2016, the FASB issued ASU No. 2016-18, which requires amounts generally described as restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the total beginning and ending amounts for the periods shown on the statement of cash flows. ASU No. 2016-18 is effective for fiscal years beginning after December 15, 2017 (including interim periods within those periods) using a retrospective transition method to each period presented. The Company adopted this ASU effective January 1, 2018. The adoption of this guidance required the following changes and disclosures to the presentation of the condensed consolidated financial statements: · Cash, cash equivalents and restricted cash and cash equivalents reported on the condensed consolidated statements of cash flows now includes restricted cash and cash equivalents and totals $646.0 million and $501.9 million as of December 31, 2017 and March 31, 2018, respectively. · Restricted cash generally consists of cash balances held as collateral for the Company’s employee credit card programs. In May 2017, the FASB issued ASU No. 2017-09, which clarifies when a change to the terms or conditions of a share-based payment award must be accounted for as a modification. The new guidance requires modification accounting if the fair value, vesting condition or classification of the award is not the same immediately before and after a change to the terms and conditions of the award. This ASU is effective on a prospective basis beginning on January 1, 2018, with early adoption permitted. The Company adopted this ASU effective January 1, 2018, and the adoption did not have an impact on the Company’s condensed consolidated financial statements and related disclosures. New Accounting Pronouncements – Recently Issued In February 2016, the FASB issued ASU No. 2016-02, a comprehensive new lease accounting standard, which provides revised guidance on accounting for lease arrangements by both lessors and lessees and requires lessees to recognize a lease liability and a right-of-use asset for most leases. This ASU also requires additional disclosures. The new guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. The new standard must be applied using a modified retrospective transition approach that requires application of the new guidance for all periods presented. Although its assessment is not complete, the Company currently expects the adoption of this guidance to result in the addition of material balances of leased assets and corresponding lease liabilities to its consolidated balance sheets, primarily relating to leases of office space.

Net Loss per Share

Net Loss per Share	3 Months Ended
	Mar. 31, 2018
Net Loss per Share
Net Loss per Share	3. Net Loss per Share Basic and diluted net loss per common share is calculated by dividing net loss applicable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration of common stock equivalents. The Company’s potentially dilutive shares, which include outstanding stock options, Employee Stock Purchase Plan awards, unvested restricted stock units, or RSUs, and shares issuable upon conversion of the Convertible Notes, are considered to be common stock equivalents and are only included in the calculation of diluted net loss per share when their effect is dilutive. The following table presents amounts that were excluded from the calculation of diluted net loss per share, due to their anti-dilutive effect (in thousands): Three Months Ended March 31, 2017 2018 Outstanding stock options and Employee Stock Purchase Plan 7,366 8,067 Unvested restricted stock units 1,093 2,197 Shares issuable upon conversion of Convertible Notes 4,186 1,441 12,645 11,705 In September 2014, the Company issued Convertible Notes, which provide in certain situations for the conversion of the outstanding principal amount of the Convertible Notes into shares of the Company’s common stock at a predefined conversion rate. See Note 5, “Debt”, for additional information. In conjunction with the issuance of the Convertible Notes, the Company entered into capped call option transactions, or Capped Calls, with certain counterparties. The Capped Calls are expected generally to reduce the potential dilution, and/or offset, to an extent, the cash payments the Company may choose to make in excess of the principal amount, upon conversion of the Convertible Notes. As provided by the terms of the indenture underlying the Convertible Notes, the Company has a choice to settle the conversion obligation for the Convertible Notes in cash, shares or any combination of the two. The Company currently intends to settle the par value of the Convertible Notes in cash and any excess conversion premium in shares. Accordingly, the par value of the Convertible Notes will not be included in the calculation of diluted net income per share, but the dilutive effect of the conversion premium will be considered in the calculation of diluted net income per share using the treasury stock method. The share figures in the table above represent the estimated incremental shares that would be issued, after consideration of the Capped Calls, assuming conversion of all of the outstanding Convertible Notes as of March 31, 2017 and 2018.

Inventories

Inventories	3 Months Ended
	Mar. 31, 2018
Inventories
Inventories	4. Inventories The following table presents inventories as of December 31, 2017 and March 31, 2018 (in thousands): December 31, March 31, 2017 2018 Raw materials $ 17,876 $ 22,428 Work in process 38,629 50,231 Finished goods 1,434 1,785 Total inventories $ 57,939 $ 74,444 Inventories are related to the Company’s approved products, primarily ZEJULA. If future sales of ZEJULA or VARUBI are less than expected, the Company may be required to write down the value of such inventories.

Debt

Debt	3 Months Ended
	Mar. 31, 2018
Debt.
Debt	5. Debt Our outstanding debt obligations consisted of the following (in thousands): December 31, March 31, 2017 2018 Convertible notes, net $ 143,446 $ 146,529 Term Loan (Tranche A), net 293,659 293,888 Total long-term debt $ 437,105 $ 440,417 Convertible Notes On September 29, 2014, in a registered underwritten public offering, the Company completed the issuance of $201.3 million aggregate principal amount of Convertible Notes. In conjunction with the sale of the Convertible Notes, the Company used $20.8 million of the net proceeds to enter into separate Capped Calls. The Convertible Notes bear interest at a rate of 3.00% per annum, payable semi-annually on April 1 and October 1, and will be convertible into cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election. The Convertible 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 Convertible Notes will be convertible only upon the occurrence of certain events and during certain periods as discussed below, 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 Convertible Notes is approximately $35.13 per share of common stock at an initial conversion rate of 28.4627 shares of the Company’s common stock per $1,000 principal amount of Convertible Notes. The conversion rate is subject to adjustment from time to time upon the occurrence of certain events, including, but not limited to, the issuance of stock dividends and payment of cash dividends. At any time prior to the close of business on the business day immediately preceding April 1, 2021, holders may convert their Convertible Notes at their option only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on December 31, 2014 (and only during such calendar quarter), if the closing sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter in which the conversion occurs is greater than 130% of the conversion price on each applicable trading day; (2) during the five business day period after any ten consecutive trading day period, or the measurement period, in which the trading price per $1,000 principal amount of the Convertible Notes for each trading day of the measurement period was less than 98% of the product of the closing sale price of the Company’s common stock and the conversion rate on each such trading day; or (3) upon the occurrence of specified corporate events. As of March 31, 2018, the carrying value of the Convertible Notes, net of unamortized discount and debt issuance costs, was $146.5 million and the estimated fair value of the principal amount was $369.0 million. As provided by the terms of the indenture underlying the Convertible Notes, the Company has a choice to settle the conversion obligation for the Convertible Notes in cash, shares or any combination of the two. The Company currently intends to settle the par value of the Convertible Notes in cash and any excess conversion premium in shares. The following table presents total interest expense recognized related to the Convertible Notes during the three months ended March 31, 2017 and 2018 (in thousands): Three Months Ended March 31, 2017 2018 Contractual interest expense $ 1,509 $ 1,509 Amortization of debt discount 2,615 2,953 Amortization of debt issuance costs 143 130 Total interest expense $ 4,267 $ 4,592 2017 Term Loan Agreement In November 2017, the Company entered into a loan agreement, or the Loan Agreement, with BioPharma Credit PLC and affiliates, or the Lenders. The Lenders agreed to provide up to an aggregate principal amount of $500.0 million in two tranches, with the first tranche equal to $300.0 million, or Tranche A, and the second in an amount between $50.0 million and $200.0 million at the Company’s discretion, or Tranche B. The Company drew Tranche A on December 6, 2017 with a maturity date of December 6, 2024. Tranche B is available for draw at the Company’s option, on 90 days’ notice, from June 30, 2018 until December 20, 2018 and if drawn by the Company, will also have a maturity date of December 6, 2024. Borrowings under the Tranche A and Tranche B loans bear interest at rates equal to the London Interbank Offered Rate, or LIBOR, plus an applicable margin of 8% per annum and 7.5% per annum, respectively (with the LIBOR rate subject to a floor of 1% and cap equal to the LIBOR rate as of the Tranche A closing date plus 1.5%). The loans have an up-front fee of 2% on the funded amount of each tranche, payable at the applicable closing date. The Tranche A loan was recorded on the condensed consolidated balance sheets, net of a debt discount of $6.0 million in upfront fees assessed by the Lenders at the time of borrowing. The debt discount and deferred financing costs of $0.4 million are being amortized to interest expense using the effective interest method over the same term. The effective annual interest rate of the outstanding debt under Tranche A loan is approximately 10.0%. For the three months ended March 31, 2018, the Company recognized $7.5 million of interest expense related to the Tranche A loan, including $0.2 million related to the accretion of debt discount and amortization of deferred financing costs.

