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Verastem Reports Third Quarter 2017 Financial Results

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Verastem, Inc. (NASDAQ:VSTM), focused on discovering and developing
drugs to improve the survival and quality of life of cancer patients,
today reported financial results for the third quarter ended September
30, 2017 and provided an overview of certain corporate developments and
plans.

"The third quarter was a pivotal time for Verastem with the announcement
of positive top-line data from the pivotal Phase 3 DUO™ study evaluating
oral duvelisib monotherapy in patients with relapsed or refractory
chronic lymphocytic leukemia (CLL)/small lymphocytic lymphoma (SLL),"
said Robert Forrester, President and Chief Executive Officer
of Verastem. "The DUO study met its primary endpoint, with
progression-free survival (PFS) significantly favoring duvelisib
monotherapy over ofatumumab, an approved standard of care treatment for
patients with CLL/SLL. We recently met with the U.S. Food and Drug
Administration (FDA), and based on the meeting and written feedback, we
intend to submit, during the first quarter of 2018, a New Drug
Application (NDA) requesting the full approval of duvelisib for the
treatment of patients with relapsed or refractory CLL/SLL and
accelerated approval for the treatment of patients with relapsed or
refractory follicular lymphoma (FL). The NDA will be based on a
comprehensive clinical data package, including the Phase 3 DUO and Phase
2 DYNAMO studies evaluating duvelisib in patients with advanced
hematologic malignancies."

Mr. Forrester concluded, "At the upcoming American Society of Hematology
2017 Annual Meeting (ASH 2017), we will be presenting data from multiple
studies, including the detailed positive results from the Phase 3 DUO
study, which were selected for an oral presentation."

Third Quarter 2017 and Recent Highlights:

Duvelisib

  • Announced Regulatory Strategy for Duvelisib NDA –
    Verastem recently announced that a meeting was held with the U.S. Food
    and Drug Administration (FDA) regarding the regulatory path for
    duvelisib. Based on the meeting with, and written feedback from the
    FDA, Verastem intends to submit a New Drug Application (NDA)
    requesting the full approval of duvelisib for the treatment of
    patients with relapsed or refractory CLL/SLL and accelerated approval
    for the treatment of patients with relapsed or refractory FL. Along
    with the clinical data from the DUO study, the duvelisib NDA
    submission will also contain the favorable results from the Phase 2
    DYNAMO™ study in double-refractory indolent non-Hodgkin's lymphoma
    (iNHL), which also achieved its primary endpoint with an ORR of 46%
    (p<0.0001). In the subset of patients enrolled in the DYNAMO study
    with double-refractory FL (n=83), duvelisib demonstrated an ORR of
    41%. The Company expects to submit the duvelisib NDA during the first
    quarter of 2018.
  • Reported Positive Top-line Data from the Pivotal Phase 3 DUO
    Study in Relapsed or Refractory CLL/SLL –
    In September 2017,
    Verastem reported that the Phase 3 DUO study met its primary endpoint
    with oral duvelisib monotherapy demonstrating superiority over
    ofatumumab for PFS in patients with CLL/SLL. In this study, duvelisib
    achieved a statistically significant improvement in median PFS of 13.3
    months, compared to 9.9 months for ofatumumab with a hazard ratio of
    0.52 (p<0.0001), representing a 48% reduction in the risk of
    progression or death. Duvelisib monotherapy had a manageable safety
    profile, with results from this study consistent with the
    well-characterized safety profile of duvelisib monotherapy in patients
    with advanced hematologic malignancies.
  • Expanded Duvelisib Program to Include Peripheral T-Cell Lymphoma
    In September 2017, Verastem announced the expansion of its
    duvelisib development program to include targeting the treatment of
    patients with Peripheral T-Cell Lymphoma (PTCL). Duvelisib was granted
    Fast Track designation by the FDA for the treatment of patients with
    PTCL who have received at least one prior therapy. Development of
    duvelisib in PTCL is supported by encouraging Phase 1 clinical data
    which demonstrated a 50% investigator-assessed overall response rate
    in 16 heavily pre-treated patients with relapsed or refractory PTCL,
    including 3 (19%) complete responses and 5 (31%) partial responses.
    Verastem intends to initiate an open-label, multicenter, Phase 2
    clinical trial evaluating the efficacy and safety of duvelisib in
    patients with relapsed or refractory PTCL by the end of 2017.
  • Clinical Data from Pivotal Phase 3 DUO Study Selected for Oral
    Presentation at ASH 2017 –
    Verastem recently announced that an
    abstract highlighting clinical data from the Phase 3 DUO study was
    selected for oral presentation at ASH 2017. The presentation, titled
    "Results from the Phase 3 DUO Trial: A Randomized Comparison of
    Duvelisib Vs Ofatumumab in Patients with Relapsed/Refractory Chronic
    Lymphocytic Leukemia or Small Lymphocytic Lymphoma," will be presented
    by principal investigator, Ian Flinn, M.D., Ph.D., Director of the
    Blood Cancer Research Program at Sarah Cannon Research Institute, on
    Sunday, December 10, 2017 at 4:30pm ET at the Georgia World Congress
    Center, in Building B, Level 5, Murphy BR 3-4.
  • Additional Duvelisib Abstracts Selected for Presentation at ASH
    2017 –
    Along with the Phase 3 DUO results, two additional
    duvelisib abstracts were selected for presentation at ASH 2017. The
    abstract, titled "In Vitro, In Vivo, and Parallel Phase I
    Evidence Support the Safety and Activity of Duvelisib, a PI3K-δ,γ
    Inhibitor, in Combination with Romidepsin or Bortezomib in
    Relapsed/Refractory T-Cell Lymphoma," will be given as an oral
    presentation by Steven Horowitz, M.D., Memorial Sloan Kettering Cancer
    Center, on Monday, December 11, 2017 at 5:00pm ET at the Georgia World
    Congress Center, in Building A, Level 4, Marcus Auditorium. The
    abstract, titled "The Dual PI3K-δ,γ Inhibitor Duvelisib Stimulates
    Anti-Tumor Immunity and Enhances Efficacy of Immune Checkpoint and
    Co-Stimulatory Antibodies in a B Cell Lymphoma Model," will be given
    as a poster presentation by Jonathan Pachter, Ph.D., Chief Scientific
    Officer of Verastem, on Saturday, December 9, 2017 from 5:30-7:30pm ET
    at the Georgia World Congress Center, in Building A, Level 1, Hall A2.
  • Verastem to Host Key Opinion Leader Event at ASH 2017 – On
    Sunday, December 10, 2017, Verastem will host an investor and analyst
    reception, which will feature a moderated panel discussion/Q&A
    including Ian Flinn, MD, Director of the Blood Cancer Research Program
    at Sarah Cannon Cancer Center in Nashville, TN. The event will take
    place during the ASH 2017 annual meeting and interested parties can
    access a live webcast of the event beginning December 10, 2017 at 8pm
    ET by going to the "News and Press" section of the Verastem website at www.verastem.com.

