Core Viewpoint - Verastem Oncology has granted stock options to nine new employees as part of its strategy to attract talent in the biopharmaceutical sector focused on RAS/MAPK pathway-driven cancers [1] Group 1: Company Actions - The company announced the grant of stock options to purchase 138,000 shares of its common stock [1] - The stock options were awarded under the Nasdaq inducement grant exception, which is designed to incentivize new employees [1] - This action aligns with Nasdaq Listing Rule 5635(c), indicating compliance with regulatory requirements for employee compensation [1]

Core Viewpoint - Verastem (VSTM) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive shift in earnings estimates which is a significant factor influencing stock prices [1][2]. Earnings Estimates and Stock Price Movement - The Zacks rating system highlights the strong correlation between changes in earnings estimates and near-term stock price movements, making it a valuable tool for investors [2][3]. - Institutional investors utilize earnings estimates to determine the fair value of stocks, leading to price movements based on their buying or selling actions [3]. Business Improvement Indicators - The upgrade in earnings estimates for Verastem suggests an improvement in the company's underlying business, which could lead to an increase in stock price as investors respond positively [4]. Importance of Earnings Estimate Revisions - Empirical research supports the idea that tracking earnings estimate revisions can be beneficial for investment decisions, with the Zacks Rank system effectively leveraging this information [5]. Zacks Rank System Overview - The Zacks Rank system categorizes stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks which have averaged a +25% annual return since 1988 [6]. Specifics on Verastem's Earnings Estimates - For the fiscal year ending December 2025, Verastem is projected to earn -$3.11 per share, unchanged from the previous year, but the Zacks Consensus Estimate has increased by 6% over the past three months [7]. Conclusion on Zacks Rating - The upgrade to Zacks Rank 2 places Verastem in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [9].

Summary of Verastem Oncology Conference Call Company Overview - **Company**: Verastem Oncology - **Industry**: Biotechnology focused on cancer therapies - **Key Product**: Combination of avutometinib and defactinib, approved for low-grade serous ovarian cancer [1][2] Core Points and Arguments - **FDA Approval**: The company received accelerated FDA approval for its lead product, targeting low-grade serous ovarian cancer, with a response rate of 44% in pivotal studies compared to standard care's 6% to 15% [2][3] - **Market Size**: Approximately 6,000 to 8,000 women in the U.S. are affected by low-grade serous ovarian cancer [2] - **Launch Performance**: In the first six weeks post-launch, the company generated over $2 million in net revenue, exceeding consensus expectations [3] - **Investor Interest**: There are three groups of investors: those focused on the launch product, those interested in newer programs, and those looking at the G12D inhibitor [3][4] Clinical Development - **G12D Inhibitor**: The company is developing a G12D inhibitor for pancreatic cancer and non-small cell lung cancer, with promising data reported from partners in China [4][5] - **International Expansion**: Discussions are ongoing for approvals in Europe and Japan, with a bridging study in Japan almost fully accrued [10][11] - **Phase 3 Trial**: A confirmatory Phase 3 trial for ovarian cancer is underway, with a pre-planned interim analysis scheduled for later this year [12][14] Upcoming Milestones - **Lung Cancer Studies**: Data on the combination of sotorasib with avutometinib and defactinib is expected later this year [16] - **Pancreatic Cancer Data**: The company reported an 83% response rate in a small cohort for frontline metastatic pancreatic cancer, significantly higher than the standard care response rate of 30% to 35% [17] - **VS-7375 Development**: The next product in the pipeline, VS-7375, has shown a 69% response rate in pancreatic cancer trials, indicating strong efficacy compared to competitors [24][26] Financial Position - **Cash Reserves**: The company reported over $160 million in cash, with additional funding expected from cash-only warrants [34] - **Funding Strategy**: The company aims to fund future programs primarily through sales, with potential partnerships as a secondary option [35][36] Additional Insights - **LGSOC Opportunity**: The potential market for low-grade serous ovarian cancer is significant due to high unmet needs and favorable pricing and reimbursement conditions [39] - **Long Treatment Duration**: Patients in clinical trials averaged 18 months on therapy, creating a recurring revenue model that differs from typical cancer treatments [39] Conclusion Verastem Oncology is positioned for significant growth with its innovative therapies targeting high unmet needs in cancer treatment, particularly in low-grade serous ovarian cancer and G12D mutations. The company is actively pursuing international expansion and has a robust pipeline with promising clinical data. Financially, it appears well-positioned to support its ongoing and future programs.

Summary of Verastem (VSTM) Conference Call Company Overview - Verastem is focused on developing small molecules targeting the RAS pathway, with a recent approval for a drug combination in low grade serous ovarian cancer (LGSOC) [2][3] Key Points Recent Approvals and Product Launch - Verastem received its first approval for a drug combination in LGSOC, marking it as the first total novel approval in oncology for this specific cancer type [2][3] - The approval was granted approximately two months ahead of the PDUFA date, which was unexpected [3] - The company reported $2.1 million in revenue within the first six weeks of the drug launch, utilizing only two specialty pharmacies [12] Clinical Data and Mechanism of Action - The drug combination includes budametinib, a dual inhibitor of RAF and MEC, which is designed to overcome resistance mechanisms in cancer treatment [8][9] - The company is also advancing a program targeting KRAS G12D, with promising data from clinical trials in pancreatic and lung cancer [4][64] Market Strategy and Distribution - Verastem has expanded its distribution network by adding three specialty distributors to reach larger oncology practices [12][13] - The company is working to get its drug included in NCCN guidelines, which is crucial for reimbursement [15][17] - The drug is being prescribed to both KRAS mutant and wild type patients, with the latter group showing a poorer prognosis [16][18] Patient Treatment Dynamics - Patients with KRAS mutant tumors have an average survival of 12 years, while those with wild type tumors average 7 years [16] - The treatment model is likened to a rare disease model, with patients remaining on therapy for extended periods (18 months for mutant and 11 months for wild type) [21][22] Financial Outlook and Reimbursement - The company anticipates a gross to net revenue ratio of 15% to 20%, influenced by the Medicare commercial mix [33] - Verastem has implemented a zero co-pay program to minimize patient out-of-pocket costs, which is expected to enhance patient access [35] Future Developments - Verastem is conducting an investigator-sponsored study to explore the use of its drug in frontline therapy, aiming for a future label expansion [57][58] - The company is tracking leading indicators such as physician awareness and intent to treat, as there is no specific ICD-10 code for LGSOC [47] Clinical Trial Insights - The confirmatory Phase 3 trial is expected to complete enrollment by year-end, with a sample size re-estimation planned [60][62] - The company has reported high response rates in KRAS mutant pancreatic cancer, with an 83% response rate observed in early trials [64] Additional Important Insights - The company emphasizes the importance of education for healthcare providers regarding the drug's use and potential side effects [51][52] - Verastem's approach includes leveraging group purchasing organizations to facilitate broader drug adoption among community physicians [19][29] This summary encapsulates the key points discussed during the Verastem conference call, highlighting the company's recent achievements, market strategies, and future directions in oncology.