Accrued Expenses

Accrued Expenses	3 Months Ended
	Mar. 31, 2018
Accrued Expenses
Accrued expenses	6. Accrued Expenses The following table presents the components of accrued expenses (in thousands): December 31, March 31, 2017 2018 Research and development $ 55,949 $ 57,285 Salaries, bonuses and other compensation 33,717 23,625 Product revenue allowances 22,847 18,590 Inventory 16,469 28,633 Sales and marketing 6,701 7,347 Royalties 6,552 4,982 Professional services 3,944 3,101 Other 8,629 7,026 Total accrued expenses $ 154,808 $ 150,589

Stock-Based Compensation

Stock-Based Compensation	3 Months Ended
	Mar. 31, 2018
Stock-Based Compensation
Stock-Based Compensation	7. Stock-Based Compensation The Company maintains several equity compensation plans, including the TESARO, Inc. 2012 Omnibus Incentive Plan, or the 2012 Incentive Plan, the TESARO, Inc. 2010 Stock Incentive Plan, or the 2010 Incentive Plan, the TESARO, Inc. 2015 Non-Employee Director Stock Incentive Plan, or the 2015 Director Plan, and the TESARO, Inc. 2012 Employee Stock Purchase Plan, or the 2012 ESPP. On April 27, 2012, the stockholders of the Company approved the 2012 Incentive Plan, which had been previously adopted by the board of directors. Upon effectiveness of the 2012 Incentive Plan, the Company ceased making awards under the 2010 Incentive Plan. The 2012 Incentive Plan initially allowed the Company to grant awards for up to 1,428,571 shares of common stock plus the number of shares of common stock available for grant under the 2010 Incentive Plan as of the effectiveness of the 2012 Incentive Plan (an additional 6,857 shares) plus the number of shares of common stock related to awards outstanding under the 2010 Incentive Plan that terminate by expiration, forfeiture, cancellation, cash settlement or otherwise. The number of shares available for grants of awards under the 2012 Incentive Plan is increased automatically each January 1 by a number of shares of common stock equal to the lesser of 4% of the shares of common stock then outstanding or the number of shares determined by the Company’s board of directors. Most recently, on January 1, 2017 and 2018, the number of shares authorized for issuance under the 2012 Incentive Plan was increased by 2,144,867 shares and 2,178,561 shares, respectively. Awards under the 2012 Incentive Plan may include the following award types: stock options, which may be either incentive stock options or nonqualified stock options; stock appreciation rights; restricted stock; RSUs; dividend equivalent rights; performance shares; performance units; cash-based awards; other stock-based awards, including unrestricted shares; or any combination of the foregoing. The exercise price of stock options granted under the 2012 Incentive Plan is equal to the closing price of a share of the Company’s common stock on the grant date. The 2015 Director Plan allows the Company to grant awards for up to 500,000 shares of common stock. Awards under the 2015 Director Plan may include the following award types: stock options; stock appreciation rights; restricted stock; RSUs; unrestricted stock; or any combination of the foregoing. The exercise price of stock options granted under the 2015 Director Plan is equal to the closing price of a share of the Company’s common stock on the grant date. The following table presents stock-based compensation expense as reflected in the Company’s condensed consolidated statements of operations and comprehensive loss (in thousands): Three Months Ended March 31, 2017 2018 Research and development $ 7,125 $ 7,940 Selling, general and administrative 11,276 18,493 Subtotal 18,401 26,433 Capitalized stock-based compensation costs — (305) Stock-based compensation expense included in total expenses $ 18,401 $ 26,128 Stock Options The following table presents a summary of the Company’s stock option activity and related information: Weighted-average exercise price per Shares share Outstanding at December 31, 2017 6,908,313 $ 52.00 Granted 1,366,909 56.12 Exercised (121,278) 37.08 Cancelled (141,904) 90.70 Outstanding at March 31, 2018 8,012,040 $ 52.24 Vested at March 31, 2018 4,558,825 $ 36.97 At March 31, 2018, there was approximately $132.6 million of unrecognized compensation cost related to unvested stock options, which the Company expects to recognize over a remaining weighted-average period of 2.67 years. Restricted Stock Units The following table presents a summary of the Company’s RSU activity and related information: Weighted-average grant date fair Shares value per share Unvested restricted stock units at December 31, 2017 1,159,118 $ 115.01 Granted 1,315,916 59.07 Vested (216,319) 108.51 Forfeited (62,001) 114.08 Unvested restricted stock units at March 31, 2018 2,196,714 $ 82.17 At March 31, 2018, there was approximately $166.8 million of unrecognized compensation cost related to unvested RSUs, which the Company expects to recognize over a remaining weighted-average period of 3.19 years. ESPP Under the Company’s 2012 ESPP, an aggregate of 275,000 shares of common stock have been reserved for issuance pursuant to purchase rights granted to the Company’s employees or to employees of the Company’s designated subsidiaries. As of March 31, 2018, 151,859 shares remained available for issuance. During the three months ended March 31, 2017 and 2018, the Company did not issue any shares under the 2012 ESPP, and recognized approximately $0.5 million and $0.4 million in related stock-based compensation expense, respectively.

Income Taxes

Income Taxes	3 Months Ended
	Mar. 31, 2018
Income Taxes
Income Taxes	8. Income Taxes Deferred tax assets and deferred tax liabilities are determined based on temporary differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is recorded against deferred tax assets if it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company does not recognize a tax benefit for uncertain tax positions unless it is more likely than not that the position will be sustained upon examination by tax authorities, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit that is recorded for these positions is measured at the largest amount of cumulative benefit that has greater than a 50 percent likelihood of being realized upon ultimate settlement. Deferred tax assets that do not meet these recognition criteria are not recorded and the Company recognizes a liability for uncertain tax positions that may result in tax payments. If such unrecognized tax benefits were realized and not subject to valuation allowances, the entire amount would impact the tax provision. As of March 31, 2018, the Company’s uncertain tax positions were subject to valuation allowances. As of March 31, 2018, the Company continues to consider interpretations of the application of SEC Staff Accounting Bulletin No. 118, and has not finalized incremental accounting adjustments related to the Tax Cuts and Jobs Act of 2017. The Company recorded provisions for income taxes for the three months ended March 31, 2017 and 2018 of $0.1 million and $0.4 million, respectively. The provision for income taxes consists of current tax expense, which relates primarily to the Company’s subsidiary operations in non-U.S. tax jurisdictions.

Intangible Assets

Intangible Assets	3 Months Ended
	Mar. 31, 2018
Intangible Assets
Intangible Assets	9. Intangible Assets The following table presents intangible assets as of December 31, 2017 and March 31, 2018 (in thousands): December 31, March 31, 2017 2018 Estimated useful life Acquired and in-licensed rights $ 64,665 $ 64,665 8-15 Years Less accumulated amortization (8,281) (9,718) Total intangible assets, net $ 56,384 $ 54,947 The Company recorded $0.5 million and $1.4 million in amortization expense related to intangible assets during the three months ended March 31, 2017 and 2018, respectively. Estimated future amortization expense for intangible assets as of March 31, 2018 is $4.5 million for the remainder of 2018, $6.0 million per year for 2019, 2020, 2021, and 2022, and $26.5 million thereafter.

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2018
Commitments and Contingencies
Commitments and Contingencies	10. Commitments and Contingencies The Company leases approximately 275,000 square feet of office space in Waltham, Massachusetts under a non-cancelable operating lease agreement. The Company also leases office space in several locations throughout Europe. The Company recognizes rental expense on a straight-line basis over the respective lease term including any free rent periods and tenant allowances. Future minimum rental commitments under the Company’s leased properties as of March 31, 2018 were $8.4 million for the remainder of the year ending December 31, 2018 and $12.1 million, $8.0 million, $3.8 million, $3.6 million and $2.3 million for the years ending December 31, 2019, 2020, 2021, 2022 and thereafter, respectively. The Company has entered into agreements with certain vendors for the provision of services, including services related to commercial manufacturing, data management and clinical operation support, that the Company is not able to terminate for convenience under its contracts, and thus avoid any and all future obligations to the vendors. Under such agreements, the Company is contractually obligated to make certain minimum payments to the vendors, with the exact amounts in the event of termination to be based on the timing of the termination and the exact terms of the agreement. The Company has certain obligations under licensing agreements with third parties that are contingent upon achieving various development, regulatory and commercial milestones. Pursuant to these license agreements, the Company is required to make milestone payments if certain development, regulatory and commercial sales milestones are achieved, and may have certain additional research funding obligations. Also, pursuant to the terms of each of these license agreements, when and if commercial sales of a product commence, the Company will pay royalties to its licensors on net sales of the respective products. Litigation and Other Proceedings The Company may periodically become subject to legal proceedings and claims arising in connection with ongoing business activities, including claims or disputes related to patents that have been issued or that are pending in the field of research on which the Company is focused. A putative class action complaint was filed on January 17, 2018 in the United States District Court for the District of Massachusetts, entitled Roger Bowers v. TESARO Incorporated (sic), et. al., Case No. 18-10086. The complaint alleges that the Company and its Chief Executive Officer and its Chief Financial Officer violated certain federal securities laws, specifically under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 thereunder. The plaintiff seeks unspecified damages on behalf of a purported class of purchasers of the Company’s common stock between March 14, 2016 and January 12, 2018. On March 19, 2018, six separate applicants filed motions seeking appointment as lead plaintiff. Four of these applicants subsequently withdrew their motions or indicated that they did not oppose a competing motion filed by another applicant. The Court has not yet ruled on the remaining motions or selected a lead plaintiff. The Court has also not set a trial date for this matter. The Company believes that the allegations contained in the complaint are without merit and intends to defend the case vigorously. The Company has not recorded an estimated liability associated with this legal proceeding as it does not believe that such a liability is probable.

