On March 11, 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 and full-year ended December 31, 2019, and provided an overview of recent corporate highlights (Press release, Verastem, MAR 11, 2020, View Source [SID1234555428]).
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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) (Free AACR Whitepaper) 2020 Annual Meeting. The AACR (Free AACR Whitepaper) 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 (ASH) (Free ASH Whitepaper) 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.