Defactinib

  • Published Scientific Data Highlighting Potential Role of Focal
    Adhesion Kinase (FAK) Inhibition in Pancreatic and Breast Cancer

    In July 2017, Verastem announced the publication of two papers
    in the peer-reviewed journals, PLoS One and Oncotarget.
    The two published articles reported scientific findings from studies
    evaluating FAK inhibition in preclinical models of pancreatic and
    breast cancer and continue to validate the underlying thesis for
    ongoing clinical collaborations evaluating Verastem's lead FAK
    inhibitor, defactinib, in combination with chemotherapeutic and
    leading immunotherapeutic agents in several difficult to treat types
    of cancer. The PLoS One paper in pancreatic cancer is available here
    and the Oncotarget paper in breast cancer is available here.
  • Defactinib Preclinical Abstract Selected for Presentation at ASH
    2017 –
    An abstract describing preclinical data in combination
    with BCL-2 was selected for presentation at ASH 2017. The abstract,
    titled "Combinatorial Inhibition of Focal Adhesion Kinase and BCL-2 in
    AML," will be given as a poster presentation by Xiangmeng Wang, Ph.D.,
    on Sunday, December 10, 2017 from 6:00-8:00pm ET at the Georgia World
    Congress Center, in Building A, Level 1, Hall A2.

