On May 7, 2020 Verastem, Inc. (Nasdaq:VSTM) (also known as Verastem Oncology), a biopharmaceutical company committed to developing and commercializing new medicines for patients battling cancer, reported financial results for the three months ending March 31, 2020, and provided an overview of recent corporate highlights (Press release, Verastem, MAY 7, 2020, View Source [SID1234557361]).
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"The early part of 2020 was marked most importantly by the strategic in-licensing of the novel RAF/MEK inhibitor VS-6766 which is being investigated in combination with defactinib, our lead FAK inhibitor, in KRAS mutant tumors," commented Brian Stuglik, Chief Executive Officer of Verastem Oncology. "The encouraging preliminary Phase 1 results from the investigator-initiated FRAME study recently reported at AACR (Free AACR Whitepaper) in KRAS mutant low-grade serous ovarian cancer (LGSOC) will form the basis of our upcoming discussions with the U.S. Food and Drug Administration (FDA) and other regulatory authorities. We look forward to identifying the path forward for this novel combination and to embarking on a registration-directed clinical trial in LGSOC as rapidly as possible."
RAF/MEK and FAK Inhibition in KRAS Mutant Solid Tumors
Presented Preliminary Results from investigator-initiated Phase 1 FRAME Study Investigating the Combination of VS-6766 and Defactinib in KRAS Mutant Solid Tumors at AACR (Free AACR Whitepaper) 2020 Virtual Meeting I. In a virtual poster presentation, Udai Banerji, MBBS, MD, DNB, PhD, FRCP, NIHR, Professor of Molecular Cancer Pharmacology at The Institute of Cancer Research and Honorary Consultant in Medical Oncology at The Royal Marsden NHS Foundation Trust, highlighted data from this ongoing, open-label, dose-escalation and expansion investigator-initiated study investigating the combination of VS-6766, Verastem Oncology’s RAF/MEK inhibitor, with defactinib, the Company’s FAK inhibitor, in patients with KRAS mutant advanced solid tumors, including LGSOC and non-small cell lung cancer (NSCLC).
The VS-6766/defactinib combination was well tolerated by the patients in the trial. The recommended Phase 2 dose has now been established. In the patients with KRAS mutant LGSOC (n=6), 4 patients responded for an overall response rate (ORR) of 67%. The median time on treatment for these 4 patients was 20.5 months. In the patients with KRAS mutant NSCLC (n=10), 1 patient responded (partial response) for an ORR of 10% and a total of 8 patients achieved disease control for a disease control rate (DCR) of 80%. Additionally, in patients with KRAS mutant NSCLC, 8 remained on therapy for at least 12 weeks and 3 remained on therapy for at least 24 weeks. Expansion cohorts remain ongoing in LGSOC and NSCLC.
Verastem Oncology plans to initiate discussions with the FDA during second quarter of 2020, with the goal of commencing a registration-directed clinical trial investigating the VS-6766/defactinib combination in patients with LGSOC by the end of 2020.
Subsequent Analysis
Based on an observation of higher response rates seen in patients with KRASG12V mutations in the investigator-initiated Phase 1 combination study, Verastem Oncology conducted a post-hoc combined analysis with data from the combination study and the prior single-agent study that utilized a twice-weekly dosing schedule of VS-6766 to get a more complete picture of activity in KRASG12V mutations. This analysis showed early signals of activity in patients with KRASG12V mutated NSCLC. The Company plans to evaluate this finding further in a prospective NSCLC clinical trial.
New Strategic Direction. Verastem Oncology recently licensed exclusive global development and commercialization rights to VS-6766 (CH5126766), a unique and promising inhibitor of the RAF/MEK signaling pathway. The Company then announced its plans to accelerate development of VS-6766 in combination with defactinib for the treatment of KRAS mutant solid tumors. The rationale for investigating the combinations of VS-6766 and defactinib is supported by single-agent Phase 1 and Phase 2 studies which investigated defactinib in KRAS mutant NSCLC1 and VS-6766 in KRAS mutant NSCLC and LGSOC2.
