Tesaro (NASDAQ:TSRO), a development-stage biotech, reported its first-quarter earnings on April 30. Tesaro reported a net loss of $49.8 million, or $1.43 per share -- a steep drop from the loss of $18.9 million, or $0.66 per share, it posted in the prior-year quarter. Analysts polled by Thomson Reuters had expected a narrower loss of $1.06 per share.

Tesaro's two most advanced pipeline products are rolapitant, an orally and intravenously administered treatment for chemotherapy-induced nausea and vomiting (CINV), and niraparib, which is in late-stage trials for ovarian and breast cancer. Tesaro signed a marketing agreement with Opko Health (NASDAQ:OPK) for rolapitant in December 2010 and licensed niraparib from Merck (NYSE:MRK) in May 2012.

TSRO Chart

Source: YCharts.

Higher expenses, stagnant stock price
Tesaro attributed its wider quarterly loss to higher expenses across the board. Research and development expenses rose 70% year over year to $28.1 million, in addition to an in-process expense of $17 million for R&D related to a licensing and collaboration agreement with AnaptysBio in immuno-oncology antibodies.

Tesaro's general and adminstrative expenses climbed 96% to $4.7 million, due to higher non-cash stock-based compensation, a larger workforce, and professional service fees. Tesaro finished the quarter with $180 million in cash and equivalents.

Tesaro's lackluster earnings won't do much to boost the stock, which has slumped 9% over the past 12 months despite rising 78% over the past five years. Should investors invest in the stock while it hovers near 52-week lows or move on to more promising biotechs instead?

Near-term catalysts
Tesaro's nearest catalyst is its planned submission of a new drug application to the Food and Drug Administration for rolapitant in mid-2014. Rolapitant is currently in phase 3 trials for the oral indication and phase 2 trials for the IV one. If approved, analysts expect the drug to generate peak sales over $300 million.

However, there are a few issues with rolapitant that can't be ignored. Opko Health originally acquired rolapitant from Schering-Plough (now part of Merck) for $2 million in cash in 2009. But rather than start clinical trials, Opko simply held onto the drug and flipped it to Tesaro in 2010 in exchange for an up-front payment of $6 million and $115 million in additional milestone payments.

Although Opko made a quick profit on the deal, it wasn't clear why the company never tried to develop the drug. That question was likely answered last December, when Tesaro reported mixed results from two late-stage trials. Although rolapitant was effective at treating CINV during the 24- to 120-hour "delayed" period following chemotherapy, it did not significantly improve patients' conditions during the first 24 hours. It also failed to show significant improvement after 120 hours.

This means that rolapitant doesn't offer any clear advantages over Merck's Emend, a similar drug which prevents CINV for up to five days from when chemotherapy is administered. Merck reported that sales of Emend climbed 3.7% year over year to $507 million in fiscal 2013. Both rolapitant and Emend are NK-1 receptor antagonists, which block a substance in the brain that causes vomiting.

Don't overlook its immuno-oncology pipeline
Despite its problems with rolapitant, Tesaro could have a brighter future in cancer drugs. The company has initiated treatment in its phase 3 BRAVO study of niraparib for BRCA positive breast cancer, and is continuing enrollment in its phase 3 NOVA study of the drug for patients with high-grade serous, platinum-sensitive ovarian cancer.

It also plans to start enrolling patients in a phase 1 study of niraparib for patients with Ewing's sarcoma by mid-2014. Analysts expect niraparib to generate annual peak sales of more than $600 million if approved.

Niraparib could just be the beginning, however. Thanks to licensing agreements with Amgen, Merck, and Anaptysbio, Tesaro has built up an enviable pipeline of early-stage small molecule inhibitors and monospecific antibody candidates for the treatment of various tumors.

The Foolish takeaway
In conclusion, Tesaro has promising products in its long-term pipeline, but it's tough to recommend the stock, considering that its losses are widening, expenses are soaring, and rolapitant -- its best hope for revenue growth -- still faces significant challenges ahead. Investors might be better served by waiting on the sidelines and seeing what else transpires with the stock.

Leo Sun has no position in any stocks mentioned, and neither does The Motley Fool. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.