Revenue Recognition

Revenue Recognition	3 Months Ended
	Mar. 31, 2018
Revenue recognition
Revenue Recognition	11. Revenue Recognition Product Revenue, Net The Company sells its products principally to a limited number of specialty distributors and specialty pharmacy providers in the U.S., and directly to hospitals and clinics as well as to certain wholesale distributors in Europe, or collectively, its Customers. These Customers subsequently resell the Company’s products to health care providers and patients. In addition to distribution agreements with Customers, the Company enters into arrangements with health care providers and payors that provide for government-mandated and/or privately-negotiated rebates, chargebacks and discounts with respect to the purchase of the Company’s products. Revenues from product sales are recognized when the Customer obtains control of the Company’s product, which occurs at a point in time, typically upon delivery to the Customer. When the Company performs shipping and handling activities after the transfer of control to the Customer (e.g., when control transfers prior to delivery), they are considered as fulfillment activities, and accordingly, the costs are accrued for when the related revenue is recognized. Taxes collected from Customers relating to product sales and remitted to governmental authorities are excluded from revenues. Product Revenue . Net product revenue relates to sales of ZEJULA and VARUBI/VARUBY. The Company commenced sales of ZEJULA in the U.S. in April 2017 and in Europe in December 2017. The following table presents net product revenues by product for the three months ended March 31, 2017 and 2018, respectively (in thousands). Three months ended March 31, Change 2017 2018 Amount Percentage ZEJULA $ –– $ 48,869 $ 48,869 n/m VARUBI/VARUBY 2,139 1,303 (836) (39)% Product revenue, net $ 2,139 $ 50,172 $ 48,033 n/m = not meaningful The following table summarizes activity in each of the product revenue allowance and reserve categories for the three months ended March 31, 2017 and 2018 (in thousands): Chargebacks, Government Returns Total Balance at December 31, 2016 $ 177 $ 1,312 $ 18 $ 1,507 Provision related to current period sales 736 562 8 1,306 Adjustment related to prior period sales — — — — Credit or payments made during the period (756) (1,157) — (1,913) Balance at March 31, 2017 $ 157 $ 717 $ 26 $ 900 Balance at December 31, 2017 $ 2,088 $ 6,450 $ 16,350 $ 24,888 Provision related to current period sales 3,310 3,115 194 6,619 Adjustment related to prior period sales — — — — Credit or payments made during the period (4,208) (3,801) (3,697) (11,706) Balance at March 31, 2018 $ 1,190 $ 5,764 $ 12,847 $ 19,801 License, Collaboration and Other Revenues The Company enters into out-licensing agreements which are within the scope of Topic 606, under which it licenses certain rights to its product candidates to third parties. The terms of these arrangements typically include payment to the Company of one or more of the following: non-refundable, up-front license fees; development, regulatory and commercial milestone payments; payments for manufacturing supply services the Company provides through its contract manufacturers; and royalties on net sales of licensed products. Each of these payments results in license, collaboration and other revenues, except for revenues from royalties on net sales of licensed products, which are classified as royalty revenues. In determining the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements, the Company performs the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. The following table presents changes in the Company’s contract assets and liabilities during the three months ended March 31, 2017 and 2018 (in thousands): Balance at Additions Deductions Balance at Three months ended March 31, 2017 Contract assets $ 1,000 $ — $ — $ 1,000 Contract liabilities: Deferred revenue $ 399 $ — $ (23) $ 376 Three months ended March 31, 2018 Contract assets $ 1,000 $ — $ (1,000) $ — Contract liabilities: Deferred revenue $ 306 $ — $ (24) $ 282 During the three months ended March 31, 2017 and 2018, the Company recognized the following revenues as a result of changes in the contract asset and the contract liability balances in the respective periods (in thousands): Three Months Ended 2017 2018 Revenue recognized in the period from: Amounts included in the contract liability or contract assets at the beginning of the period $ 23 $ 24 Performance obligations satisfied in previous periods $ — $ (1,000) The $(1.0) million noted above for the three months ended March 31, 2018 was a reversal of license revenue based on a re-evaluation of the probability of a milestone being achieved, as more fully described in Note 12, “Collaboration Arrangements”, under “ Jiangsu Hengrui Medicine Co., Ltd. ”

