On March 23, 2017 Verastem, Inc. (NASDAQ: VSTM), focused on discovering and developing drugs to treat cancer, reported financial results for the year ended December 31, 2016, and also provided an overview of certain corporate developments (Press release, Verastem, MAR 23, 2017, View Source [SID1234518251]).

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"2016 was a year of significant achievement for Verastem with the in-licensing of duvelisib, a late-stage, clinical product candidate with broad potential across B-cell and T-cell lymphoid malignancies, and the advancement of defactinib into clinical development in combination with immuno-oncology agents," said Robert Forrester, President and Chief Executive Officer of Verastem. "As we enter 2017, we are laser-focused on several important milestones, beginning with reporting top-line duvelisib data from the Phase 3 DUO study in chronic lymphocytic leukemia (CLL) expected mid-year 2017. There remains an unmet medical need for patients with relapsed CLL. We believe duvelisib has potential as a convenient, oral monotherapy with an expected and manageable safety profile for patients with relapsed CLL. For defactinib, we look forward to advancing our ongoing combination trials into important expansion cohorts across several high unmet need indications."

Mr. Forrester continued, "On the financial front, we ended 2016 with $80.9 million in cash, cash equivalents and investments, which we believe is sufficient to support our research and development programs and operations into 2018. In March 2017, we entered into a loan facility with Hercules Capital, Inc. for up to $25.0 million, subject to certain conditions including positive DUO data, which would provide us with additional financial flexibility to advance duvelisib."