Company Performance - Verastem reported a quarterly loss of $0.39 per share, which was better than the Zacks Consensus Estimate of a loss of $0.85, representing an earnings surprise of +54.12% [1] - The company posted revenues of $2.14 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 86.36%, compared to revenues of $10 million a year ago [2] - Over the last four quarters, Verastem has surpassed consensus EPS estimates two times but has not beaten consensus revenue estimates [2] Stock Movement and Outlook - Verastem shares have increased by approximately 10.6% since the beginning of the year, outperforming the S&P 500's gain of 7.9% [3] - The future stock price movement will largely depend on management's commentary during the earnings call and the company's earnings outlook [4][6] - The current consensus EPS estimate for the upcoming quarter is -$0.72 on revenues of $10.98 million, and for the current fiscal year, it is -$3.51 on revenues of $17.25 million [7] Industry Context - The Medical - Biomedical and Genetics industry, to which Verastem belongs, is currently ranked in the top 41% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Verastem's performance [5]

Financial Data and Key Metrics Changes - The company reported $2.1 million in net product revenue for the first six weeks post-launch, with a cost of sales of $400,000 for 2025 compared to zero in 2024 [25][26] - Non-GAAP adjusted net loss was $41.4 million or $0.63 per share diluted for 2025, compared to a loss of $16.5 million or $0.61 per share diluted for 2024 [27] - The company ended 2025 with cash, cash equivalents, and investments of $164.3 million, bolstered by a $75 million private placement [27][28] Business Line Data and Key Metrics Changes - The FDA approved AvmapKefaxin Jakobak for KRAS mutated recurrent LGSOC, marking a significant milestone for the company [5][6] - The commercial launch of Abnapti Faxinga Copac has shown early traction with $2.1 million in revenue within six weeks [6][11] Market Data and Key Metrics Changes - The company has seen coverage from major insurers in the U.S., representing over 80% of lives, indicating strong market access [10][21] - The initial uptake of the product has been encouraging, with a mix of prescriptions from both academic and community settings [50][51] Company Strategy and Development Direction - The company aims to establish Abnapti Faxinga Copac as the new standard of care for KRAS mutated recurrent LGSOC, fundamentally changing the treatment paradigm [6][8] - Future milestones include advancing clinical programs and maintaining strong momentum in the commercial launch [29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the product's potential impact on patients with high unmet needs and emphasized the importance of ongoing engagement with healthcare providers [10][22] - The company is optimistic about the second half of the year, expecting to build on early achievements and continue executing its strategic imperatives [16][29] Other Important Information - The company has entered into multiple agreements with specialty distributors and oncology group purchasing organizations to enhance market reach [16][21] - The NCCN committee plans to review the company's submission for broader treatment recommendations in October [20][75] Q&A Session Summary Question: Can you talk about the degree of off-label use currently seen? - Management noted that while they do not promote off-label uses, they have observed utilization in both labeled and wild-type populations, with reimbursement not being an issue to date [34][35] Question: What are the key indicators being tracked for launch performance? - Management indicated that they are monitoring engagement with healthcare providers, patient access, and overall market dynamics to gauge launch momentum [41][45] Question: What is the experience with payers regarding reimbursement? - Management reported that early experiences with payers have been positive, with minimal pushback and effective reimbursement processes in place [56][58] Question: How might the launch curve evolve with the integration of specialty distributors? - Management expects a steady uptick in patient adoption as the full distribution network is established, with ongoing engagement efforts to support this growth [66][77] Question: What is the current size of the sales force and future plans? - The company launched with a focused team of 16 sales representatives and currently has no plans to increase this number [99]

[Forward-Looking Statements](index=4&type=section&id=FORWARD-LOOKING%20STATEMENTS) [Overview of Forward-Looking Statements](index=4&type=section&id=Overview%20of%20Forward-Looking%20Statements) This section identifies forward-looking statements within the 10-Q report, which relate to the company's strategy, future operations, financial position, product development, clinical trials, regulatory interactions, and commercialization plans for products like AVMAPKI™ FAKZYNJA™ CO-PACK, avutometinib, defactinib, and VS-7375 - Forward-looking statements cover **strategy**, **future operations**, **financial position** (including **going concern**), **revenues**, **costs**, **prospects**, and **management objectives**[10](index=10&type=chunk) - Key products and candidates mentioned include **AVMAPKI™ FAKZYNJA™ CO-PACK**, **avutometinib** (RAF/MEK program), **defactinib** (FAK program), and **VS-7375** (KRAS G12D inhibitor)[10](index=10&type=chunk) - Statements also relate to **clinical trials** (RAMP 201, RAMP 201J, RAMP 203, RAMP 205, RAMP 301, VS-7375), **timing of trials and data reports**, **regulatory interactions**, and **potential commercialization**[10](index=10&type=chunk) [Risks and Uncertainties](index=4&type=section&id=Risks%20and%20Uncertainties) Forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially. These include challenges in product development and commercialization, clinical trial outcomes, regulatory approvals, market acceptance, intellectual property protection, and the ability to secure adequate financing - Actual results may differ materially due to risks in **product candidate development and commercialization**, including **avutometinib** in combination with other compounds (**defactinib**, **LUMAKRAS®**) and **VS-7375**[11](index=11&type=chunk) - Uncertainties include **negative or unexpected clinical trial results**, **timing of regulatory applications and approvals**, **commercial success**, **healthcare reforms**, **intellectual property protection**, and **legal proceedings**[11](index=11&type=chunk) - Other risks involve **manufacturing/supply interruptions**, **reliance on third-party organizations**, **substantial competition**, **longer or costlier development**, **insufficient cash to fund operations**, and **failure to attract/retain personnel**[11](index=11&type=chunk)[12](index=12&type=chunk) [PART I—FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) [Item 1. Condensed Consolidated Financial Statements (unaudited)](index=7&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed consolidated financial statements for Verastem, Inc., including the balance sheets, statements of operations and comprehensive loss, statements of convertible preferred stock and stockholders' (deficit) equity, and statements of cash flows, along with detailed notes explaining significant accounting policies and financial instrument valuations [Condensed Consolidated Balance Sheets](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) The condensed consolidated balance sheets show a significant increase in total assets from $101.5 million at December 31, 2024, to $196.3 million at June 30, 2025, primarily driven by an increase in cash and cash equivalents and the recognition of intangible assets. Total liabilities also increased from $130.4 million to $160.2 million, while stockholders' equity shifted from a deficit of $28.9 million to a positive $36.1 million | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------- | :----------------------------- | :------------------------------- | | Cash and cash equivalents | $164,322 | $88,818 | | Total current assets | $174,273 | $94,961 | | Intangible assets, net | $15,636 | $— | | Total