Corporate and Financial

  • Brian Stuglik, R.Ph. Appointed to the Board of Directors –
    In September 2017, Verastem announced the appointment of Mr. Stuglik
    to its Board. Mr. Stuglik, former Chief Marketing Officer for Lilly
    Oncology, brings to Verastem 35 years of experience in pharmaceutical
    and oncology commercialization in both the U.S. and international
    markets. He has successfully launched several multi-billion dollar
    brands over his career, including Gemzar®, Alimta®
    and Erbitux®.
  • NgocDiep Le, M.D., Ph.D., Appointed Chief Medical Officer –
    In October 2017, Verastem announced the appointment of Dr. Le as its
    Chief Medical Officer. A trained medical oncologist, Dr. Le is board
    certified in internal medicine and has 15 years of drug development
    experience across all phases in both solid and hematologic
    malignancies as well as IND and NDA submissions. Dr. Le joins Verastem
    from MedImmune (a subsidiary of AstraZeneca) where she served as Vice
    President, Immuno-Oncology Innovative Medicines and led the product
    development teams for multiple high-priority immuno-oncology assets.
    Prior to joining MedImmune, Dr. Le held roles of increasing
    responsibilities at Novartis and at GlaxoSmithKline where she led the
    MEK inhibitor, trametinib (MekinistTM), from the
    first-in-human studies to FDA approval. Dr. Le received a Bachelor in
    Science degree from the California Institute of Technology, and earned
    both MD and PhD degrees from Stanford University School of Medicine.
    Dr. Le will oversee the development strategy and activities for
    Verastem's duvelisib and defactinib.
  • Julie B. Feder Appointed Chief Financial Officer – In
    July 2017, Verastem announced the appointment of Ms. Feder as its
    Chief Financial Officer. Ms. Feder is an accomplished financial
    professional with invaluable leadership experience in the healthcare
    industry. She joins Verastem from the Clinton Health Access
    Initiative, Inc. (CHAI), where she served as Chief Financial Officer.
    Prior to joining CHAI, Ms. Feder held finance roles of increasing
    responsibility at Genzyme Corporation including leading the internal
    audit function. Ms. Feder began her career at Deloitte & Touche LLP
    and she holds a Bachelor of Science in Accounting from Yeshiva
    University's Sy Syms School of Business.
  • Achieved First Development Milestone Related to the Duvelisib
    License Agreement –
    In September 2017, upon achievement of
    positive top-line results from the Phase 3 DUO study, Verastem
    determined that the pre-specified criteria for the first milestone
    under the license agreement with Infinity Pharmaceuticals, Inc.
    (Infinity) had been met and recorded $6.0 million as research and
    development expense. Subsequently, in October 2017, Verastem made the
    milestone payment of $6.0 million to Infinity. The milestone was paid
    using funds drawn from Verastem's existing loan and security agreement
    with Hercules Capital, Inc.

Third Quarter 2017 Financial Results

Net loss for the three months ended September 30, 2017 (2017 Quarter)
was $23.1 million, or $0.61 per share, as compared to a net loss of $7.9
million, or $0.21 per share, for the three months ended September 30,
2016 (2016 Quarter). Net loss includes non-cash stock-based compensation
expense of $1.7 million and $1.3 million for the 2017 Quarter and 2016
Quarter, respectively. Verastem used $11.8 million for operating
activities during the 2017 Quarter.

Research and development expense for the 2017 Quarter was $17.7 million
compared to $4.2 million for the 2016 Quarter. The $13.5 million
increase from the 2016 Quarter to the 2017 Quarter was primarily related
to the achievement of a $6.0 million milestone pursuant to Verastem's
license agreement with Infinity, an increase of $4.8 million in contract
research organization (CRO) expense for outsourced biology, development
and clinical services, which includes Verastem's clinical trial costs,
an increase of approximately $2.0 million in consulting fees, an
increase in stock-based compensation of approximately $423,000 and an
increase in personnel related costs of approximately $153,000.

General and administrative expense for the 2017 Quarter was $5.4 million
compared to $3.8 million for the 2016 Quarter. The increase of $1.6
million from the 2016 Quarter to the 2017 Quarter primarily resulted
from increases in consulting and professional fees of $1.3 million and
personnel costs of approximately $330,000.

As of September 30, 2017, Verastem had cash, cash equivalents and
investments of $60.3 million compared to $80.9 million as of December
31, 2016.

The number of outstanding common shares as of September 30, 2017, was
39,945,028.

Financial Guidance

Based on our current operating plans, we expect to have sufficient cash,
cash equivalents and investments to fund our research and development
programs and operations into the second half of 2018.

