Analyst Conference Summary

Verastem Oncology

conference date: August 10, 2020 Press Release only
for quarter ending: June 30, 2020 (Q2, second quarter 2020)

Forward-looking statements

Overview: Copiktra being sold, so focus is now entirely on developing 6766. Has enough cash to see some data points. Copiktra sales not impressive.

Basic data (GAAP):

Revenue was $4.3, down sequentially from $5.1 million, and up from $3.1 million year-earlier.

Net income was negative $21.3 million, up sequentially from negative $38.0 million and down from negative $38.3 million year-earlier.

EPS, diluted, was negative $0.14, up sequentially from negative $0.35, and down from negative $0.57 year-earlier.


Expects total operating expenses for the full year 2020 to be in the range of $80 million to $90 million. Beginning in 2021 Verastem expects its annual operating expenses to be approximately $50 million.

Conference Highlights:

Brian Stuglik, CEO of Verastem, said "The first half of 2020 has been a time of transformational change at Verastem Oncology. We recently announced our newest strategic transaction, the sale of Copiktra to Secura Bio, which allows us to monetize this asset while focusing our resources and efforts on advancing the VS-6766 and defactinib combination program in KRAS mutant solid tumors. We are now looking forward to a catalyst-driven second half of 2020, including reporting updated data from the LGSOC arm of the investigator-initiated Phase 1/2 FRAME study in September and commencing registration-directed clinical trials in low-grade serous ovarian cancer (LGSOC) and KRAS mutant non-small cell lung cancer (NSCLC) by the end of this year."

Verastem announced its entry into a definitive agreement to sell its global commercial and development rights to Copiktra in all oncology indications to Secura Bio, Inc. The transaction includes $70 million upfront, and carries a total deal value of up to $311 million, plus royalties. This transaction should close in Q3 2020.

Verastem Oncology completed 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. In a virtual poster presentation, Udai Banerji, Professor of Molecular Cancer Pharmacology at The Institute of Cancer Research and highlighted data from this ongoing, open-label, dose-escalation and expansion study in patients with KRAS mutant advanced solid tumors, including LGSOC and NSCLC. Preliminary data demonstrated a 67% overall response rate and long duration of therapy among patients with LGSOC. Based on higher response rates seen in NSCLC patients with KRAS-G12V mutations, Verastem will also be further exploring the role of the VS-6766/defactinib combination in KRAS-G12V NSCLC. Expansion cohorts remain ongoing in LGSOC and NSCLC and the study will be expanding to include new cohorts in pancreatic, KRAS mutant endometrial and KRAS-G12V NSCLC.

Verastem also presented new preclinical VS-6766/Defactinib Combination Data in Uveal Melanoma at AACR 2020 Virtual Meeting II. In this study, researchers identified and reinforced that FAK inhibition is a viable pathway to inhibit downstream from the GNAQ pathway, which is constitutively active in uveal melanoma. It was observed that co-targeting FAK and RAF/MEK signaling led to tumor collapse in uveal melanoma xenograft and liver metastasis models in vivo. Based on these encouraging results, Verastem plans to support an investigator-sponsored, Phase 2 clinical testing of the VS-6766/defactinib combination in uveal melanoma, which is expected to commence by the end of 2020.

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.

Product revenue from Copiktra/duvelisib was $4.2 million, down sequentially from $5.0 million and up from $3.0 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.

Cash and equivalents ended at $125 million, up sequentially from $135 million. Long term debt $31 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.

Cost of good sold was $0.8 million. R&D expense was $9.3 million. G&A was $15.4 million. Total operating expense was $25.6 million. Loss from operations was $21.2 million. Interest and other net expense $1.9 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