assets | $196,264 | $101,538 | | Total current liabilities | $50,361 | $30,973 | | Long-term debt | $74,274 | $40,724 | | Warrant liability | $21,757 | $58,199 | | Total liabilities | $160,208 | $130,431 | | Total stockholders' (deficit) equity | $36,056 | $(28,893) | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS%20AND%20COMPREHENSIVE%20LOSS) The company reported a net loss of $25.9 million for the three months ended June 30, 2025, compared to $8.3 million for the same period in 2024, and a net loss of $78.0 million for the six months ended June 30, 2025, versus $42.1 million in 2024. This increased loss is primarily due to higher operating expenses, particularly in research and development and selling, general and administrative, despite the initiation of product revenue from AVMAPKI FAKZYNJA CO-PACK | Metric (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenue | $2,137 | $10,000 | $2,137 | $10,000 | | Total operating expenses | $45,901 | $28,277 | $90,076 | $56,336 | | Loss from operations | $(43,764) | $(18,277) | $(87,939) | $(46,336) | | Net loss | $(25,934) | $(8,256) | $(78,037) | $(42,119) | | Net loss per share—basic | $(0.39) | $(0.31) | $(1.30) | $(1.57) | | Net loss per share—diluted | $(0.62) | $(0.31) | $(1.41) | $(1.57) | - Product revenue, net, was **$2.1 million** for both the three and six months ended June 30, 2025, compared to **$0** in the prior year periods, following FDA approval of **AVMAPKI FAKZYNJA CO-PACK** in May 2025[19](index=19&type=chunk)[212](index=212&type=chunk)[231](index=231&type=chunk) - Research and development expenses increased by **$6.7 million (37%)** for the three months and **$18.2 million (51%)** for the six months ended June 30, 2025, primarily due to higher CRO costs, investigator fees, personnel costs, and clinical supply costs[19](index=19&type=chunk)[216](index=216&type=chunk)[235](index=235&type=chunk)[236](index=236&type=chunk) - Selling, general and administrative expenses increased by **$10.5 million (102%)** for the three months and **$15.1 million (74%)** for the six months ended June 30, 2025, mainly due to consulting and professional fees related to the **AVMAPKI FAKZYNJA CO-PACK** launch and increased personnel costs[19](index=19&type=chunk)[221](index=221&type=chunk)[239](index=239&type=chunk) [Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' (Deficit) Equity](index=9&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CONVERTIBLE%20PREFERRED%20STOCK%20AND%20STOCKHOLDERS'%20(DEFICIT)%20EQUITY) The statements reflect a significant improvement in stockholders' equity, moving from a deficit of $28.9 million at December 31, 2024, to a positive $36.1 million at June 30, 2025. This change was primarily driven by capital raises through common stock issuances, warrant exercises, and the conversion of Series A Preferred Stock, despite ongoing net losses | Metric (in thousands) | Balance at December 31, 2024 | Balance at June 30, 2025 | | :-------------------------------------- | :--------------------------- | :----------------------- | | Common stock shares outstanding | 44,784,350 | 61,523,425 | | Common stock amount | $4 | $6 | | Additional paid-in capital | $926,630 | $1,064,324 | | Accumulated other comprehensive income | $— | $5,290 | | Accumulated deficit | $(955,527) | $(1,033,564) | | Total stockholders' (deficit) equity | $(28,893) | $36,056 | - Issuance of common stock from at-the-market transactions generated **$22.7 million** in additional paid-in capital for the six months ended June 30, 2025[22](index=22&type=chunk) - Issuance of common stock upon exercise of warrants contributed **$9.95 million** and **$22.4 million** to additional paid-in capital for the periods ending March 31, 2025, and June 30, 2025, respectively[22](index=22&type=chunk) - Conversion of **Series A Preferred Stock** in June 2025 resulted in the issuance of **833,332 shares** of common stock, with no **Series A Preferred Stock** outstanding as of June 30, 2025[22](index=22&type=chunk)[149](index=149&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) For the six months ended June 30, 2025, net cash used in operating activities increased to $71.3 million from $55.9 million in the prior year. However, net cash provided by financing activities significantly increased to $146.8 million, primarily from proceeds from the Note Purchase Agreement and a private placement, leading to an overall increase in cash, cash equivalents, and restricted cash | Metric (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(71,339) | $(55,877) | | Net cash provided by investing activities | $— | $59,972 | | Net cash provided by financing activities | $146,843 | $441 | | Increase in cash, cash equivalents and restricted cash | $75,504 | $4,536 | | Cash, cash equivalents and restricted cash at end of period | $164,563 | $83,612 | - Operating cash outflow increased due to **higher net losses**, adjusted for non-cash items like **warrant liability changes** and **debt extinguishment loss**[24](index=24&type=chunk)[252](index=252&type=chunk) - Financing activities were significantly boosted by **$75.0 million** from the **Note Purchase Agreement** and **$69.9 million** from the **2025 Private Placement**, partially offset by **$42.6 million** repayment of the **Loan Agreement**[24](index=24&type=chunk)[255](index=255&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) The notes provide detailed explanations of the company's financial position, operations, and cash flows, covering its business nature, significant accounting policies, fair value measurements, debt arrangements, capital stock activities, and commitments. Key updates include the FDA approval of AVMAPKI FAKZYNJA CO-PACK, new debt financing, and equity issuances [1. Nature of business](index=12&type=section&id=1.%20Nature%20of%20business) Verastem, Inc. is a biopharmaceutical company focused on developing and commercializing medicines for RAS/MAPK pathway-driven cancers. The FDA approved AVMAPKI FAKZYNJA CO-PACK in May 2025 for KRAS mutant recurrent LGSOC. The company's pipeline includes RAF/MEK, FAK, and KRAS G12D inhibitors. The company faces substantial doubt about its ability to continue as a going concern due to anticipated operating losses and the need for additional financing - **Verastem, Inc.** is a biopharmaceutical company developing and commercializing medicines for **RAS/MAPK pathway-driven cancers**[25](index=25&type=chunk) - **AVMAPKI FAKZYNJA CO-PACK** received **FDA approval** on **May 8, 2025**, for adult patients with **KRAS mutant recurrent low grade serous ovarian cancer (LGSOC)**[25](index=25&type=chunk) - The company's pipeline focuses on novel small molecule drugs inhibiting **RAF/MEK**, **FAK**, and **KRAS G12D pathways**[25](index=25&type=chunk) - As of June 30, 2025, the company had **$164.3 million** in cash, cash equivalents, and investments, but anticipates continued operating losses, raising **substantial doubt** about its ability to continue as a **going concern** for the next 12 months[28](index=28&type=chunk)[29](index=29&type=chunk) [2. Summary of significant accounting policies](index=14&type=section&id=2.%20Summary%20of%20significant%20accounting%20policies) The financial statements are prepared under GAAP, assuming a going concern, but acknowledge the uncertainty. Key accounting policies for product revenue, accounts receivable, inventory, and intangible assets have been updated following the FDA approval of AVMAPKI FAKZYNJA CO-PACK in May 2025, leading to capitalization of inventory and amortization of intangible assets. The company also details its policies for revenue recognition, including variable consideration and reserves - Financial statements are prepared in accordance with **GAAP** for interim reporting, under the assumption of continuing as a **going concern**, despite substantial doubt[30](index=30&type=chunk) - Material changes to significant accounting policies include **product revenue, net**, **accounts receivable, net**, **inventory**, and **intangible assets**, driven by the **FDA approval of AVMAPKI FAKZYNJA CO-PACK**[31](index=31&type=chunk) - Product revenue is recognized upon **customer control of the product**, net of variable consideration components such as **trade discounts**, **chargebacks**, **government rebates**, and **patient support programs**[33](index=33&type=chunk) - **Inventory capitalization** began after **FDA approval on May 8, 2025**; prior manufacturing costs were expensed as R&D. **Finite-lived intangible assets** related to capitalized milestone payments are amortized over their useful lives[46](index=46&type=chunk)[49](index=49&type=chunk) [3. Cash, cash equivalents and restricted cash](index=22&type=section&id=3.