License and Collaboration Arran

License and Collaboration Arrangements	3 Months Ended
	Mar. 31, 2018
License And Collaboration Agreements Abstract
License and Collaboration Arrangements	12. Collaboration Arrangements Merck Collaboration In May 2015, the Company entered into a research agreement with Merck Sharp & Dohme B.V., a subsidiary of Merck, to perform a trial to evaluate the preliminary safety and efficacy of niraparib plus KEYTRUDA® in patients with triple negative breast cancer and patients with ovarian cancer. Under the terms of this agreement, the Company is responsible for providing niraparib study materials and for carrying out clinical research activities. The Company and Merck share in the external costs of the study equally, with certain exceptions. The Company records cost-sharing payments due from Merck as reductions of research and development expense. During the three months ended March 31, 2017 and 2018, the Company incurred $2.1 million and $1.8 million in external costs related to this study, of which $1.0 million and $0.9 million is reimbursable by Merck, respectively. At March 31, 2018, $2.2 million of cost-sharing receivable from Merck has been recorded in other current assets on the condensed consolidated balance sheets. Out-Licenses Takeda Pharmaceutical Co., Ltd. On July 27, 2017, the Company entered into an exclusive license agreement, or the Takeda Agreement, with Millennium Pharmaceuticals, Inc., a wholly-owned subsidiary of Takeda Pharmaceutical Company Limited , or Takeda. Pursuant to the Takeda Agreement, the Company granted Takeda licenses under certain patent rights and know-how relating to niraparib to develop and commercialize niraparib for the treatment of all tumor types in Japan, and all tumor types excluding prostate cancer in South Korea, Taiwan, Russia and Australia. In connection with the Takeda Agreement, the Company received a $100.0 million up-front payment and is eligible to receive additional payments of up to $140.0 million related to the achievement of certain clinical development and regulatory milestones as well as up to $100.0 million related to the achievement of additional sales milestones. The Company will also be eligible to receive tiered royalties from Takeda based on percentages of net product sales ranging from the high teens to low thirties. Takeda is responsible for conducting and funding all development and commercialization of niraparib in the licensed territories, including research, development, regulatory and commercialization activities. Unless earlier terminated, the Takeda Agreement will continue in effect until the date on which the royalty term and all payment obligations with respect to all products in all countries have expired. The Company identified the following performance obligations at the inception of the Takeda Agreement: (1) exclusive license with rights to develop and commercialize niraparib to Takeda in the licensed territories for the associated tumor types, and (2) initial supply to Takeda of certain materials for the manufacture of niraparib. In addition, the Company may also become responsible for manufacturing certain niraparib products for clinical and commercial supply and providing technical assistance related to the transfer of know-how, at Takeda’s option, for the manufacture of niraparib for which the Company will receive reimbursement that approximates stand-alone selling prices. Revenue associated with the transfer of the license was fully recognized during the third quarter of 2017, the performance obligation is fully satisfied, and no changes have occurred in the transaction price during the three months ended March 31, 2018. Revenue associated with the initial supply of niraparib materials will be recognized when delivered to Takeda. During the three months ended March 31, 2018, the Company recognized $0.1 million as other revenues within license, collaboration and other revenues in the Company’s condensed consolidated statements of operations and comprehensive loss related to materials delivered to Takeda. No revenue was recognized during the three months ended March 31, 2017. No changes have occurred in the transaction price of previously delivered goods during the three months ended March 31, 2018. Janssen Biotech, Inc. Under the terms of the Company’s collaboration agreement with Janssen Biotech, Inc., or Janssen, the Company granted Janssen licenses under certain patent rights and know-how relating to niraparib for prostate cancer worldwide, except for Japan. Janssen will conduct all development and commercialization of niraparib in the field of prostate cancer worldwide (excluding Japan). Pursuant to the collaboration agreement, within 30 days after the date of the collaboration agreement, the Company provided Janssen with electronic copies of certain know-how relating to development of niraparib. In addition, at Janssen’s request and in return for certain reimbursement, the Company is also responsible for manufacturing and supplying to Janssen all of Janssen’s requirements of active pharmaceutical ingredient, or API, and finished drug product, for niraparib and niraparib products to be used by Janssen for its development activities in prostate cancer indications. Also at Janssen’s request, the Company is responsible for manufacturing of certain niraparib products and API for commercial sale in the field of prostate cancer. In both cases, if Janssen exercises its right to receive the manufacturing services, the Company will receive reimbursement that will at least cover its cost of providing such services. The Company received a $35.0 million up-front, non-refundable license fee from Janssen. Assuming successful development and commercialization of niraparib products for prostate cancer, the Company could receive up to an additional $43.0 million in clinical milestones and $372.0 million in regulatory and sales milestones as well as tiered, double-digit royalties on aggregate net sales of products in the field of prostate cancer. Janssen is responsible for funding all development and commercialization of niraparib in prostate cancer worldwide (excluding Japan), including research, development, manufacturing, regulatory and commercialization activities. Janssen may terminate the collaboration agreement at any time upon 90 days’ written notice, upon termination of the Company’s license agreement with Merck or in the event of certain safety concerns. Either party may terminate the collaboration agreement for uncured material breach or bankruptcy. Unless earlier terminated, the collaboration agreement will continue in effect until the date on which the royalty term and all payment obligations with respect to all products in all countries have expired. The Company assessed this arrangement in accordance with Topic 606 and concluded that the contract counterparty, Janssen, is a customer. The Company identified the following material promises under the contract: (1) the licenses under certain patent rights relating to niraparib for prostate cancer worldwide, except for Japan, and transfer of certain development and regulatory information; and (2) the obligation to participate in Joint Committees. In addition, the Company identified the following customer options that will create manufacturing obligations for the Company upon exercise by Janssen: (1) the supply of API and niraparib products for Janssen’s development and commercial needs; and (2) the supply of niraparib for Janssen’s clinical trial needs. The Company considered the manufacturing capabilities of Janssen, Janssen’s right to sublicense and manufacture API, and the fact that the manufacturing services are not proprietary and can be provided by other vendors, to conclude that the license has stand-alone functionality and is distinct. The Company’s obligation to participate in the Joint Committees and provide development, regulatory and commercialization information to Janssen does not significantly impact or modify the licenses’ granted functionality. Further, the customer options for manufacturing services were evaluated as a material right, but were concluded to be immaterial to the Company’s financial statements. Based on these assessments, the Company identified the license and the participation in Joint Committees as the only performance obligations at the inception the arrangement, which were both deemed to be distinct. Revenue associated with the transfer of the license was fully recognized during the second quarter of 2016, the performance obligation is fully satisfied, and no changes have occurred in the transaction price during the three months ended March 31, 2018. Revenue associated with the Joint Committees performance obligation, $0.5 million, is being recognized on a straight-line basis over a period of five years, which, in management’s judgment, is the best measure of progress toward satisfying the performance obligation and represents the Company’s best estimate of the period of the obligation to participate in the Joint Committees. The remaining transaction price of $0.3 million is recorded in deferred revenue as of March 31, 2018 on the condensed consolidated balance sheets and will be recognized as revenue over the remaining period of 36 months. Revenue associated with the materials supply service is recognized when the material is delivered to Janssen. During the three months ended March 31, 2017 and 2018, the Company recognized $0.9 million and $0.5 million, respectively, as other revenues within license, collaboration and other revenues in the Company’s condensed consolidated statements of operations and comprehensive loss related to materials delivered to Janssen. No changes have occurred in the transaction price of previously delivered goods during the three months ended March 31, 2018. Zai Lab (Shanghai) Co., Ltd. On September 28, 2016, the Company entered into a Collaboration, Development and License Agreement, or the Zai Agreement, with Zai Lab. Under the terms of the Zai Agreement, the Company exclusively licensed the rights to develop and commercialize niraparib to Zai Lab for China, Hong Kong and Macao, or the China Territories. Zai Lab will conduct all development, manufacturing and commercialization of niraparib in the China Territories, except for prostate cancer. Under the terms of the Zai Agreement, the Company received a $15.0 million up-front, non-refundable license fee from Zai Lab in the fourth quarter of 2016. Assuming successful development and commercialization of niraparib products in the China Territories, the Company could receive additional regulatory and sales milestones as well as tiered, double-digit royalties on aggregate net sales of products in the China Territories. Zai Lab is responsible for funding all development and commercialization of niraparib in the China Territories, including research, development, manufacturing, regulatory and commercialization activities. The term of the Zai Agreement continues, on a country-by-country basis, until the later of expiration of the last patent in the China Territories covering the niraparib product, or ten years from the first commercial sale in such country. The Zai Agreement may also be terminated by Zai Lab at any time upon prior written notice, or by either party for material breach or insolvency. Jiangsu Hengrui Medicine Co., Ltd. In July 2015, the Company entered into a license agreement with Jiangsu Hengrui Medicine Co., Ltd., or Hengrui, pursuant to which Hengrui has licensed the rights to develop, manufacture and commercialize rolapitant in the China Territories. The Company received a $1.0 million up-front, non-refundable license fee from Hengrui in the fourth quarter of 2015. The Company has evaluated the terms of this arrangement under Topic 606 and has determined that there are two performance obligations: (1) exclusive license with rights to develop, manufacture and commercialize rolapitant in the China Territories; and (2) provision of technical assistance related to the know-how transfer for the development of the rolapitant formulations. The Company further determined that the transaction price for this arrangement included the $1.0 million up-front consideration received and a future regulatory development milestone of $1.0 million. This future milestone payment relates to the submission of the clinical trial application with the China Food and Drug Administration. The Company re-evaluates the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur. During the first quarter of 2018, Hengrui ceased development activities related to the licensed product. All performance obligations were recognized in 2015 and 2016, including a $1.0 million future regulatory development milestone that the Company assessed as probable. The Company re-evaluated the probability of the milestone, including its impact on the transaction price, and recognized a $1.0 million reversal of license revenue during the three months ended March 31, 2018. No revenue was recognized during the three months ended March 31, 2017.