About Duvelisib

Duvelisib is an investigational, dual inhibitor of phosphoinositide
3-kinase (PI3K)-delta and PI3K-gamma, two enzymes known to help support
the growth and survival of malignant B-cells and T-cells. PI3K signaling
may lead to the proliferation of malignant B-cells and is thought to
play a role in the formation and maintenance of the supportive tumor
microenvironment.1,2,3 Duvelisib is currently being evaluated
in late- and mid-stage clinical trials, including DUO™, a randomized,
Phase 3 monotherapy study in patients with relapsed or refractory
chronic lymphocytic leukemia (CLL)/small lymphocytic lymphoma (SLL),4
and DYNAMO™, a single-arm, Phase 2 monotherapy study in patients with
refractory indolent non-Hodgkin lymphoma (iNHL).5 Both DUO
and DYNAMO achieved their primary endpoints and Verastem is preparing to
submit a New Drug Application to the U.S. Food and Drug Administration
for the treatment of patients with relapsed or refractory CLL/SLL and
patients with follicular lymphoma (FL) whose disease has progressed and
are refractory to rituximab and to either chemotherapy or
radioimmunotherapy. Duvelisib is also being developed by Verastem for
the treatment of peripheral T-cell lymphoma (PTCL), and is being
investigated in combination with other agents through
investigator-sponsored studies.6 Information about duvelisib
clinical trials can be found on www.clinicaltrials.gov.

About Defactinib

Defactinib is an investigational inhibitor of FAK, a non-receptor
tyrosine kinase that mediates oncogenic signaling in response to
cellular adhesion and growth factors.7 Based on the
multi-faceted roles of FAK, defactinib is used to treat cancer through
modulation of the tumor microenvironment, enhancement of anti-tumor
immunity, and reduction of cancer stem cells.8,9 Defactinib
is currently being evaluated in three separate clinical collaborations
in combination with immunotherapeutic agents for the treatment of
several different cancer types including pancreatic, ovarian, non-small
cell lung cancer, and mesothelioma. These studies are combination
clinical trials with pembrolizumab and avelumab from Merck & Co. and
Pfizer/Merck KGaA, respectively.10,11,12 Information about
these and additional clinical trials evaluating the safety and efficacy
of defactinib can be found on www.clinicaltrials.gov.

About Verastem, Inc.

Verastem, Inc. (NASDAQ:VSTM) is a biopharmaceutical company focused on
discovering and developing drugs to improve outcomes for patients with
cancer. Verastem is currently developing duvelisib, a dual inhibitor of
PI3K-delta and PI3K-gamma, which has successfully met its primary
endpoint in a Phase 2 study in iNHL and a Phase 3 clinical trial in
patients with CLL/SLL. In addition, Verastem is developing the FAK
inhibitor defactinib, which is currently being evaluated in three
separate clinical collaborations in combination with immunotherapeutic
agents for the treatment of several different cancer types, including
pancreatic cancer, ovarian cancer, non-small cell lung cancer, and
mesothelioma. Verastem's product candidates seek to treat cancer by
modulating the local tumor microenvironment, enhancing anti-tumor
immunity, and reducing cancer stem cells. For more information, please
visit www.verastem.com.

Verastem, Inc. forward-looking statements notice:

This press release includes forward-looking statements about Verastem's
strategy, future plans and prospects, including statements regarding the
development and activity of Verastem's investigational product
candidates, including duvelisib and defactinib, and Verastem's PI3K and
FAK programs generally, the structure of our planned and pending
clinical trials and the timeline and indications for clinical
development and regulatory submissions. The words "anticipate,"
"believe," "estimate," "expect," "intend," "may," "plan," "predict,"
"project," "target," "potential," "will," "would," "could," "should,"
"continue," and similar expressions are intended to identify
forward-looking statements, although not all forward-looking statements
contain these identifying words. Each forward-looking statement is
subject to risks and uncertainties that could cause actual results to
differ materially from those expressed or implied in such statement.
Applicable risks and uncertainties include the risks that the full data
from the DUO study will not be consistent with the top-line results of
the study; that the preclinical testing of Verastem's product candidates
and preliminary or interim data from clinical trials may not be
predictive of the results or success of ongoing or later clinical
trials; that data may not be available when expected, including for the
Phase 3 DUO™ study; that even if data from clinical trials is positive,
regulatory authorities may require additional studies for approval and
the product may not prove to be safe and effective; that the degree of
market acceptance of product candidates, if approved, may be lower than
expected; that the timing, scope and rate of reimbursement for our
product candidates is uncertain; that there may be competitive
developments affecting our product candidates; that data may not be
available when expected; that enrollment of clinical trials may take
longer than expected; that our product candidates will cause unexpected
safety events or result in an unmanageable safety profile as compared to
their level of efficacy; that duvelisib will be ineffective at treating
patients with lymphoid malignancies; that Verastem will be unable to
successfully initiate or complete the clinical development of its
product candidates; that the development of Verastem's product
candidates will take longer or cost more than planned; that Verastem may
not have sufficient cash to fund its contemplated operations; that
Verastem or Infinity Pharmaceuticals, Inc. (Infinity) will fail to fully
perform under the duvelisib license agreement; that Verastem may be
unable to make additional draws under its debt facility or obtain
adequate financing in the future through product licensing,
co-promotional arrangements, public or private equity, debt financing or
otherwise; that Verastem will not pursue or submit regulatory filings
for its product candidates, including for duvelisib in patients with CLL
or iNHL; and that Verastem's product candidates will not receive
regulatory approval, become commercially successful products, or result
in new treatment options being offered to patients. Other risks and
uncertainties include those identified under the heading "Risk Factors"
in Verastem's Annual Report on Form 10-K for the year ended December 31,
2016 and in any subsequent filings with the U.S. Securities and Exchange
Commission. The forward-looking statements contained in this press
release reflect Verastem's views as of the date of this release, and
Verastem does not undertake and specifically disclaims any obligation to
update any forward-looking statements.