%20Cash,%20cash%20equivalents%20and%20restricted%20cash) The company's total cash, cash equivalents, and restricted cash significantly increased to $164.6 million at June 30, 2025, from $89.1 million at December 31, 2024. Restricted cash of $0.2 million is held as collateral for letters of credit for office space | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $164,322 | $88,818 | | Restricted cash | $241 | $241 | | Total cash, cash equivalents and restricted cash | $164,563 | $89,059 | - Restricted cash of **$0.2 million** collateralizes outstanding letters of credit for the company's office space[62](index=62&type=chunk) [4. Fair value of financial instruments](index=22&type=section&id=4.%20Fair%20value%20of%20financial%20instruments) The company measures financial instruments at fair value using a three-level hierarchy. As of June 30, 2025, cash equivalents ($78.9 million) are Level 1. Warrant liability ($21.8 million) and Notes ($74.3 million) are classified as Level 3, with their fair values determined using complex valuation models and unobservable inputs like probability and timing of payments, and discount rates | Description (in thousands) | June 30, 2025 Total | Level 1 | Level 2 | Level 3 | | :------------------------- | :------------------ | :------ | :------ | :------ | | Cash equivalents | $78,921 | $78,921 | $— | $— | | Warrant liability | $21,757 | $— | $— | $21,757 | | Notes | $74,274 | $— | $— | $74,274 | | Total financial liabilities | $96,031 | $— | $— | $96,031 | - Warrant liability fair value decreased from **$58.2 million** at December 31, 2024, to **$21.8 million** at June 30, 2025, due to warrant exercises and a lower stock price, valued using the **Black-Scholes model (Level 3)**[66](index=66&type=chunk)[68](index=68&type=chunk)[124](index=124&type=chunk) - The fair value of Notes was **$74.3 million** at June 30, 2025, determined using a **discounted cash flow model** with **Level 3 unobservable inputs** such as probability and timing of Revenue Participation Payments and discount rates (**12.8%-13.5%**)[68](index=68&type=chunk) [5. Investments](index=24&type=section&id=5.%20Investments) The company's investments primarily consist of cash and money market accounts, totaling $164.6 million at June 30, 2025. There were no realized gains or losses on investments for the three or six months ended June 30, 2025 or 2024, and no securities were in an unrealized loss position | Metric (in thousands) | June 30, 2025 Fair Value | December 31, 2024 Fair Value | | :-------------------------------------- | :----------------------- | :--------------------------- | | Cash and money market accounts | $164,563 | $89,059 | | Total cash, cash equivalents & restricted cash | $164,563 | $89,059 | - **No realized gains or losses** on investments were recorded for the three or six months ended June 30, 2025 or 2024[72](index=72&type=chunk) - **No securities were in an unrealized loss position** as of June 30, 2025, or December 31, 2024[72](index=72&type=chunk) [6. Accrued expenses](index=26&type=section&id=6.%20Accrued%20expenses) Total accrued expenses increased significantly from $26.0 million at December 31, 2024, to $45.7 million at June 30, 2025. This rise was primarily driven by increases in accrued clinical trial expenses, contract manufacturing expenses, and the recognition of accrued milestone payments and royalties, both short-term and long-term | Accrued Expense Category (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------------- | :------------ | :---------------- | | Accrued clinical trial expenses | $12,058 | $10,915 | | Accrued contract manufacturing expenses | $5,919 | $3,748 | | Accrued milestone payments & royalties | $8,579 | $— | | Total accrued expenses, short-term | $38,136 | $25,952 | | Accrued milestone payments (long-term) | $7,553 | $— | | Total | $45,689 | $25,952 | [7. Product revenue reserves and allowances](index=26&type=section&id=7.%20Product%20revenue%20reserves%20and%20allowances) Following the commercial launch of AVMAPKI FAKZYNJA CO-PACK in May 2025, the company established product revenue allowances and reserves totaling $0.4 million for the six months ended June 30, 2025. These reserves cover trade discounts, government rebates, and estimated product returns, reflecting variable consideration in revenue recognition | Reserve Category (in thousands) | Ending balance at June 30, 2025 | | :------------------------------ | :------------------------------ | | Trade discounts and allowances | $29 | | Government rebates and other incentives | $338 | | Returns | $26 | | Total | $393 | - The company's sole source of product revenue since 2025 is from sales of **AVMAPKI FAKZYNJA CO-PACK** in the United States[74](index=74&type=chunk) - **Trade discounts** and **Payer chargebacks** are reductions to accounts receivable, while **trade allowances**, **government rebates**, and **returns** are recorded as accrued expenses[76](index=76&type=chunk) [8. Inventory](index=27&type=section&id=8.%20Inventory) As of June 30, 2025, total inventory was $1.2 million, consisting of work in process and finished goods related to AVMAPKI and FAKZYNJA. Inventory capitalization began in May 2025 following FDA approval; prior manufacturing costs were expensed as R&D. No inventory reserve was required at June 30, 2025 | Inventory Category (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Raw materials | $— | $— | | Work in process | $1,141 | $— | | Finished goods | $27 | $— | | Total inventory | $1,168 | $— | - **Inventory capitalization** for **AVMAPKI FAKZYNJA CO-PACK** began on **May 8, 2025**, after **FDA approval**; previously, manufacturing costs were expensed as research and development[77](index=77&type=chunk) - **No reserve related to inventory** was required as of June 30, 2025[77](index=77&type=chunk) [9. Intangible Assets](index=27&type=section&id=9.%20Intangible%20Assets) The company recognized $15.8 million in acquired and in-licensed intangible assets related to AVMAPKI FAKZYNJA CO-PACK, primarily from milestone payments under the Pfizer Agreement and a new License Agreement. These finite-lived assets are amortized using the straight-line method over an average remaining period of 15.2 years, with $0.1 million amortization expense recorded for the three and six months ended June 30, 2025 | Intangible Asset Category (in thousands) | June 30, 2025 | | :--------------------------------------- | :------------ | | Acquired and in-licensed rights | $15,764 | | Less: accumulated amortization | $(128) | | Total intangible assets, net | $15,636 | - Intangible assets are primarily from milestone payments under the **Pfizer Agreement** and a **new License Agreement**, recognized and amortized following **FDA approval of AVMAPKI FAKZYNJA CO-PACK**[78](index=78&type=chunk)[163](index=163&type=chunk)[165](index=165&type=chunk) - Amortization expense of approximately **$0.1 million** was recorded for the three and six months ended June 30, 2025, using the **straight-line method**[79](index=79&type=chunk) [10. Debt](index=29&type=section&id=10.