Fourth Quarter 2016 and Recent Highlights:
Duvelisib
In-licensed Late-stage, Complementary Oncology Product Candidate Duvelisib – Verastem and Infinity Pharmaceuticals, Inc. (Infinity) announced the signing of an agreement under which Verastem licensed exclusive worldwide rights to develop and commercialize duvelisib, an investigational product candidate currently in development for hematologic malignancies. Duvelisib is well aligned with Verastem’s strategic focus of developing novel anti-cancer therapeutics that modulate the tumor microenvironment. The transaction provides a new oncology product candidate with demonstrated activity in lymphoid malignancies.
Ongoing Phase 3 DUO Study in Relapsed or Refractory CLL – The safety and efficacy of duvelisib is currently being evaluated in the randomized Phase 3 DUO study in patients with relapsed or refractory CLL. In the DUO study, approximately 300 patients were randomized 1:1 to receive duvelisib (25mg BID) or ofatumumab (8 weekly infusions, starting with an initial intravenous dose of 300mg on day 1 followed by 7 weekly doses of 2,000mg, then 2,000mg monthly for 4 cycles). The primary endpoint of this study is progression free survival (PFS). Key secondary endpoints include overall response rate (ORR), overall survival, duration of response (DOR) and safety. Verastem expects to report top-line data from the DUO study in mid-year 2017.
Positive Phase 2 DYNAMO Data Reported at ASH (Free ASH Whitepaper) 2016 – Positive Phase 2 clinical data from the DYNAMO study demonstrating the clinical activity of duvelisib in patients with relapsed refractory indolent non-Hodgkin lymphoma (iNHL) were presented at the 58th American Society of Hematology (ASH) (Free ASH Whitepaper) Annual Meeting in December 2016. In an oral presentation, titled "A phase 2 study demonstrating the clinical activity of duvelisib in patients with relapsed refractory indolent non-Hodgkin lymphoma," (Publication ID: 1218) Ian Flinn, M.D., Ph.D. (Director, Hematologic Malignancies Program, Sarah Cannon Research Institute), described results from 129 patients with double refractory iNHL (median 3 prior anti-cancer regimens, range 1-18). The study met its primary endpoint, achieving an ORR of 46% as determined by an independent review committee (IRC) (p=0.0001; 95% CI 0.37-0.55). Among disease subgroups, the ORR was 41% in follicular lymphoma (n=83), 68% in small lymphocytic lymphoma (n=28), and 33% in marginal zone lymphoma (n=18). The median DOR among all patients was 9.9 months. Notably, 83% of patients had reductions in the size of their target lymph nodes per the IRC. Duvelisib was generally well tolerated, with an expected and manageable safety profile with appropriate risk mitigation. The DYNAMO study showed that duvelisib monotherapy has a favorable benefit-risk profile in refractory iNHL patients and may represent an important treatment option in this population.
Defactinib (VS-6063)
Dosed the First Patient in Combination Trial of Defactinib and Avelumab in Patients with Ovarian Cancer – As announced in January 2017, the first patient was dosed in a new clinical trial evaluating avelumab, an investigational fully human anti-PD-L1 IgG1 monoclonal antibody, in combination with Verastem’s defactinib, an investigational focal adhesion kinase (FAK) inhibitor, in patients with advanced ovarian cancer. This multicenter, open-label, dose-escalation and dose-expansion Phase 1/2 clinical trial is designed to assess the safety, pharmacokinetics, pharmacodynamics, and initial observations of clinical activity of the avelumab/defactinib combination in patients with recurrent or refractory stage III-IV ovarian cancer. The study is being conducted in collaboration with the alliance between Merck KGaA, Darmstadt, Germany, which in the U.S. and Canada operates as EMD Serono, and Pfizer, and is expected to enroll approximately 100 patients at up to 15 sites across the U.S.
Corporate and Financial
Hagop Youssoufian, MSc, M.D., Named Head of Hematology and Oncology Development – In January 2017, Dr. Youssoufian assumed this leadership role at Verastem to oversee the clinical and regulatory development of Verastem’s pipeline, including duvelisib, and provide overall strategic and tactical leadership to our hematology-oncology clinical programs. Dr. Youssoufian brings over 25 years of product development and commercialization experience to Verastem, having served in senior leadership roles at several oncology-focused companies, including BIND Therapeutics, Progenics Pharmaceuticals, Ziopharm Oncology, Imclone Systems, Sanofi Aventis and Bristol-Myers Squibb where he was involved in the development of Sprycel, Taxotere and Erbitux.
Additional Key Personnel Appointments – Recently, Michael Ferraresso joined Verastem as Vice President, Commercial Operations, and Verastem also appointed several highly experienced individuals to the Clinical and Scientific Advisory Board including:
Lori Kunkel, M.D., Former Chief Medical Officer, Pharmacyclics
Edmund J. Pezalla, M.D., MPH, Former VP, Pharmaceutical Policy and Strategy at Aetna
Greg Berk, M.D., Former Chief Medical Officer, Verastem
Cheryl Cohen, Former Chief Commercial Officer, Medivation
Brian Stuglik, PharmD., Former VP and Chief Marketing Officer, Oncology Global Marketing, Eli Lilly
Secured $25 Million Loan Facility – In March 2017, Verastem entered into a Loan and Security Agreement with Hercules Capital, Inc. for up to $25.0 million in financing. Verastem received the first $2.5 million of financing under the Loan and Security Agreement when the transaction closed. The proceeds will be used for Verastem’s ongoing research and development programs and for general corporate purposes. Additional tranches of up to $22.5 million in aggregate will be available subject to certain conditions, including positive data from the Phase 3 DUO clinical trial evaluating duvelisib in patients with relapsed or refractory CLL.
Full Year 2016 Financial Results
Net loss for the year ended December 31, 2016 (2016 Period) was $36.4 million, or $0.99 per share, as compared to a net loss of $57.9 million, or $1.61 per share, for the year ended December 31, 2015 (2015 Period). Net loss includes non-cash stock-based compensation expense of $6.2 million and $9.7 million for the 2016 Period and 2015 Period, respectively.
Research and development expense for the 2016 Period was $19.8 million compared to $40.6 million for the 2015 Period. The $20.8 million decrease from the 2015 Period to the 2016 Period was primarily related to a decrease of $15.6 million in external contract research organization expense for outsourced biology, chemistry, development and clinical services, which includes our clinical trial costs, a $3.4 million decrease in personnel related costs, primarily due to the reduction in workforce in October 2015, a decrease of $1.3 million in stock-based compensation expense and a decrease of $1.5 million in lab supplies, travel and other research and development expense. These decreases were partially offset by an increase of approximately $947,000 in consulting and professional fees.
General and administrative expense for the 2016 Period was $17.2 million compared to $17.6 million for the 2015 Period. The approximate $411,000 decrease from the 2015 Period to the 2016 Period primarily resulted from a decrease of $2.1 million in stock-based compensation expense. This decrease was partially offset by increases of $1.1 million in consulting and professional fees, approximately $280,000 in personnel costs, and a net increase of approximately $306,000 of other general and administrative costs.
As of December 31, 2016, Verastem had cash, cash equivalents and investments of $80.9 million compared to $110.3 million as of December 31, 2015. Verastem used $29.5 million for operating activities during the 2016 Period.
The number of outstanding common shares as of December 31, 2016, was 36,992,418.
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 2018.
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