Basis of Presentation and Sig19

Basis of Presentation and Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2018
Basis of Presentation and Significant Accounting Policies
Basis of Presentation	Basis of Presentation The accompanying condensed consolidated financial statements are unaudited and have been prepared by TESARO in conformity with accounting principles generally accepted in the United States of America, or GAAP. The Company’s condensed consolidated financial statements reflect the operations of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The Company currently operates in one business segment, which is the identification, acquisition, development and commercialization of oncology-related therapeutics, and has a single reporting and operating unit structure. Certain information and footnote disclosures normally included in the Company’s annual financial statements have been condensed or omitted. These interim financial statements, in the opinion of management, reflect all normal recurring adjustments necessary for a fair presentation of the Company’s financial position and results of operations for the interim periods ended March 31, 2017 and 2018. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full fiscal year. These interim financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2017 and the notes thereto, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. The significant accounting policies used in preparation of these condensed consolidated financial statements for the three months ended March 31, 2018 are consistent with those discussed in Note 2 to the consolidated financial statements in the Company’s 2017 Annual Report on Form 10-K and are updated below as necessary.
Use of Estimates	Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, other comprehensive income (loss) and the related disclosures. Significant estimates in these condensed consolidated financial statements include estimates made in connection with accrued research and development expenses, stock-based compensation expense, revenue, valuation of convertible notes, inventory, intangible assets and related amortization. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. Actual results may differ from those estimates or assumptions.
Fair Value of Financial Instruments	Fair Value of Financial Instruments The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. The fair value hierarchy prioritizes valuation inputs based on the observable nature of those inputs. The fair value hierarchy applies only to the valuation inputs used in determining the reported fair value of the investments and is not a measure of investment credit quality. The hierarchy defines three levels of valuation inputs: Level 1 inputs Quoted prices in active markets for identical assets or liabilities Level 2 inputs Observable inputs other than Level 1 inputs, including quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active Level 3 inputs Unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability The following table presents information about the Company’s financial assets and liabilities that have been measured at fair value as of December 31, 2017 and March 31, 2018 and indicates the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands): December 31, 2017 Description Balance Sheet Classification Total Level 1 Level 2 Level 3 Assets: Money market funds Cash and cash equivalents $ 593,955 $ 593,955 $ — $ — Total assets $ 593,955 $ 593,955 $ — $ — March 31, 2018 Description Balance Sheet Classification Total Level 1 Level 2 Level 3 Assets: Money market funds Cash and cash equivalents $ 403,121 $ 403,121 $ — $ — Total assets $ 403,121 $ 403,121 $ — $ — The carrying amounts of accounts payable and accrued expenses approximate their fair values due to their short-term maturities. In September 2014, the Company issued $201.3 million aggregate principal amount of 3.00% convertible senior notes due October 1, 2021, or the Convertible Notes. Interest is payable semi-annually in arrears on April 1 and October 1 of each year. As of March 31, 2018, the carrying value of the Convertible Notes, net of unamortized discount and debt issuance costs, was $146.5 million and the estimated fair value of the principal amount was $369.0 million. As of March 31, 2018, the carrying value of the Company’s borrowing under its term loan agreement approximated its fair value. The Convertible Notes and the term loan agreement are discussed in more detail in Note 5, “Debt”.
Revenue Recognition	Revenue Recognition The Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To determine revenue recognition, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. For a further discussion of accounting for net product revenue and license, collaboration and other revenues, see Note 11, “Revenue Recognition”.
Intangible Assets	Intangible Assets The Company maintains definite-lived intangible assets related to milestone payments made to third parties subsequent to regulatory approval for acquired and in-licensed product candidates. These assets are amortized over their remaining useful lives, which are generally estimated to be the remaining patent life. If the Company’s estimate of the product’s useful life is shorter than the remaining patent life, then the shorter period is used. Intangible assets are amortized using the economic consumption method if anticipated future revenues can be reasonably estimated. The straight-line method is used when future revenues cannot be reasonably estimated, with a cumulative catch-up of amortization expense for milestone payments that do not result in additional intellectual property rights and/or incremental cash flows. Amortization expense is recorded as a component of cost of sales in the condensed consolidated statements of operations and comprehensive loss. The Company assesses its intangible assets for impairment if indicators are present or changes in circumstance suggest that impairment may exist. Events that could result in an impairment, or trigger an interim impairment assessment, include the receipt of additional clinical or nonclinical data regarding one of the Company’s drug candidates or a potentially competitive drug candidate, changes in the clinical development program for a drug candidate or new information regarding potential sales for the drug. If impairment indicators are present or changes in circumstance suggest that impairment may exist, the Company performs a recoverability test by comparing the sum of the estimated undiscounted cash flows of each intangible asset to its carrying value on the condensed consolidated balance sheet. If the undiscounted cash flows used in the recoverability test are less than the carrying value, the Company would determine the fair value of the intangible asset and recognize an impairment loss if the carrying value of the intangible asset exceeds its fair value.
Comprehensive Loss	Comprehensive Loss Comprehensive loss is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Comprehensive loss consists of net loss and other comprehensive loss. Other comprehensive loss includes foreign currency translation adjustments and unrealized gains and losses on pension obligations. The following table presents changes in the components of accumulated other comprehensive loss (in thousands): Foreign currency translation adjustments Unrealized loss on pension liability Total Balance at December 31, 2016 $ (142) $ (2,782) $ (2,924) Other comprehensive (loss) income 35 45 80 Balance at March 31, 2017 $ (107) $ (2,737) $ (2,844) Balance at December 31, 2017 $ 259 $ (6,141) $ (5,882) Other comprehensive (loss) income 462 63 525 Balance at March 31, 2018 $ 721 $ (6,078) $ (5,357)
New Accounting Pronouncements	New Accounting Pronouncements - Recently Adopted In August 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2016-15, which is intended to simplify and clarify how certain transactions are classified in the statement of cash flows, and to reduce diversity in practice for such transactions. This ASU addresses eight specific issues regarding classification of cash flows. The standard is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company adopted this ASU effective January 1, 2018. The adoption of this guidance did not have an impact on the Company’s condensed consolidated financial statements and related disclosures. In October 2016, the FASB issued ASU No. 2016-16, which removes the prohibition in ASC Topic 740 against the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. As a result, the income tax consequences from the intra-entity transfer of an asset, other than inventory, and associated changes to deferred taxes will be recognized when the transfer occurs. The Company adopted this new standard effective January 1, 2018 using the modified retrospective method. Upon adoption, the Company recorded a deferred tax asset and corresponding valuation allowance of $52.7 million. There was no cumulative effect adjustment to accumulated deficit as of the beginning of the period of adoption. In November 2016, the FASB issued ASU No. 2016-18, which requires amounts generally described as restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the total beginning and ending amounts for the periods shown on the statement of cash flows. ASU No. 2016-18 is effective for fiscal years beginning after December 15, 2017 (including interim periods within those periods) using a retrospective transition method to each period presented. The Company adopted this ASU effective January 1, 2018. The adoption of this guidance required the following changes and disclosures to the presentation of the condensed consolidated financial statements: · Cash, cash equivalents and restricted cash and cash equivalents reported on the condensed consolidated statements of cash flows now includes restricted cash and cash equivalents and totals $646.0 million and $501.9 million as of December 31, 2017 and March 31, 2018, respectively. · Restricted cash generally consists of cash balances held as collateral for the Company’s employee credit card programs. In May 2017, the FASB issued ASU No. 2017-09, which clarifies when a change to the terms or conditions of a share-based payment award must be accounted for as a modification. The new guidance requires modification accounting if the fair value, vesting condition or classification of the award is not the same immediately before and after a change to the terms and conditions of the award. This ASU is effective on a prospective basis beginning on January 1, 2018, with early adoption permitted. The Company adopted this ASU effective January 1, 2018, and the adoption did not have an impact on the Company’s condensed consolidated financial statements and related disclosures. New Accounting Pronouncements – Recently Issued In February 2016, the FASB issued ASU No. 2016-02, a comprehensive new lease accounting standard, which provides revised guidance on accounting for lease arrangements by both lessors and lessees and requires lessees to recognize a lease liability and a right-of-use asset for most leases. This ASU also requires additional disclosures. The new guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. The new standard must be applied using a modified retrospective transition approach that requires application of the new guidance for all periods presented. Although its assessment is not complete, the Company currently expects the adoption of this guidance to result in the addition of material balances of leased assets and corresponding lease liabilities to its consolidated balance sheets, primarily relating to leases of office space.

Basis of Presentation and Sig20

Basis of Presentation and Significant Accounting Policies (Tables)	3 Months Ended
	Mar. 31, 2018
Basis of Presentation and Significant Accounting Policies
Schedule of company's financial assets and liabilities that have been measured at fair value and indicating the fair value hierarchy of the valuation inputs utilized to determine such fair value:	The following table presents information about the Company’s financial assets and liabilities that have been measured at fair value as of December 31, 2017 and March 31, 2018 and indicates the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands): December 31, 2017 Description Balance Sheet Classification Total Level 1 Level 2 Level 3 Assets: Money market funds Cash and cash equivalents $ 593,955 $ 593,955 $ — $ — Total assets $ 593,955 $ 593,955 $ — $ — March 31, 2018 Description Balance Sheet Classification Total Level 1 Level 2 Level 3 Assets: Money market funds Cash and cash equivalents $ 403,121 $ 403,121 $ — $ — Total assets $ 403,121 $ 403,121 $ — $ —
Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]	Foreign currency translation adjustments Unrealized loss on pension liability Total Balance at December 31, 2016 $ (142) $ (2,782) $ (2,924) Other comprehensive (loss) income 35 45 80 Balance at March 31, 2017 $ (107) $ (2,737) $ (2,844) Balance at December 31, 2017 $ 259 $ (6,141) $ (5,882) Other comprehensive (loss) income 462 63 525 Balance at March 31, 2018 $ 721 $ (6,078) $ (5,357)

Net Loss per Share (Tables)

Net Loss per Share (Tables)	3 Months Ended
	Mar. 31, 2018
Net Loss per Share
Schedule of share amount excluded from the calculation of diluted net loss per share due to their anti-dilutive effect	Three Months Ended March 31, 2017 2018 Outstanding stock options and Employee Stock Purchase Plan 7,366 8,067 Unvested restricted stock units 1,093 2,197 Shares issuable upon conversion of Convertible Notes 4,186 1,441 12,645 11,705

Inventories (Tables)