%20Debt) In January 2025, the company entered into a Note Purchase Agreement for up to $150.0 million, issuing an initial $75.0 million in Notes. These Notes bear floating interest and include revenue participation payments. Concurrently, the previous Loan Agreement with Oxford was terminated, resulting in a $1.8 million loss on debt extinguishment. The Notes are measured at fair value, with changes recorded in operations and comprehensive loss - On **January 13, 2025**, the company entered a **Note Purchase Agreement** for up to **$150.0 million**, issuing an initial **$75.0 million** in Notes[80](index=80&type=chunk) - The Notes bear interest at **Term SOFR + 3.71% (capped at 9.75%)** and include a **1.00% revenue participation percentage** on net sales of Included Products, increasing to **2.00%** with additional Note sales[81](index=81&type=chunk)[82](index=82&type=chunk) - The company terminated its **Loan Agreement with Oxford** on **January 13, 2025**, repaying **$42.7 million** and recognizing a **$1.8 million loss on debt extinguishment**[99](index=99&type=chunk)[244](index=244&type=chunk) - The Notes are accounted for using the **fair value option**, with changes in fair value (excluding instrument-specific credit risk) recorded in the condensed consolidated statements of operations[88](index=88&type=chunk) [11. Leases](index=35&type=section&id=11.%20Leases) The company's primary lease is for office space in Needham, Massachusetts, accounted for as an operating lease. The lease term was extended to June 2026, with annual base rent of $1.1 million. As of June 30, 2025, the right-of-use asset and lease liability were both $1.0 million, with total future lease payments of $1.1 million - The company's **Needham, Massachusetts office space lease** is accounted for as an **operating lease**, extended to **June 2026**[101](index=101&type=chunk)[103](index=103&type=chunk) | Metric (in thousands) | June 30, 2025 | | :-------------------------------------- | :------------ | | Right-of-use asset, net | $963 | | Lease liability, short-term | $1,044 | | Lease liability, long-term | $— | | Total Lease Liability | $1,044 | | Weighted average remaining lease term | 1.0 years | | Weighted average discount rate | 9.8% | - Operating lease expense was **$0.5 million** for the six months ended June 30, 2025[104](index=104&type=chunk) [12. Notes Payable](index=37&type=section&id=12.%20Notes%20Payable) In January 2025, the company entered a finance agreement with FIRST Insurance Funding for $1.2 million at 6.9% interest to fund insurance policies. The outstanding balance was $0.5 million at June 30, 2025, with monthly payments of $0.1 million through November 2025 - The company secured a **$1.2 million finance agreement** with **FIRST Insurance Funding** in **January 2025**, accruing interest at **6.9% per annum**, to fund insurance policies[105](index=105&type=chunk) - The outstanding balance was **$0.5 million** at June 30, 2025, with monthly payments of **$0.1 million** through **November 2025**[105](index=105&type=chunk) [13. Vendor Financing Arrangement](index=37&type=section&id=13.%20Vendor%20Financing%20Arrangement) The company has a vendor financing arrangement with IQVIA, Inc. for strategic collaboration services, resulting in a liability of $8.9 million as of June 30, 2025. This arrangement extends payment terms, with the liability expected to be paid in 2026, and incurred interest expense of $0.2 million for the six months ended June 30, 2025 - A vendor financing arrangement with **IQVIA, Inc.** for commercialization solutions resulted in a liability of **$8.9 million** as of June 30, 2025[106](index=106&type=chunk) - The company expects to pay the vendor financing liabilities during **2026**[106](index=106&type=chunk) - Interest expense of **$0.2 million** was recorded for the six months ended June 30, 2025, related to these extended payment terms[106](index=106&type=chunk) [14. Segment Reporting](index=39&type=section&id=14.%20Segment%20Reporting) The company operates as a single segment focused on researching, developing, and commercializing cancer drugs. All business activities are managed on a consolidated basis, with performance assessed by the President and CEO based on consolidated net loss. Accounting policies are consistent with the annual report - The company has **one operating segment**: researching, developing, and commercializing drugs for cancer treatment[108](index=108&type=chunk) - All business activities are managed on a **consolidated basis**, and performance is assessed by the **Chief Operating Decision Maker (President and CEO)** based on **consolidated net loss**[108](index=108&type=chunk) | Metric (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Product revenue, net | $2,137 | $— | $2,137 | $— | | Research and development expenses | $23,979 | $17,475 | $52,532 | $34,212 | | Commercial expenses | $8,364 | $3,211 | $12,417 | $6,253 | | Net loss | $(25,934) | $(8,256) | $(78,037) | $(42,119) | [15. Capital stock](index=40&type=section&id=15.%20Capital%20stock) The company engaged in several capital-raising activities, including a $69.9 million private placement in April 2025 (issuing common stock and pre-funded warrants), a $7.4 million stock purchase agreement in January 2025, and a $50.8 million public offering in July 2024 (issuing common stock and warrants). The July 2024 Warrants are classified as a liability and re-measured at fair value, while pre-funded warrants are permanent equity. All Series A and Series B Convertible Preferred Stock were converted or expired by June 30, 2025 - In **April 2025**, a private placement generated approximately **$69.9 million** in net proceeds from the sale of common stock and pre-funded warrants[110](index=110&type=chunk)[112](index=112&type=chunk) - A **Stock Purchase Agreement** in **January 2025** resulted in **$7.4 million** net proceeds from the sale of common stock to SPA Investors[113](index=113&type=chunk) - The **July 2024 Public Offering** raised approximately **$50.8 million** in net proceeds from common stock and accompanying warrants[116](index=116&type=chunk) - The **July 2024 Warrants** are classified as a **derivative liability** and re-measured at fair value, with a **$21.8 million liability** at June 30, 2025. **Pre-funded warrants** are classified as **permanent equity**[122](index=122&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk) - All **Series A and Series B Convertible Preferred Stock** were converted into common stock or expired by **June 30, 2025**, with no shares outstanding[140](index=140&type=chunk)[142](index=142&type=chunk)[149](index=149&type=chunk) [16. Stock-based compensation](index=52&type=section&id=16.%20Stock-based%20compensation) The company's stock option activity for the six months ended June 30, 2025, shows 2.9 million options outstanding, with a weighted-average exercise price of $10.56. An Option Exchange Program in March 2024 resulted in $1.7 million incremental stock-based compensation expense. Restricted stock units outstanding totaled 1.5 million shares, and the Employee Stock Purchase Plan (ESPP) issued 8,033 shares | Stock Option Activity | Shares Outstanding at Dec 31, 2024 | Shares Outstanding at Jun 30, 2025 | | :-------------------- | :--------------------------------- | :--------------------------------- | | Outstanding | 2,479,037 | 2,945,631 | | Granted | — | 554,500 | | Forfeited/cancelled | — | (87,281) | | Expired | — | (625) | | Weighted average exercise price per share | $11.43 | $10.56 | - The **March 2024 Option Exchange Program** resulted in **$1.7 million** incremental stock-based compensation expense recognized over the requisite service period of the new options[154](index=154&type=chunk) | Restricted Stock Units | Shares Outstanding at Dec 31, 2024 | Shares Outstanding at Jun 30, 2025 | | :--------------------- | :--------------------------------- | :--------------------------------- | | Outstanding | 1,010,233 | 1,498,103 | | Granted | — | 1,132,374 | | Vested | — | (591,731) | | Forfeited/cancelled | — | (52,773) | - The **Employee Stock Purchase Plan (ESPP)** issued **8,033 shares** of common stock for proceeds of **$0.1 million** during the six months ended June 30, 2025[158](index=158&type=chunk) [17. Net loss per share](index=56&type=section&id=17.