References
1 Winkler D.G., Faia K.L., DiNitto
J.P. et al. PI3K-delta and PI3K-gamma inhibition by IPI-145 abrogates
immune responses and suppresses activity in autoimmune and inflammatory
disease models. Chem Biol 2013; 20:1-11.
2 Reif K et al.
Cutting Edge: Differential Roles for Phosphoinositide 3 kinases,
p110-gamma and p110-delta, in lymphocyte chemotaxis and homing. J
Immunol 2004:173:2236-2240.
3 Schmid M et al. Receptor
Tyrosine Kinases and TLR/IL1Rs Unexpectedly activate myeloid cell PI3K,
a single convergent point promoting tumor inflammation and progression.
Cancer Cell 2011;19:715-727.
4 www.clinicaltrials.gov,
NCT02004522
5 www.clinicaltrials.gov,
NCT01882803
6 www.clinicaltrials.gov,
NCT02783625, NCT02158091
7 Schaller M.D. and Parsons
J.T. Focal adhesion kinase: an integrin-linked protein tyrosine kinase.
Trends Cell Biol. 1993 3: 258-62.
8 Jiang H et al.
Targeting focal adhesion kinase renders pancreatic cancers responsive to
checkpoint immunotherapy. Nat Med 2016: Aug 22(8) 851-60.
9 Sulzmaier
F.J. et al. FAK in cancer: mechanistic findings and clinical
applications. Nature Rev Cancer. 2014 14: 598-610.
10 www.clinicaltrials.gov,
NCT02546531
11 www.clinicaltrials.gov,
NCT02943317
12 www.clinicaltrials.gov,
NCT02758587

 
Verastem, Inc.
Condensed Consolidated Balance Sheets

(in thousands)

   
September 30,

December 31,

2017 2016
(unaudited)
Cash, cash equivalents and investments $ 60,264 $ 80,897
Prepaid expenses and other current assets 940 398
Property and equipment, net 989 1,417
Other assets   946   917
Total assets $ 63,139 $ 83,629
 
Accounts payable and accrued expenses $ 19,618 $ 10,991
Long-term debt 2,335
Other liabilities 201 341
Stockholders' equity   40,985   72,297
Total liabilities and stockholders' equity $ 63,139 $ 83,629
 
 
Verastem, Inc.
Unaudited Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

       
Three months ended September 30, Nine months ended September 30,
2017 2016 2017 2016
Operating expenses:
Research and development $ 17,743 $ 4,216 $ 35,170 $ 12,887
General and administrative   5,394   3,843   14,582   12,315
Total operating expenses   23,137   8,059   49,752   25,202
Loss from operations (23,137) (8,059) (49,752) (25,202)
Interest income 121 137 416 417
Interest expense   (110)     (231)  
Net loss $ (23,126) $ (7,922) $ (49,567) $ (24,785)
Net loss per share—basic and diluted $ (0.61) $ (0.21) $ (1.33) $ (0.67)
Weighted-average number of common shares used in net loss per
share-basic and diluted
  37,630   36,992   37,207   36,986
 

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