Inventories (Tables)	3 Months Ended
	Mar. 31, 2018
Inventories
Schedule of current inventories	December 31, March 31, 2017 2018 Raw materials $ 17,876 $ 22,428 Work in process 38,629 50,231 Finished goods 1,434 1,785 Total inventories $ 57,939 $ 74,444

Debt (Tables)

Debt (Tables)	3 Months Ended
	Mar. 31, 2018
Debt.
Schedule of outstanding debt obligations	December 31, March 31, 2017 2018 Convertible notes, net $ 143,446 $ 146,529 Term Loan (Tranche A), net 293,659 293,888 Total long-term debt $ 437,105 $ 440,417
Schedule of convertible note interest expense	Three Months Ended March 31, 2017 2018 Contractual interest expense $ 1,509 $ 1,509 Amortization of debt discount 2,615 2,953 Amortization of debt issuance costs 143 130 Total interest expense $ 4,267 $ 4,592

Accrued Expenses (Tables)

Accrued Expenses (Tables)	3 Months Ended
	Mar. 31, 2018
Accrued Expenses
Schedule of accrued expenses	December 31, March 31, 2017 2018 Research and development $ 55,949 $ 57,285 Salaries, bonuses and other compensation 33,717 23,625 Product revenue allowances 22,847 18,590 Inventory 16,469 28,633 Sales and marketing 6,701 7,347 Royalties 6,552 4,982 Professional services 3,944 3,101 Other 8,629 7,026 Total accrued expenses $ 154,808 $ 150,589

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	3 Months Ended
	Mar. 31, 2018
Stock-Based Compensation
Schedule of stock-based compensation expense as reflected in the Company's condensed consolidated statements of operations and comprehensive loss	Three Months Ended March 31, 2017 2018 Research and development $ 7,125 $ 7,940 Selling, general and administrative 11,276 18,493 Subtotal 18,401 26,433 Capitalized stock-based compensation costs — (305) Stock-based compensation expense included in total expenses $ 18,401 $ 26,128
Summary of the Company's stock option activity and related information	Weighted-average exercise price per Shares share Outstanding at December 31, 2017 6,908,313 $ 52.00 Granted 1,366,909 56.12 Exercised (121,278) 37.08 Cancelled (141,904) 90.70 Outstanding at March 31, 2018 8,012,040 $ 52.24 Vested at March 31, 2018 4,558,825 $ 36.97
Summary of the Company's restricted stock unit (RSU) activity and related information	Weighted-average grant date fair Shares value per share Unvested restricted stock units at December 31, 2017 1,159,118 $ 115.01 Granted 1,315,916 59.07 Vested (216,319) 108.51 Forfeited (62,001) 114.08 Unvested restricted stock units at March 31, 2018 2,196,714 $ 82.17

Intangible Asset (Tables)

Intangible Asset (Tables)	3 Months Ended
	Mar. 31, 2018
Intangible Assets
Schedule of finite-lived intangible assets	The following table presents intangible assets as of December 31, 2017 and March 31, 2018 (in thousands): December 31, March 31, 2017 2018 Estimated useful life Acquired and in-licensed rights $ 64,665 $ 64,665 8-15 Years Less accumulated amortization (8,281) (9,718) Total intangible assets, net $ 56,384 $ 54,947

Revenue Recognition (Tables)

Revenue Recognition (Tables)	3 Months Ended
	Mar. 31, 2018
Revenue recognition
Schedule of product revenue by product	Three months ended March 31, Change 2017 2018 Amount Percentage ZEJULA $ –– $ 48,869 $ 48,869 n/m VARUBI/VARUBY 2,139 1,303 (836) (39)% Product revenue, net $ 2,139 $ 50,172 $ 48,033
Summary of activity in each of the product revenue allowance and reserve categories	Chargebacks, Government Returns Total Balance at December 31, 2016 $ 177 $ 1,312 $ 18 $ 1,507 Provision related to current period sales 736 562 8 1,306 Adjustment related to prior period sales — — — — Credit or payments made during the period (756) (1,157) — (1,913) Balance at March 31, 2017 $ 157 $ 717 $ 26 $ 900 Balance at December 31, 2017 $ 2,088 $ 6,450 $ 16,350 $ 24,888 Provision related to current period sales 3,310 3,115 194 6,619 Adjustment related to prior period sales — — — — Credit or payments made during the period (4,208) (3,801) (3,697) (11,706) Balance at March 31, 2018 $ 1,190 $ 5,764 $ 12,847 $ 19,801
Summary of changes in contract assets and liabilities	Balance at Additions Deductions Balance at Three months ended March 31, 2017 Contract assets $ 1,000 $ — $ — $ 1,000 Contract liabilities: Deferred revenue $ 399 $ — $ (23) $ 376 Three months ended March 31, 2018 Contract assets $ 1,000 $ — $ (1,000) $ — Contract liabilities: Deferred revenue $ 306 $ — $ (24) $ 282
Schedule of revenue recognized due to changes in contract asset and contract liability balances	Three Months Ended 2017 2018 Revenue recognized in the period from: Amounts included in the contract liability or contract assets at the beginning of the period $ 23 $ 24 Performance obligations satisfied in previous periods $ — $ (1,000)

Description of Business (Detail

Description of Business (Details)	Mar. 31, 2018segment
Description of Business
Number of operating segments	1

Basis of Presentation and Sig29

Basis of Presentation and Significant Accounting Policies - Financial Instruments and Convertible Senior Notes (Details) $ in Thousands	Mar. 31, 2018USD ($)segment	Dec. 31, 2017USD ($)	Sep. 30, 2014USD ($)	Sep. 29, 2014USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Number of operating segments | segment	1
Convertible Senior Notes
Net carrying amount	$ 440,417	$ 437,105
Convertible senior notes due October 2021
Convertible Senior Notes
Aggregate principal amount			$ 201,300	$ 201,300
Debt Instrument, Interest Rate, Stated Percentage			3.00%	3.00%
Net carrying amount	146,500
Fair value of principal amount	369,000
Fair Value, Measurements, Recurring
Financial Assets and Liabilities Measured At Fair Value
Total assets	403,121	593,955
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1
Financial Assets and Liabilities Measured At Fair Value
Total assets	403,121	593,955
Money Market Funds | Fair Value, Measurements, Recurring
Financial Assets and Liabilities Measured At Fair Value
Cash and cash equivalents	403,121	593,955
Money Market Funds | Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1
Financial Assets and Liabilities Measured At Fair Value
Cash and cash equivalents	$ 403,121	$ 593,955

Basis of Presentation and Sig30

Basis of Presentation and Significant Accounting Policies - Comprehensive Loss (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017	Dec. 31, 2016
Accumulated Other Comprehensive Income (Loss) [Line Items]
Cash, cash equivalents and restricted cash and cash equivalents	$ 501,851	$ 674,855	$ 645,954	$ 787,866
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period	(5,882)	(2,924)
Other comprehensive income:	525	80
Balance at end of period	(5,357)	(2,844)
Foreign currency translation adjustments
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period	259	(142)
Other comprehensive income:	462	35
Balance at end of period	721	(107)
Unrealized (loss) on pension liability
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period	(6,141)	(2,782)
Other comprehensive income:	63	45
Balance at end of period	$ (6,078)	$ (2,737)

Basis of Presentation and Sig31

Basis of Presentation and Significant Accounting Policies - New Accounting Pronouncements (Details) - USD ($) $ in Thousands	Jan. 01, 2018	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2017	Dec. 31, 2016
New Accounting Pronouncements-Recently Adopted or Issued
Cash, cash equivalents and restricted cash and cash equivalents		$ 501,851	$ 645,954	$ 674,855	$ 787,866
ASU 2016-16
New Accounting Pronouncements-Recently Adopted or Issued
Deferred tax asset for intra-entity transfers	$ 52,700
Increase in valuation allowance for change in deferred tax assets	52,700
Cumulative effect adjustment	$ 0

Net Loss per Share (Details)

Net Loss per Share (Details) - shares shares in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Net Loss per Share
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	11,705	12,645
Outstanding stock options
Net Loss per Share
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	8,067	7,366
Unvested restricted stock units
Net Loss per Share
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	2,197	1,093
Shares issuable upon conversion of Convertible Notes
Net Loss per Share
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	1,441	4,186

Inventories (Details)

Inventories (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Inventories
Raw materials	$ 22,428	$ 17,876
Work in process	50,231	38,629
Finished goods	1,785	1,434
Total inventories	$ 74,444	$ 57,939

Debt - Obligations (Details)

Debt - Obligations (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Debt.
Convertible notes, net	$ 146,529	$ 143,446
Term Loan (Tranche A)	293,888	293,659
Total long-term debt	$ 440,417	$ 437,105