%20Net%20loss%20per%20share) Basic net loss per common share was $(0.39) for the three months and $(1.30) for the six months ended June 30, 2025. Diluted net loss per common share was $(0.62) and $(1.41) for the respective periods. The dilutive effect of warrants was reflected using the treasury stock method, while other potentially dilutive securities were excluded due to their anti-dilutive effect | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss per share - basic | $(0.39) | $(0.31) | $(1.30) | $(1.57) | | Net loss per share - diluted | $(0.62) | $(0.31) | $(1.41) | $(1.57) | | Weighted average common shares outstanding (basic) | 66,143 | 26,861 | 60,191 | 26,846 | | Weighted average common shares outstanding (diluted) | 74,037 | 26,861 | 68,182 | 26,846 | - The dilutive effect of warrants was included in diluted EPS calculations for 2025 using the **treasury stock method**[160](index=160&type=chunk) - Potentially dilutive securities, including **stock options**, **restricted stock units**, and **ESPP shares**, were excluded from diluted EPS for both periods due to their **anti-dilutive effect**[161](index=161&type=chunk) [18. License, collaboration and commercial agreements](index=57&type=section&id=18.%20License,%20collaboration%20and%20commercial%20agreements) The company has several key agreements: an amended Pfizer Agreement requiring $15.5 million in milestones for FDA approval of AVMAPKI FAKZYNJA CO-PACK, a new License Agreement for avutometinib/defactinib patents, and the GenFleet Agreement for oncology programs, under which Verastem exercised an option for VS-7375 with a $6.0 million payment. The Secura APA, for the sale of duvelisib rights, did not generate revenue in the current periods - The **Pfizer Agreement** was amended in **April 2025**, making a **$7.5 million milestone** payable upon **FDA approval of AVMAPKI FAKZYNJA CO-PACK (May 8, 2025)** and an **$8.0 million milestone** payable one year post-approval[163](index=163&type=chunk) - A **new License Agreement** was entered in **Q2 2025** for exclusive rights to certain **avutometinib** and **defactinib patents**, obligating a **$0.7 million payment** and up to **$3.7 million** in future milestones[165](index=165&type=chunk) - Under the **GenFleet Agreement**, the company exercised its option for **VS-7375** in **January 2025**, making a **$6.0 million payment** and potentially up to **$622.0 million** in future milestones and royalties[166](index=166&type=chunk)[167](index=167&type=chunk)[169](index=169&type=chunk) - **No revenue** was recognized from the **Secura APA** (sale of COPIKTRA license) for the three or six months ended June 30, 2025 or 2024, as future potential milestones and royalties remain constrained[178](index=178&type=chunk) [19. Income taxes](index=61&type=section&id=19.%20Income%20taxes) The company recorded no federal or state income tax provision or benefit for the six months ended June 30, 2025 or 2024, due to expected operating losses and a full valuation allowance against net deferred tax assets. The recently signed One Big Beautiful Bill Act is being evaluated for its impact but is not expected to materially affect financial statements - **No federal or state income tax provision or benefit** was recorded for the six months ended June 30, 2025 or 2024, due to **expected losses** and a **full valuation allowance**[179](index=179&type=chunk) - The company is evaluating the impact of the **One Big Beautiful Bill Act**, signed **July 4, 2025**, but expects **no material impact** on its financial statements[180](index=180&type=chunk) [20. Commitments and contingencies](index=61&type=section&id=20.%20Commitments%20and%20contingencies) As of June 30, 2025, the company has committed to spend approximately $59.3 million under the IQVIA Master Services Agreement over the next three to four years, with $8.9 million already included in liabilities. Additionally, the company has potential future development, regulatory, and commercial milestone payments and royalties under various agreements, contingent on future events - The company has committed to spend approximately **$59.3 million** under the **IQVIA Master Services Agreement** over the next three to four years, with **$8.9 million** included in current liabilities[182](index=182&type=chunk) - **Future development, regulatory, and commercial milestone payments** and **significant royalties** are contingent upon the occurrence of various future events with a high degree of uncertainty[182](index=182&type=chunk) [21. Subsequent events](index=61&type=section&id=21.%20Subsequent%20events) The company is not aware of any material subsequent events that occurred after June 30, 2025, and prior to the issuance of the condensed consolidated financial statements that would require disclosure or impact asset/liability carrying values - **No material subsequent events** were identified between June 30, 2025, and the issuance date of the financial statements[183](index=183&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=62&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and operational results, highlighting the commercial launch of AVMAPKI FAKZYNJA CO-PACK, ongoing clinical trials for various product candidates, and the financial impact of these activities. It also discusses critical accounting policies, liquidity, and capital resources, emphasizing the company's need for future financing despite recent capital raises [Overview](index=62&type=section&id=OVERVIEW) Verastem is a biopharmaceutical company focused on RAS/MAPK pathway-driven cancers. AVMAPKI FAKZYNJA CO-PACK received FDA accelerated approval in May 2025 for KRAS mutant LGSOC, with a confirmatory Phase 3 trial (RAMP 301) underway. The pipeline also includes avutometinib combinations (RAMP 203 for NSCLC, RAMP 205 for pancreatic cancer) and the KRAS G12D inhibitor VS-7375, which recently began U.S. clinical trials. The company faces substantial doubt about its going concern ability due to accumulated deficit and anticipated operating losses - **AVMAPKI FAKZYNJA CO-PACK** received **FDA accelerated approval** on **May 8, 2025**, for **KRAS mutant recurrent LGSOC**, with inclusion in **NCCN guidelines**[186](index=186&type=chunk)[190](index=190&type=chunk) - The **RAMP 301 Phase 3 confirmatory trial** for **avutometinib** and **defactinib** in recurrent LGSOC is on track for full enrollment by end of **2025**, aiming for full approval and expanded indication[189](index=189&type=chunk) - The **RAMP 203 study** is evaluating **avutometinib** with Amgen's **LUMAKRAS®** for **KRAS G12C NSCLC**, with triplet cohorts (adding defactinib) showing promising preclinical data. Interim safety and efficacy data expected **Q4 2025**[192](index=192&type=chunk)[193](index=193&type=chunk) - **VS-7375**, a **KRAS G12D inhibitor** from the GenFleet collaboration, began **U.S. Phase 1/2a clinical trials** in **June 2025**, with preliminary data expected **Q4 2025**. Chinese Phase 1/2 trial data showed **ORR of 52% in PDAC** and **42% in NSCLC**[199](index=199&type=chunk)[200](index=200&type=chunk)[201](index=201&type=chunk)[202](index=202&type=chunk) - The company had an accumulated deficit of **$1,033.6 million** and **$164.3 million** in cash as of June 30, 2025, and anticipates continued operating losses, raising **substantial doubt** about its ability to continue as a **going concern**[205](index=205&type=chunk)[206](index=206&type=chunk) [Critical Accounting Policies and Significant Judgments and Estimates](index=68&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20SIGNIFICANT%20JUDGMENTS%20AND%20ESTIMATES) The company's financial statements rely on critical accounting policies requiring significant judgments and estimates, particularly in revenue recognition, collaborative agreements, accrued R&D expenses, and stock-based compensation. No material changes to these policies occurred during the six months ended June 30, 2025 - **Critical accounting policies** involve significant judgments and estimates in areas such as **revenue recognition**, **collaborative agreements**, **accrued and prepaid research and development expenses**, and **stock-based compensation**[211](index=211&type=chunk) - **No material changes** to critical accounting policies were identified during the six months ended June 30, 2025[211](index=211&type=chunk) [Results of Operations](index=70&type=section&id=RESULTS%20OF%20OPERATIONS) The company experienced increased net losses for both the three and six months ended June 30, 2025, primarily due to higher operating expenses, including significant increases in R&D and SG&A costs related to product launch and clinical trial advancements. While product revenue