Analyst Conference Summary

Verastem Oncology

conference date: May 7, 2020 Press Release only
for quarter ending: March 31, 2020 (Q1, first quarter 2020)

Forward-looking statements

Overview: Copiktra revenue ramping, but focus is now on developing 6766.

Basic data (GAAP):

Revenue was $5.1, up sequentially from $3.6 million, and up from $1.7 million year-earlier.

Net income was negative $38.0 million, up sequentially from negative $38.8 million and down from negative $38.1 million year-earlier.

EPS, diluted, was negative $0.35, up sequentially from negative $0.51, and down from negative $0.52 year-earlier.


Conference Highlights:

Brian Stuglik, CEO of Verastem, said "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 tumor. The encouraging preliminary Phase 1 results from the investigator-initiated FRAME study recently reported at AACR in KRAS mutant low-grade serous ovarian cancer will form the basis of our upcoming discussions with the 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 as rapidly as possible."

Verastem Oncology anticipates completing a private placement of approximately 46.5 million shares of its common stock at an offering price of $2.15 per share on March 3, 2020, resulting in gross proceeds of approximately $100 million and net $92 million.

Following the change of strategy, primary focus will be on the development of CH5126766 (VS-6766), its RAF/MEK inhibitor, in combination with defactinib, its focal adhesion kinase (FAK) inhibitor, for the treatment of KRAS mutant solid tumors. Phase 1 data have been submitted for presentation at AACR 2020 [July 26-29, 2020]. 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 these mutations. This analysis showed early signals of activity in patients with KRASG12V mutated NSCLC. Verastem plans to evaluate this finding in a prospective NSCLC clinical trial.

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 research and development and selling, general and administrative expenses for the full year 2020 to be in the range of $70 million to $85 million. Will reduce to about 90 employees.

In October 2019, Verastem partner Yakult Honsha dosed the first patient in a Phase 1b Japanese bridging study evaluating Copiktra in patients with relapsed or refractory CLL/SLL following at least one prior therapy.

Product revenue from Copiktra/duvelisib was $5.0 million, up 39% sequentially from $3.6 million and up from $1.7 million year-earlier.

Non-GAAP net income negative $21.3 million, up sequentially from negative $na million, and up from negative $33.8 million year-earlier. EPS negative $0.20, sequentially from negative $na, and up from negative $0.46 year-earlier.

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

Copiktra patents protect it through 2030, plus extenions. Expects to extend to many types of cancer, including solid tumors.

A Phase 1/2 trial for Copiktra in combination with venetoclax for CLL, initiated by the Dana-Farber Cancer Institute, continued.

Cash and equivalents ended at $135 million, up sequentially from $111 million. Long term debt $35 million, senior convertible notes $20 million.

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.

Cost of good sold was $0.9 million. R&D expense was $10.9 million. G&A was $19.6 million. Total operating expense was $31.26.44 million. Loss from operations was $ million. Interest and other net expense $11.8 million.

Q&A summary:

No Q&A session.

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Disclaimer: My analyst call summaries may include both condensations of statements made by company representatives and my own analysis. They are not covered by any warranty. I cannot guarantee anything said by company representatives is true. I try not to make errors, but it is possible. These are my personal notes which I share with other investors and which I use as the basis of my Seeking Alpha articles.

Copyright 2020 William P. Meyers