COPIKTRA (Duvelisib)
First Patient Dosed in Chinese Study Evaluating Duvelisib in Patients with Relapsed or Refractory Follicular Lymphoma (FL). Verastem Oncology’s partner, CSPC Pharmaceutical Group Limited, has dosed the first patient in a single-arm, open-label, multi-center pivotal study designed to evaluate the antitumor activity and safety of duvelisib in patients with relapsed or refractory FL. This study is expected to serve as a bridging study based on the efficacy and safety observed in Verastem Oncology’s Phase 2 DYNAMO study. The results of this study will form the basis of a regulatory submission for duvelisib for the treatment of relapsed or refractory FL in China.
Ongoing U.S. Commercial Rollout of COPIKTRA. COPIKTRA, the Company’s marketed oral inhibitor of phosphoinositide 3-kinase (PI3K), and the first FDA-approved dual inhibitor of PI3K-delta and PI3K-gamma generated $5.0 million in net product revenues during the first quarter of 2020, a 194% increase over the first quarter of 2019 and a 39% increase over the fourth quarter of 2019.
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 $93.8 million.
Convertible Senior Second Lien Notes (2019 Notes) Fully Converted to Common Stock. During the first quarter of 2020, all of the remaining 2019 Notes were converted into shares of common stock. As of March 31, 2020, the Company had approximately $63.3 million in outstanding debt.
Appointed John H. Johnson to the Board of Directors. In April, Verastem Oncology announced the appointment of John H. Johnson to its Board of Directors. Mr. Johnson’s career spans multiple executive management roles at leading global corporations where he was responsible for overseeing oncology and immunology drug development initiatives and commercialization. Mr. Johnson will serve on the Compensation and Nominating and Governance Committees.
First Quarter 2020 Financial Results
Net product revenue for the three months ending March 31, 2020 (2020 Quarter) was $5.0 million, compared to $1.7 million for the three months ending March 31, 2019 (2019 Quarter). COPIKTRA demand units for the 2020 Quarter increased 178% compared to the 2019 Quarter. License and collaboration revenue for the 2020 Quarter was less than $0.1 million. There was no license and collaboration revenue for the 2019 Quarter. 2020 Quarter license and collaboration revenue was comprised of duvelisib shipments to our partner, CSPC Pharmaceutical Group Limited.
Total operating expenses for the 2020 Quarter were $31.4 million, compared to $36.3 million for the 2019 Quarter. Included within operating expenses for the 2020 Quarter is a non-recurring charge of $3.0 million related to an up-front non-refundable payment to Chugai Pharmaceutical Co. Ltd. (Chugai) for the VS-6766 license, $1.8 million of severance expense and $1.4 million of non-cash stock-based compensation expense.
Research and development (R&D) expense for the 2020 Quarter was $10.9 million, compared to $9.8 million for the 2019 Quarter. The increase of $1.1 million, or 11%, was primarily related to the up-front non-refundable payment of $3.0 million to Chugai for the VS-6766 license. This was partially offset by a decrease of $1.3 million in contract research organization costs and a decrease of $0.6 million in costs for clinical supply, drug substance and drug product.
Selling, general and administrative (SG&A) expense for the 2020 Quarter was $19.6 million, compared to $26.0 million for the 2019 Quarter. The decrease of $6.4 million, or 25%, primarily resulted from a decrease of $2.8 million in consulting and professional fees, principally related to the support of commercial launch activities in the 2019 Quarter, a decrease of $2.3 million in personnel related costs, including non-cash stock-based compensation as a result of reduced headcount, and a decrease of $1.3 million in reduced travel and other costs.
Net loss for the 2020 Quarter was $38.0 million, or $0.35 per share (basic and diluted), compared to $38.1 million, or $0.52 per share (basic and diluted), for the 2019 Quarter. The 2020 Quarter includes $8.1 million of non-cash interest expense related to conversions of Convertible Senior Notes into shares of common stock.
For the 2020 Quarter, non-GAAP adjusted net loss was $21.3 million, or $0.20 per share (diluted), compared to non-GAAP adjusted net loss of $33.8 million, or $0.46 per share (diluted), for the 2019 Quarter. Please refer to the GAAP to Non-GAAP Reconciliation attached to this press release.
Verastem Oncology ended the first quarter of 2020 with cash, cash equivalents and short-term investments of $170.7 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, the Company expects its R&D and SG&A expenses for the full year 2020 to be in the range of $70 million to $85 million. The company is guiding that 2020 COPIKTRA revenues may be approximately $16 million.