Verastem, Inc. (Nasdaq:VSTM) (also known as Verastem Oncology),
a biopharmaceutical company committed to developing and
commercializing new medicines for patients battling cancer, today
reported financial results for the three months and full-year ended
December 31, 2019, and provided an overview of recent corporate
highlights.
Brian Stuglik, Chief Executive Officer of Verastem Oncology,
commented, “We are very excited to be executing on our new
strategic direction. Our newly expanded development pipeline and
priorities, combined with our recently strengthened balance sheet,
leave us well positioned to deliver on our key corporate objectives
in 2020 and beyond.”
New Strategic Direction
CH5126766 (VS-6766) in Combination with Defactinib
- Accelerating Development for KRAS Mutant Solid
Tumors. In early 2020, Verastem Oncology licensed exclusive
global development and commercialization rights to CH5126766
(VS-6766), a unique and promising inhibitor of the RAF/MEK
signaling pathway. The combination of CH5126766 (VS-6766) and
defactinib is currently being investigated in a Phase 1 clinical
study and expansion cohorts in patients with KRAS mutant advanced
solid tumors, including low grade serous ovarian cancer, non-small
cell lung cancer and colorectal cancer. Verastem Oncology plans to
initiate discussions with regulatory authorities during the first
half of 2020, with the goal of commencing a registration-directed
trial as soon as possible. Data from the Phase 1 combination study
were submitted for presentation to the American Association for
Cancer Research (AACR) 2020 Annual Meeting. The AACR recently
announced that it was terminating the April 2020 meeting due to the
COVID-19 outbreak and is planning to reschedule the meeting for
later this year. Verastem Oncology is actively working with the
appropriate organizations and institutions to determine next
steps.
Duvelisib (COPIKTRA®)
- Prioritizing the Advancement of Duvelisib in
Relapsed/Refractory PTCL. At the American Society of Hematology
2019 Annual Meeting, Verastem Oncology presented positive data from
the dose optimization portion of the Phase 2 PRIMO study evaluating
duvelisib in patients with relapsed or refractory PTCL, an
aggressive disease with a lack of effective therapeutic options.
This initial phase of the trial demonstrated promising clinical
activity including complete and durable responses, as assessed by
independent central review, with a manageable safety profile. The
expansion phase of this registration-directed study continues to
accrue patients and Verastem Oncology expects to complete
enrollment in 2020 and report top-line results from the expansion
cohorts in early 2021. Verastem Oncology intends to build on the
existing Fast Track and Orphan Drug Designations and submit a
regulatory package to the U.S. Food and Drug Administration to
expand the approved indications for COPIKTRA to include relapsed or
refractory PTCL.
- Focusing COPIKTRA Commercial Activities. Verastem
Oncology will be reducing the resources directed to the promotion
and sale of COPIKTRA in its current indications, including reducing
the size of its salesforce and non-core clinical research. The
Company plans to shift its COPIKTRA promotional resources toward
large, community-based practices and academic institutions, which
represent the majority of the appropriate third-line patients with
chronic lymphocytic leukemia/small lymphocytic lymphoma and
follicular lymphoma. The Company expects to reduce its overall
headcount number to approximately 90 employees.
Corporate and Financial
- Strengthened the Balance Sheet Through a Private Placement
with Premier Life Science Investors. On March 3, 2020, Verastem
Oncology completed a private placement offering of approximately
46.5 million shares of its common stock to certain institutional
investors, including RA Capital Management, Vivo Capital, Venrock
Healthcare Capital Partners, Farallon Capital Management, Acuta
Capital, EcoR1 Capital LLC, Avidity Partners and Logos Capital at a
price of $2.15 per share, a 12.6% premium to the February 27, 2020
closing price. The gross proceeds to Verastem Oncology were $100
million. After deducting the underwriting discounts and commissions
and other estimated offering expenses, net proceeds to the Company
were approximately $92.0 million.
Fourth Quarter 2019 Financial Results
Net product revenue for the three months ended December 31, 2019
(2019 Quarter) was $3.6 million, compared to $1.2 million for the
three months ended December 31, 2018 (2018 Quarter), following the
FDA’s approval of COPIKTRA on September 24, 2018. COPIKTRA demand
units for the 2019 Quarter increased 20% compared to the third
quarter of 2019. There was no license and collaboration revenue for
the 2019 or 2018 Quarter.