commenced, it was offset by the absence of a COPIKTRA license sale from the prior year and increased operational investments [Comparison of the three months ended June 30, 2025 and 2024](index=70&type=section&id=Comparison%20of%20the%20three%20months%20ended%20June%2030,%202025%20and%202024) For the three months ended June 30, 2025, net loss increased to $25.9 million from $8.3 million in 2024. Product revenue of $2.1 million commenced, but total revenue decreased due to the absence of a $10.0 million COPIKTRA license sale. Operating expenses rose significantly, with R&D up 37% to $24.8 million and SG&A up 102% to $20.7 million, driven by launch activities and trial costs. Interest expense decreased due to debt termination, while warrant liability fair value changes contributed to the net loss | Metric (in thousands) | 2025 Quarter | 2024 Quarter | Change | % Change | | :-------------------------------------- | :----------- | :----------- | :----- | :------- | | Product revenue, net | $2,137 | $— | $2,137 | 100% | | Sale of COPIKTRA license and related assets | $— | $10,000 | $(10,000) | (100)% | | Total revenue | $2,137 | $10,000 | $(7,863) | (79)% | | Research and development | $24,786 | $18,062 | $6,724 | 37% | | Selling, general and administrative | $20,669 | $10,215 | $10,454 | 102% | | Net loss | $(25,934) | $(8,256) | $(17,678) | 214% | - R&D expense increase was primarily due to a **$2.4 million** increase in CRO costs, **$2.0 million** in investigator fees, **$1.5 million** in personnel costs, and **$0.8 million** in clinical supply costs[212](index=212&type=chunk) - SG&A expense increase was mainly due to an **$8.1 million** rise in consulting and professional fees for the **AVMAPKI FAKZYNJA CO-PACK** launch and a **$2.7 million** increase in personnel costs[221](index=221&type=chunk) - Interest expense decreased by **$0.9 million** due to the termination of the **Loan Agreement with Oxford** in **January 2025**[224](index=224&type=chunk) - A **$20.3 million** change in fair value of warrant liability was recorded, reflecting a decrease in value due to **warrant exercises** and a **lower stock price**[228](index=228&type=chunk) [Comparison of the six months ended June 30, 2025 and 2024](index=76&type=section&id=Comparison%20of%20the%20six%20months%20ended%20June%2030,%202025%20and%202024) For the six months ended June 30, 2025, net loss increased to $78.0 million from $42.1 million in 2024. Total revenue decreased due to the absence of the COPIKTRA license sale. Operating expenses significantly increased, with R&D up 51% to $53.9 million (including a $6.0 million GenFleet option payment) and SG&A up 74% to $35.7 million. A $1.8 million loss on debt extinguishment was recognized, and changes in fair value of warrant liability and Notes also impacted the net loss | Metric (in thousands) | 2025 Period | 2024 Period | Change | % Change | | :-------------------------------------- | :---------- | :---------- | :----- | :------- | | Product revenue, net | $2,137 | $— | $2,137 | 100% | | Sale of COPIKTRA license and related assets | $— | $10,000 | $(10,000) | (100)% | | Total revenue | $2,137 | $10,000 | $(7,863) | (79)% | | Research and development | $53,938 | $35,769 | $18,169 | 51% | | Selling, general and administrative | $35,692 | $20,567 | $15,125 | 74% | | Net loss | $(78,037) | $(42,119) | $(35,918) | 85% | - R&D expense increase was driven by a **$6.0 million GenFleet option payment** for **VS-7375**, **$4.7 million** in CRO costs, **$2.5 million** in investigator fees, **$2.3 million** in personnel costs, and **$2.1 million** in manufacturing costs[231](index=231&type=chunk)[236](index=236&type=chunk) - SG&A expense increase was primarily due to an **$11.7 million** rise in consulting and professional fees, **$3.7 million** in personnel costs, and a **$1.1 million** financing cost fee[239](index=239&type=chunk) - A **$1.8 million loss on debt extinguishment** was recognized due to the early repayment of the **Loan Agreement** in **January 2025**[244](index=244&type=chunk) - A **$17.9 million** change in fair value of warrant liability was recorded, reflecting a decrease in value due to **warrant exercises** and a **lower stock price**[246](index=246&type=chunk) - A **$7.4 million** change in fair value of Notes was recorded, primarily driven by **interest on the Notes** and a **reduction in the risk-free rate**[247](index=247&type=chunk) [Liquidity and Capital Resources](index=81&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company's liquidity is primarily supported by public and private equity offerings, convertible notes, and the Note Purchase Agreement. As of June 30, 2025, cash, cash equivalents, and investments totaled $164.3 million. Net cash used in operating activities increased to $71.3 million for the six months ended June 30, 2025, but was offset by $146.8 million in financing activities, including proceeds from the Note Purchase Agreement and a private placement. The company continues to rely on future financing to fund operations - The company's operations are financed through **public/private equity offerings**, **convertible notes**, and the **Note Purchase Agreement**[249](index=249&type=chunk) - As of June 30, 2025, cash, cash equivalents, and investments totaled **$164.3 million**, primarily invested in **U.S. Government money market funds**, **bonds**, and **commercial paper**[250](index=250&type=chunk) | Cash Flow Activity (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(71,339) | $(55,877) | | Net cash provided by investing activities | $— | $59,972 | | Net cash provided by financing activities | $146,843 | $441 | | Increase in cash, cash equivalents and restricted cash | $75,504 | $4,536 | - Financing activities for the 2025 Period included **$75.0 million** from the **Note Purchase Agreement** and **$69.9 million** from the **2025 Private Placement**, partially offset by a **$42.6 million** repayment of the **Loan Agreement**[255](index=255&type=chunk) [Contractual Obligations and Commitments](index=83&type=section&id=CONTRACTUAL%20OBLIGATIONS%20AND%20COMMITMENTS) No material changes to contractual obligations and commitments were reported since the Annual Report on Form 10-K for the year ended December 31, 2024, except as disclosed in this Quarterly Report - **No material changes** to contractual obligations and commitments were reported since the Annual Report on Form 10-K for the year ended December 31, 2024, except as disclosed in this Quarterly Report[256](index=256&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=83&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risk primarily from changes in interest rates, affecting its $164.3 million in cash, cash equivalents, and investments. Due to the short-term nature and low-risk profile of its investment portfolio, a 100 basis point change in interest rates would not materially affect its fair market value. The floating-rate Notes under the Note Purchase Agreement also expose the company to interest rate fluctuations, though an overall floor and cap limit the impact - The company's primary market risk exposure is **interest rate sensitivity**, affecting its **$164.3 million** in cash, cash equivalents, and investments[257](index=257&type=chunk) - An immediate **100 basis point change** in interest rates would **not materially affect** the fair market value of the investment portfolio due to its short-term duration and low-risk profile[257](index=257&type=chunk) - The **$75.0 million Notes** under the Note Purchase Agreement bear a **floating interest rate**, but an overall **floor and cap** limit the impact of interest rate changes on cash interest expense[259](index=259&type=chunk)[260](index=260&type=chunk) - The company also faces **immaterial foreign currency fluctuation risk** from global CRO and contract manufacturer agreements[258](index=258&type=chunk) [Item 4. Controls and Procedures](index=85&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the effectiveness of the company's disclosure controls and procedures as of June 30, 2025, concluding they were effective at a reasonable assurance level. No material changes in internal control over financial reporting occurred during