Debt - Convertible Notes (Detai

Debt - Convertible Notes (Details)	Mar. 31, 2018USD ($)item	Sep. 29, 2014USD ($)$ / shares	Dec. 31, 2017USD ($)	Sep. 30, 2014USD ($)
Debt
Net carrying amount	$ 440,417,000		$ 437,105,000
Convertible senior notes due October 2021
Debt
Principal		$ 201,300,000		$ 201,300,000
Capped call transactions payments		$ 20,800,000
Interest rate (as a percent)		3.00%		3.00%
Conversion price per share of convertible notes into common stock | $ / shares		$ 35.13
Convertible notes conversion ratio per 1,000 principal		28.4627
Denominator Of Principal Amount Denomination For Conversion Into Common Stock		$ 1,000
Net carrying amount	146,500,000
Fair value of principal amount	$ 369,000,000
Convertible senior notes due October 2021 | Conversion of convertible notes into common stock after December 31,2014
Debt
Convertible threshold trading days | item	20
Convertible threshold consecutive trading days | item	30
Minimum threshold percentage of stock price trigger	130.00%
Convertible senior notes due October 2021 | Conversion of convertible notes when common share trading price is less than 98% of target ratio
Debt
Denominator Of Principal Amount Denomination For Conversion Into Common Stock	$ 1,000
Convertible threshold trading days | item	5
Convertible threshold consecutive trading days | item	10
Threshold percentage forcing conversion when less than share price times conversion ratio	98.00%

Debt - Interest expense (Detail

Debt - Interest expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Interest expense
Total interest expense	$ 12,092	$ 4,267
Convertible senior notes due October 2021
Interest expense
Contractual interest expense	1,509	1,509
Amortization of debt discount	2,953	2,615
Amortization of debt issuance costs	130	143
Total interest expense	$ 4,592	$ 4,267

Debt - 2017 Term Loan Agreement

Debt - 2017 Term Loan Agreement (Details) $ in Millions	1 Months Ended	3 Months Ended
	Nov. 30, 2017USD ($)tranche	Mar. 31, 2018
Minimum
Term loan agreement
Debt Instrument, Interest Rate, Stated Percentage	1.00%
LIBOR | Maximum
Term loan agreement
Debt Instrument, Basis Spread on Variable Rate		1.50%
2017 Term Loan Facility
Term loan agreement
Number of tranches | tranche	2
2017 Term Loan Facility | Maximum
Term loan agreement
Aggregate principal amount	$ 500
2017 Term Loan Facility | Tranche A
Term loan agreement
Aggregate principal amount	$ 300
Up-front fee	2.00%
2017 Term Loan Facility | Tranche A | LIBOR
Term loan agreement
Debt Instrument, Description of Variable Rate Basis	London Interbank Offered Rate, or LIBOR
Debt Instrument, Basis Spread on Variable Rate	8.00%
2017 Term Loan Facility | Tranche B | Minimum
Term loan agreement
Aggregate principal amount	$ 50
2017 Term Loan Facility | Tranche B | Maximum
Term loan agreement
Aggregate principal amount	$ 200
2017 Term Loan Facility | Tranche B | LIBOR
Term loan agreement
Debt Instrument, Basis Spread on Variable Rate	7.50%
2017 Term Loan Facility | Tranche B | From June 30 2018 To December 20 2018
Term loan agreement
Period of notice to draw on loan under second tranche		90 days

Debt - Term loan discount and c

Debt - Term loan discount and costs (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Interest expense
Interest Expense	$ 12,092	$ 4,267
2017 Term Loan Facility | Tranche A
Debt Instrument, Unamortized Discount [Abstract]
Debt discount	6,000
Debt Issuance Costs, Net [Abstract]
Deferred financing costs	$ 400
Interest expense
Effective annual interest rate	10.00%
Interest Expense	$ 7,500
Additional interest expense related to accretion of debt discount and amortization of deferred financing costs	$ 200

Accrued Expenses (Details)

Accrued Expenses (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Accrued Expenses
Research and development	$ 57,285	$ 55,949
Salaries, bonuses and other compensation	23,625	33,717
Product revenue allowances	18,590	22,847
Inventory	28,633	16,469
Sales and marketing	7,347	6,701
Royalties	4,982	6,552
Professional services	3,101	3,944
Other	7,026	8,629
Total accrued expenses	$ 150,589	$ 154,808

Stock-Based Compensation - Stoc

Stock-Based Compensation - Stock Compensation Plans (Details) - Common Stock - shares	Mar. 31, 2018	Jan. 01, 2018	Jan. 01, 2017	May 14, 2015	Apr. 27, 2012
Omnibus Incentive Plan 2012
Stock-Based Compensation
Number of shares authorized for grant under the plan					1,428,571
Number of shares available for future grants that were added to the total number of shares reserved for issuance					6,857
Annual increase in common stock available for grant as a percentage of common stock outstanding	4.00%
Number of additional shares authorized under the plan		2,178,561	2,144,867
Director Incentive Plan 2015 | Maximum
Stock-Based Compensation
Number of shares authorized for grant under the plan				500,000

Stock-Based Compensation - St41

Stock-Based Compensation - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Stock-based compensation expense
Stock-based compensation expense	$ 26,433	$ 18,401
Capitalized stock-based compensation costs	(305)
Total stock-based compensation expense	26,128	18,401
Research and development
Stock-based compensation expense
Stock-based compensation expense	7,940	7,125
Selling, general and administrative
Stock-based compensation expense
Stock-based compensation expense	$ 18,493	$ 11,276

Stock-Based Compensation - St42

Stock-Based Compensation - Stock Options (Details) - Outstanding stock options $ / shares in Units, $ in Millions	Mar. 31, 2018USD ($)$ / sharesshares	Mar. 31, 2018USD ($)$ / sharesshares
Shares
Outstanding at the beginning of the period (in shares) | shares		6,908,313
Granted (in shares) | shares		1,366,909
Exercised (in shares) | shares		(121,278)
Cancelled (in shares) | shares		(141,904)
Outstanding at the end of the period (in shares) | shares	8,012,040	8,012,040
Vested at the end of the period (in shares) | shares		4,558,825
Weighted-average price per share
Outstanding at the beginning of the period (in dollars per share) | $ / shares		$ 52
Granted (in dollars per share) | $ / shares		56.12
Exercised (in dollars per share) | $ / shares		37.08
Cancelled (in dollars per share) | $ / shares		90.70
Outstanding at the end of the period (in dollars per share) | $ / shares	$ 52.24	52.24
Vested at the end of the period (in dollars per share) | $ / shares	$ 36.97	$ 36.97
Total unrecognized compensation cost related to unvested stock options (in dollars) | $	$ 132.6	$ 132.6
Weighted average period over which unrecognized compensation costs are expected to be recognized	2 years 8 months 1 day

Stock-Based Compensation - Rest

Stock-Based Compensation - Restricted Stock Units (Details) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2018USD ($)$ / sharesshares	Mar. 31, 2017USD ($)
Restricted Stock Units
Stock-based compensation expense | $	$ 26,128	$ 18,401
Restricted Stock Units
Restricted Stock Units
Unvested RSUs at the beginning of the period (in shares) | shares	1,159,118
Granted (in shares) | shares	1,315,916
Vested (in shares) | shares	(216,319)
Forfeited (in shares) | shares	(62,001)
Unvested RSUs at the end of the period (in shares) | shares	2,196,714
Weighted-average grant date fair value per share
Unvested RSUs at the beginning of the period (in dollars per share) | $ / shares	$ 115.01
Granted (in dollars per share) | $ / shares	59.07
Vested (in dollars per share) | $ / shares	108.51
Forfeited (in dollars per share) | $ / shares	114.08
Unvested RSUs at the end of the period (in dollars per share) | $ / shares	$ 82.17
Unrecognized compensation costs | $	$ 166,800
Weighted average period over which unrecognized compensation costs are expected to be recognized	3 years 2 months 9 days

Stock-Based Compensation - Empl

Stock-Based Compensation - Employee Stock Purchase Plan (Details) - USD ($) $ in Thousands	Jan. 01, 2017	Mar. 31, 2018	Mar. 31, 2017
Employee Stock Purchase Plan
Stock-based compensation expense		$ 26,128	$ 18,401
Employee stock purchase plan
Employee Stock Purchase Plan
Shares reserved for issuance under ESPP		275,000
Number of shares remaining available for grant		151,859
Stock-based compensation expense	$ 500	$ 400

Income Taxes - (Details)

Income Taxes - (Details) - USD ($) $ in Millions	Mar. 31, 2018	Mar. 31, 2018
Income Taxes
Current income tax provision (benefit)	$ 0.1	$ 0.4