Total operating expenses for the 2019 Quarter were $36.9
million, compared to $35.5 million for the 2018 Quarter. Excluding
non-recurring charges of $2.2 million related to the Convertible
Notes Exchange, the total operating expenses for the 2019 Quarter
were $34.7 million.
Research and development (R&D) expense for the 2019 Quarter
was $12.5 million, compared to $8.8 million for the 2018 Quarter.
The increase of $3.7 million, or 42.0%, was primarily related to
higher contract research organization costs to support the
development of the Phase 2 TEMPO study for Intermittent Dosing,
pre-clinical collaborations, and personnel costs related to the
October 2019 rightsizing of the organization. This is partially
offset by a decrease in investigator fees and CMC costs related to
the FDA Approval of COPIKTRA in 2018.
Selling, general and administrative expense for the 2019 Quarter
was $23.7 million, compared to $26.2 million for the 2018 Quarter.
The decrease of $2.5 million, or 9.5%, was primarily due to lower
personnel and external consulting costs.
Net loss for the 2019 Quarter was $38.8 million, or $0.51 per
share (diluted), compared to $11.3 million, or $0.37 per share
(diluted), for the 2018 Quarter. The 2019 Quarter includes $1.3M of
non-cash interest expense related to conversions of Convertible
Senior Notes into shares of common stock.
For the 2019 Quarter, non-GAAP adjusted net loss was $30.3
million, or $0.40 per share (diluted), compared to non-GAAP
adjusted net loss of $33.1 million, or $0.36 per share (diluted),
for the 2018 Quarter. Please refer to the GAAP to Non-GAAP
Reconciliation attached to this press release.
Full-Year 2019 Financial Results
Total revenue for the year ended December 31, 2019 (2019 Period)
was $17.5 million. Net product revenue for the 2019 Period was
$12.3 million, compared to $1.7 million for the year ended December
31, 2018 (2018 Period), following the FDA’s approval of COPIKTRA on
September 24, 2018. License and collaboration revenue for the 2019
Period was $5.1 million, compared to $25.0 million for the 2018
Period.
Total operating expenses for the 2019 Period were $149.8 million
compared to $121.5 million for the 2018 Period.
R&D expense for the 2019 Period was $45.8 million, compared
to $43.6 million for the 2018 Period. The increase of $2.2 million,
or 5.0%, was primarily related to higher contract research
organization and personnel costs to support the development of the
Phase 2 TEMPO study for Intermittent Dosing and the Phase 2 PRIMO
study for the treatment of PTCL.
Selling, general and administrative expense for the 2019 Period
was $101.2 million, compared to $77.3 million for the 2018 Period.
The increase of $23.9 million, or 30.9%, was primarily due to the
hiring and staffing of the sales and commercial teams to support
the launch of COPIKTRA.
Net loss for the 2019 Period was $149.2 million, or $2.00 per
share (diluted), compared to $72.4 million, or $1.37 per share
(diluted), for the 2018 Period.
For the 2019 Period, non-GAAP adjusted net loss was $126.0
million, or $1.69 per share (diluted), compared to non-GAAP
adjusted net loss of $88.4 million, or $1.27 per share (diluted),
for the 2018 Period. Please refer to the GAAP to Non-GAAP
Reconciliation attached to this press release.
Verastem Oncology ended 2019 with cash, cash equivalents and
short-term investments of $111.3 million.
Financial Guidance for Fiscal 2020
As a result of its new strategic direction, Verastem Oncology
expects to reduce its operating expenses by approximately 40% for
2020 compared to 2019. Based on its current operating plans,
Verastem Oncology expects its R&D and SG&A expenses for the
full year 2020 to be in the range of $70 million to $85 million. In
light of all these changes, the company is guiding that 2020
COPIKTRA revenues may be in the range of $12 million to $16
million. Verastem Oncology expects that its existing cash and cash
equivalents, along with the revenue it expects to generate from
COPIKTRA, will be sufficient to fund its planned operations into
the fourth quarter of 2021.