the three months ended June 30, 2025 - **Disclosure controls and procedures** were evaluated as **effective** at the reasonable assurance level as of **June 30, 2025**[261](index=261&type=chunk) - **No material changes** in internal control over financial reporting occurred during the three months ended June 30, 2025[262](index=262&type=chunk) [PART II—OTHER INFORMATION](index=85&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=85&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings - There are **no legal proceedings** to report[264](index=264&type=chunk) [Item 1A. Risk Factors](index=85&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks, including those related to current and future healthcare reforms that could impede marketing approval and commercialization, affect pricing, and increase compliance burdens. Uncertainty also stems from potential regulatory changes under the new presidential administration, which could impact drug approval standards, marketing, and FDA oversight. Non-compliance with government pricing programs could lead to penalties - **Current and future healthcare reforms** may increase the difficulty and cost of obtaining marketing approval and commercializing product candidates, and affect pricing[266](index=266&type=chunk) - **Uncertainty** exists regarding potential regulatory developments under the new presidential administration, which could adversely affect drug approval standards, marketing, and FDA oversight[274](index=274&type=chunk) - **Failure to comply with reporting and payment obligations** under the Medicaid Drug Rebate Program and other government pricing programs could result in additional reimbursement requirements, penalties, sanctions, and fines[276](index=276&type=chunk) - The **U.S. Supreme Court's Loper Bright Enterprises v. Raimondo decision** could lead to increased legal challenges to federal agency regulations, potentially causing regulatory uncertainty and adversely impacting the business[272](index=272&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=90&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities and no purchases of its own equity securities during the period covered by this Quarterly Report on Form 10-Q - **No unregistered sales of equity securities** were reported[278](index=278&type=chunk) - The company did **not purchase any of its equity securities** during the reporting period[279](index=279&type=chunk) [Item 3. Defaults Upon Senior Securities](index=90&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - There were **no defaults upon senior securities**[280](index=280&type=chunk) [Item 4. Mine Safety Disclosures](index=90&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company reported no mine safety disclosures - There are **no mine safety disclosures** to report[281](index=281&type=chunk) [Item 5. Other Information](index=90&type=section&id=Item%205.%20Other%20Information) Directors and executive officers adopted Rule 10b5-1 trading plans in June 2025 for the sale of common stock, with sales commencing in September and October 2025 and plans terminating by October 2026 - **Paul Bunn, Ph.D.**, adopted a **Rule 10b5-1 plan** on **June 10, 2025**, to sell up to **20,833 shares** of common stock, with sales beginning **October 9, 2025**, and the plan terminating by **October 8, 2026**[282](index=282&type=chunk) - **Michael Kauffman, Ph.D.**, adopted a **Rule 10b5-1 plan** on **June 11, 2025**, to sell up to **42,336 shares** of common stock, with sales beginning **October 10, 2025**, and the plan terminating by **October 9, 2026**[283](index=283&type=chunk) - **Daniel Paterson** adopted a **Rule 10b5-1 plan** on **June 18, 2025**, to sell up to **31,970 shares** of common stock, with sales beginning **September 17, 2025**, and the plan terminating by **September 17, 2026**[284](index=284&type=chunk) [Item 6. Exhibits](index=90&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Quarterly Report on Form 10-Q, including corporate governance documents, various agreements (e.g., license, securities purchase, registration rights), and certifications - Exhibits include **Restated Certificate of Incorporation**, **Amended and Restated Bylaws**, **Certificates of Designation for Preferred Stock**, and various agreements such as the **First Amendment to License Agreement with Pfizer Inc.**, **Securities Purchase Agreement**, and **Registration Rights Agreement**[287](index=287&type=chunk) - Certifications from the **Principal Executive Officer** and **Principal Financial and Accounting Officer** are included, as required by the **Securities Exchange Act of 1934** and **Sarbanes-Oxley Act of 2002**[287](index=287&type=chunk) [SIGNATURES](index=94&type=section&id=SIGNATURES) [Signatures of Authorized Officers](index=94&type=section&id=Signatures%20of%20Authorized%20Officers) The report is duly signed on August 7, 2025, by Daniel W. Paterson, President and Chief Executive Officer, and Daniel Calkins, Chief Financial Officer, certifying its submission pursuant to the Securities Exchange Act of 1934 - The report was signed by **Daniel W. Paterson**, **President and Chief Executive Officer**, and **Daniel Calkins**, **Chief Financial Officer**, on **August 7, 2025**[294](index=294&type=chunk)

Core Viewpoint - Verastem (VSTM) is anticipated to report a year-over-year decline in earnings despite an increase in revenues, which could significantly influence its stock price in the near term [1][2]. Financial Expectations - The upcoming earnings report is scheduled for August 7, with expectations of a quarterly loss of $0.85 per share, reflecting a year-over-year change of -174.2% [3]. - Revenues are projected to be $15.67 million, representing a 56.7% increase from the same quarter last year [3]. Estimate Revisions - The consensus EPS estimate has been revised down by 1.17% over the last 30 days, indicating a reassessment by analysts [4]. - The Most Accurate Estimate for Verastem is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -16.47% [12]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that a positive or negative reading indicates the likely deviation of actual earnings from the consensus estimate, with a strong predictive power for positive readings [9][10]. - Verastem currently holds a Zacks Rank of 5, which complicates the prediction of an earnings beat [12]. Historical Performance - In the last reported quarter, Verastem was expected to post a loss of $0.72 per share but actually reported a loss of -$0.96, resulting in a surprise of -33.33% [13]. - Over the past four quarters, Verastem has beaten consensus EPS estimates two times [14]. Industry Context - In the broader context of the Zacks Medical - Biomedical and Genetics industry, Ultragenyx (RARE) is expected to report a loss of $1.27 per share for the same quarter, with revenues projected at $161.74 million, up 10% year-over-year [18][19]. - The consensus EPS estimate for Ultragenyx has also been revised down by 1.8% over the last 30 days, leading to an Earnings ESP of -1.02% [19][20].

Group 1 - The article discusses the combination of avutometinib and defactinib for the treatment of recurrent low-grade serous ovarian cancer (LGSOC) and its commercial potential [2] - The author has a long position in Verastem, Inc. (NASDAQ: VSTM), indicating a positive outlook on the company's stock [3] - The article emphasizes the importance of innovative companies developing breakthrough therapies and pharmaceuticals with potential acquisition catalysts [2] Group 2 - The author has been involved in the healthcare investment sector for several years, focusing on biotech and life-saving therapies [2] - The article does not provide specific financial data or performance metrics related to Verastem, Inc. or the discussed drug combination [2]

Core Insights - Verastem, Inc. (VSTM) is viewed positively despite challenges related to data readouts and drug approval uncertainty [1] Company Analysis - The company operates in the biotech sector, focusing on drug development and clinical trials [1] - There is a commitment to educating investors about the scientific aspects of the business, emphasizing the importance of due diligence in biotech investments [1]