Intangible Assets (Details)

Intangible Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Intangible Assets
Acquired and in-licensed rights	$ 64,665	$ 64,665		$ 64,665
Less: accumulated amortization	(9,718)	(9,718)		(8,281)
Total intangible asset, net	54,947	54,947		$ 56,384
Amortization expense	1,400		$ 500
Estimated future amortization expense
2,018	4,500	4,500
2,019	6,000	6,000
2,020	6,000	6,000
2,021	6,000	6,000
2,022	6,000	6,000
Thereafter	$ 26,500	$ 26,500
Use Rights [Member] | Minimum
Intangible Assets
Estimated useful life		8 years
Use Rights [Member] | Maximum
Intangible Assets
Estimated useful life		15 years

Commitments and Contingencies (

Commitments and Contingencies (Details) $ in Millions	Mar. 31, 2018USD ($)ft²
Future minimum rental commitments
2,018	$ 8.4
2,019	12.1
2,020	8
2,021	3.8
2,022	3.6
Thereafter	$ 2.3
Waltham, Massachusetts
Commitments and Contingencies
Leased office space (in square feet) | ft²	275,000

Revenue Recognition - Product r

Revenue Recognition - Product revenue (Details) - USD ($) $ in Thousands	3 Months Ended		15 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018
Revenue from Contract with Customer, Excluding Assessed Tax [Abstract]
Revenue	$ 49,742	$ 3,073
Activity in each of the product revenue allowance and reserve categories
Balance at the beginning	24,888	1,507	$ 1,507
Provision related to current period sales	6,619	1,306
Credit or payments made during the period	(11,706)	(1,913)
Balance at the end	19,801	900	19,801
Product revenue
Revenue from Contract with Customer, Excluding Assessed Tax [Abstract]
Revenue	50,172	2,139
Change amount	$ 48,033
Change percentage	2246.00%
ZEJULA
Revenue from Contract with Customer, Excluding Assessed Tax [Abstract]
Revenue	$ 48,869
Change amount	48,869
VARUBI/VARUBY
Revenue from Contract with Customer, Excluding Assessed Tax [Abstract]
Revenue	1,303	2,139
Change amount	$ (836)
Change percentage	(39.00%)
Licenses, collaboration and other revenues
Revenue from Contract with Customer, Excluding Assessed Tax [Abstract]
Revenue		934
Chargebacks, discounts and fees
Activity in each of the product revenue allowance and reserve categories
Balance at the beginning	$ 2,088	177	177
Provision related to current period sales	3,310	736
Credit or payments made during the period	(4,208)	(756)
Balance at the end	1,190	157	1,190
Government and other rebates
Activity in each of the product revenue allowance and reserve categories
Balance at the beginning	6,450	1,312	1,312
Provision related to current period sales	3,115	562
Credit or payments made during the period	(3,801)	(1,157)
Balance at the end	5,764	717	5,764
Returns
Activity in each of the product revenue allowance and reserve categories
Balance at the beginning	16,350	18	18
Provision related to current period sales	194	8
Credit or payments made during the period	(3,697)
Balance at the end	$ 12,847	$ 26	$ 12,847

Revenue Recognition - contract

Revenue Recognition - contract assets and liabilities (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Contract assets.
Contract assets, beginning of the period	$ 1,000	$ 1,000
Contract asset deductions	(1,000)
Contract assets, end of the period		1,000
Contract liabilities:
Contract liabilities, Beginning Balance	306	399
Contract liability deductions	(24)	(23)
Contract liabilities, Ending Balance	$ 282	$ 376

Revenue Recognition - Revenue r

Revenue Recognition - Revenue recognized (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Revenue recognition
Amounts included in the contract liability or contract assets at the beginning of the period	$ 24	$ 23
Performance obligations satisfied in previous periods	$ (1,000)

License and Collaboration Agree

License and Collaboration Agreements - Merck Collaboration (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
License Agreements
Research and development expense	$ 96,755	$ 66,122
Merck Sharp and Dohme B.V.
License Agreements
Research and development expense	1,800	2,100
Amount of research and development costs that are reimbursable	900	$ 1,000
Other current assets | Merck Sharp and Dohme B.V.
License Agreements
Cost-sharing receivable	$ 2,200

License and Collaboration Agr52

License and Collaboration Agreements - Takeda Pharmaceutical (Details) - USD ($) $ in Thousands	Jul. 27, 2017	Mar. 31, 2018	Mar. 31, 2017
License Agreements
Transaction price recognized		$ 49,742	$ 3,073
Takeda Pharmaceutical Co. Ltd
License Agreements
Up-front payment received	$ 100,000
Changes occurred in the transaction price of previously delivered goods		0
Transaction price recognized			$ 0
Maximum | License Agreement | Achievement of clinical development and regulatory milestones | Takeda Pharmaceutical Co. Ltd
License Agreements
Potential milestone payments	140,000
Maximum | License Agreement | Achievement of sales milestones | Takeda Pharmaceutical Co. Ltd
License Agreements
Potential milestone payments	$ 100,000
Licenses, collaboration and other revenues | Takeda Pharmaceutical Co. Ltd
License Agreements
Transaction price recognized		$ 100

License and Collaboration Agr53

License and Collaboration Agreements - Janssen Biotech Inc (Details) - USD ($) $ in Thousands	Apr. 05, 2017	Apr. 05, 2016	Mar. 31, 2018	Mar. 31, 2017
License Agreements
Transaction price recognized			$ 49,742	$ 3,073
Janssen Biotech, Inc.
License Agreements
Up-front payment received		$ 35,000
Period over which performance obligation will be recognized as revenue			36 months
Collaborative Arrangement | Janssen Biotech, Inc.
License Agreements
Prior written notice to terminate programs	90 days
Changes occurred in the transaction price of previously delivered goods			$ 0
Collaborative Arrangement | Maximum | Janssen Biotech, Inc.
License Agreements
Period of time to provide electronic copies of know-how relating to development of product		30 days
Collaborative Arrangement | Maximum | Achievement of clinical milestones | Janssen Biotech, Inc.
License Agreements
Potential milestone payments		$ 43,000
Collaborative Arrangement | Maximum | Achievement of regulatory and sales milestones | Janssen Biotech, Inc.
License Agreements
Potential milestone payments		$ 372,000
Joint Committee performance obligation arrangement | Janssen Biotech, Inc.
License Agreements
Transaction price recognized			$ 500
Period over which performance obligation will be recognized as revenue			5 years
Transaction price			$ 300
Licenses, collaboration and other revenues
License Agreements
Transaction price recognized				934
Manufacturing supply services | Collaborative Arrangement | Janssen Biotech, Inc.
License Agreements
Other revenue			$ 500	$ 900

License and Collaboration Agr54

License and Collaboration Agreements - Zai Lab (Shanghai) Co Ltd (Details) $ in Thousands	Sep. 28, 2016	Mar. 31, 2018USD ($)	Mar. 31, 2017USD ($)	Dec. 31, 2016USD ($)	Dec. 31, 2016item	Mar. 31, 2018USD ($)
License Agreements
Transaction price recognized		$ 49,742	$ 3,073
Zai Lab (Shanghai) Co. Ltd.
License Agreements
Number of performance obligations | item					3
Changes occurred in the transaction price of previously delivered goods		$ 0
Transaction price recognized						$ 0
Collaboration Development And License Agreement | Zai Lab (Shanghai) Co. Ltd.
License Agreements
Up-front payment received				$ 15,000
Maximum | Collaboration Development And License Agreement | Zai Lab (Shanghai) Co. Ltd.
License Agreements
Expiration period of collaborative arrangement	10 years

License and Collaboration Agr55

License and Collaboration Agreements - Jiangsu Hengrui Medicine Co Ltd (Details) $ in Thousands	1 Months Ended	3 Months Ended
	Jul. 31, 2015USD ($)item	Mar. 31, 2018USD ($)	Mar. 31, 2017USD ($)	Dec. 31, 2015USD ($)
License Agreements
Reversal of license revenue		$ 1,000
Transaction price recognized		49,742	$ 3,073
Jiangsu Hengrui Medicine Co., Ltd
License Agreements
Up-front payment received				$ 1,000
Transaction price recognized			$ 0
License Agreement | Jiangsu Hengrui Medicine Co., Ltd
License Agreements
Number of performance obligations | item	2
Amount of up-front payment included in transaction price	$ 1,000
Reversal of license revenue		$ 1,000
License Agreement | Achievement of submission of clinical trial application with China FDA | Jiangsu Hengrui Medicine Co., Ltd
License Agreements
Amount of future regulatory development milestone included in transaction price	$ 1,000