Use of Non-GAAP Financial Measures
To supplement Verastem Oncology’s condensed consolidated
financial statements, which are prepared and presented in
accordance with generally accepted accounting principles in the
United States (GAAP), the Company uses the following non-GAAP
financial measures in this press release: non-GAAP adjusted net
loss and non-GAAP net loss per share. These non-GAAP financial
measures exclude certain amounts or expenses from the corresponding
financial measures determined in accordance with GAAP. Management
believes this non-GAAP information is useful for investors, taken
in conjunction with the Company’s GAAP financial statements,
because it provides greater transparency and period-over-period
comparability with respect to the Company’s operating performance
and can enhance investors’ ability to identify operating trends in
the Company’s business. Management uses these measures, among other
factors, to assess and analyze operational results and trends and
to make financial and operational decisions. Non-GAAP information
is not prepared under a comprehensive set of accounting rules and
should only be used to supplement an understanding of the Company’s
operating results as reported under GAAP, not in isolation or as a
substitute for, or superior to, financial information prepared and
presented in accordance with GAAP. In addition, these non-GAAP
financial measures are unlikely to be comparable with non-GAAP
information provided by other companies. The determination of the
amounts that are excluded from non-GAAP financial measures is a
matter of management judgment and depends upon, among other
factors, the nature of the underlying expense or income amounts.
Reconciliations between these non-GAAP financial measures and the
most comparable GAAP financial measures for the three and twelve
months ended December 31, 2019 and 2018 are included in the tables
accompanying this press release after the unaudited condensed
consolidated financial statements.
About Verastem Oncology
Verastem Oncology (Nasdaq: VSTM) is a commercial
biopharmaceutical company committed to the development and
commercialization of new medicines to improve the lives of patients
diagnosed with cancer. Our pipeline is focused on novel small
molecule drugs that inhibit critical signaling pathways in cancer
that promote cancer cell survival and tumor growth, including
phosphoinositide 3-kinase (PI3K), focal adhesion kinase (FAK) and
RAF/MEK inhibition.
Our first FDA approved product is available for the treatment of
patients with certain types of indolent non-Hodgkin’s lymphoma
(iNHL).
For more information, please visit www.verastem.com.
Forward looking statements notice
This press release includes forward-looking statements about
Verastem Oncology’s strategy, future plans and prospects, including
statements related to the opportunity to rapidly advance the
development of clinical programs through Verastem Oncology’s
expanded development pipeline and strengthened balance sheet, the
timing of top-line results for clinical trials, anticipated
reductions in operating expenses from Verastem Oncology’s strategic
realignment, the timing of commencing a registration-directed trial
for CH5126766 (VS-6766) and financial guidance estimates. 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.
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 and uncertainties, among other
things, regarding: the success in the development and potential
commercialization of our product candidates, including defactinib
in combination with CH5126766 (VS-6766); the occurrence of adverse
safety events and/or unexpected concerns that may arise from
additional data or analysis or result in unmanageable safety
profiles as compared to their levels of efficacy; our ability to
obtain, maintain and enforce patent and other intellectual property
protection for our product candidates; the scope, timing, and
outcome of any legal proceedings; decisions by regulatory
authorities regarding labeling and other matters that could affect
the availability or commercial potential of our product candidates;
whether preclinical testing of our product candidates and
preliminary or interim data from clinical trials will be predictive
of the results or success of ongoing or later clinical trials; that
the timing, scope and rate of reimbursement for our product
candidates is uncertain; that third-party payors (including
government agencies) may not reimburse; 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 experience manufacturing or supply interruptions or
failures; that we will be unable to successfully initiate or
complete the clinical development and eventual commercialization of
our product candidates; that the development and commercialization
of our product candidates will take longer or cost more than
planned; that we or Chugai Pharmaceutical Co., Ltd. will fail to
fully perform under the CH5126766 (VS-6766) license agreement; that
we may not have sufficient cash to fund our contemplated
operations; that we may be unable to make additional draws under
our debt facility or obtain adequate financing in the future
through product licensing, co-promotional arrangements, public or
private equity, debt financing or otherwise; that we will be unable
to execute on our partnering strategies for defactinib in
combination with CH5126766 (VS-6766); that we will not pursue or
submit regulatory filings for our product candidates, and that our
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 the Company’s Annual Report on Form 10-K
for the year ended December 31, 2019, as filed with the Securities
and Exchange Commission (SEC) on March 11, 2020 and in any
subsequent filings with the SEC. The forward-looking statements
contained in this press release reflect Verastem Oncology’s views
as of the date hereof, and the Company does not assume and
specifically disclaims any obligation to update any forward-looking
statements whether as a result of new information, future events or
otherwise, except as required by law.
Verastem, Inc.
Condensed Consolidated Balance
Sheets
(in thousands)
(unaudited)
December 31,
December 31,
2019
2018
Cash, cash equivalents, &
investments
$
75,506
$
249,653
Accounts receivable, net
2,524
306
Inventory
3,096
327
Prepaid expenses and other current
assets
3,835
2,973
Property and equipment, net
947
1,369
Intangible assets, net
20,008
21,577
Right-of-use asset, net
3,077
—
Restricted cash and other assets
36,053
1,031
Total assets
$
145,046
$
277,236
Current Liabilities
$
29,890
$
37,077
Long-term debt
35,067
19,506
Convertible senior notes
68,556
95,231
Lease Liability, long-term
3,489
—
Other liabilities
870
1,123
Stockholders’ equity
7,174
124,299
Total liabilities and stockholders’
equity
$
145,046
$
277,236
Verastem, Inc.
Condensed Consolidated
Statements of Operations
(in thousands, except per share
amounts)
(unaudited)
Three months ended December
31,
Year ended December
31,
2019
2018
2019
2018
Revenue:
Product revenue, net
$
3,617
$
1,210
$
12,339
$
1,718
License and collaboration revenue
—
—
5,117
25,000
Total revenue
3,617
1,210
17,456
26,718
Operating expenses:
Cost of sales - product
332
116
1,238
165
Cost of sales - intangible
amortization
393
392
1,569
423
Research and development
12,455
8,762
45,778
43,648
Selling, general and administrative
23,728
26,199
101,212
77,265
Total operating expenses
36,908
35,469
149,797
121,501
Loss from operations
(33,291
)
(34,259
)
(132,341
)
(94,783
)
Other (expense)/income
(641
)
25,556
(641
)
25,556
Interest income
611
1,306
4,381
2,603
Interest expense
(5,453
)
(3,952
)
(20,608
)
(5,810
)
Net Loss
$
(38,774
)
$
(11,349
)
$
(149,209
)
$
(72,434
)
Net loss per share—basic
$
(0.51
)
$
(0.15
)
$
(2.00
)
$
(1.12
)
Net loss per share—diluted
$
(0.51
)
$
(0.37
)
$
(2.00
)
$
(1.37
)
Weighted average common shares outstanding
used in computing net loss per share—basic
76,331
73,766
74,578
64,962
Weighted average common shares outstanding
used in computing net loss per share—diluted
76,331
91,061
74,578
69,321
Verastem, Inc.
Reconciliation of GAAP to
Non-GAAP Financial Information
(in thousands, except per share
amounts)
(unaudited)
Three months ended December
31,
Year ended December
31,
2019
2018
2019
2018
Net Loss Reconciliation
Net Loss (GAAP basis)
$
(38,774
)
$
(11,349
)
$
(149,209
)
$
(72,434
)
Adjust:
Amortization of acquired intangible
asset
393
392
1,569
423
Stock-based compensation expense
1,311
1,763
8,539
6,671
Non-cash interest, net
2,705
1,479
7,131
1,814
Severance and Other
1,232
218
3,200
710
Notes third party exchange costs
2,168
—
2,168
—
Change in fair value of interest make
whole provision and conversion option for Notes
641
(25,556
)
641
(25,556
)
Adjusted Net Loss (non-GAAP
basis)
$
(30,324
)
$
(33,053
)
$
(125,961
)
$
(88,372
)
Reconciliation of Net Loss Per
Share
Net Loss per share – diluted
(GAAP Basis)
(0.51
)
(0.37
)
(2.00
)
(1.37
)
Adjust per diluted share
Amortization of acquired intangible
asset
0.01
0.00
0.02
0.01
Stock-based compensation expense
0.02
0.02
0.11
0.09
Non-cash interest, net
0.04
0.02
0.10
0.03
Severance and Other
0.01
0.00
0.04
0.01
Notes third party exchange costs
0.02
—
0.03
—
Change in fair value of interest make
whole provision and conversion option for Notes
0.01
(0.03
)
0.01
(0.04
)
Adjusted Net Loss per share –
diluted
(non-GAAP Basis)
$
(0.40
)
$
(0.36
)
$
(1.69
)
$
(1.27
)
Weighted average common shares outstanding
used in computing net loss per share—diluted
76,331
91,061
74,578
69,321
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version on businesswire.com: https://www.businesswire.com/news/home/20200311005710/en/
Verastem Oncology Contacts: Investors: John Doyle Vice
President, Investor Relations & Finance +1 781-469-1546
jdoyle@verastem.com
Media: Lisa Buffington Corporate Communications +1 781-292-4205
lbuffington@verastem.com
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