Verastem(VSTM) - 2022 Q2 - Quarterly Report

Financial Performance - The company reported a net loss of $22.0 million for the three months ended June 30, 2022, compared to a net loss of $38.9 million for the same period in 2021[117]. - Net loss for the three months ended June 30, 2022, was $21.9 million, representing a 30% increase from a net loss of $16.9 million in the same period of 2021[126]. - Total revenue for the three months ended June 30, 2022, was $0.5 million, a decrease of 100% compared to $500,000 in the same period of 2021[126]. - Total revenue for the six months ended June 30, 2022, was $2.6 million, a 72% increase from $1.5 million in the same period of 2021[139]. - Transition services revenue was $0.0 million in the 2022 Quarter, a decrease of 100% from $0.4 million in the 2021 Quarter, as services were substantially completed in 2021[127]. - The company recorded other income of $34,000 in the 2022 Period, compared to no other income in the 2021 Period[146]. Cash and Investments - As of June 30, 2022, the company had an accumulated deficit of $702.6 million and cash, cash equivalents, and investments totaling $94.3 million[117]. - The company has cash, cash equivalents, and investments totaling $94.3 million as of June 30, 2022, with primary exposure to interest rate sensitivity due to the nature of its investment portfolio[191]. - For the six months ended June 30, 2022, the company reported a net cash used in operating activities of $31.975 million, compared to $32.742 million for the same period in 2021[153]. - Cash provided by investing activities for the 2022 Period was $48.5 million, primarily from net maturities of investments[154]. - The cash inflow from operating activities due to changes in operating assets and liabilities was $3.4 million for the 2022 Period[153]. Research and Development - The ongoing FRAME study is evaluating the combination of VS-6766 and defactinib in patients with recurrent low-grade serous ovarian cancer (LGSOC) and KRAS mutant tumors[108]. - The combination of VS-6766 and defactinib has received breakthrough designation from the FDA for the treatment of all patients with recurrent LGSOC[105]. - The company expects to report topline results from Part A of the RAMP 202 study in the second half of 2022[109]. - The company received a "Therapeutic Accelerator Award" of up to $3.8 million from the Pancreatic Cancer Network to support a Phase 1b/2 clinical trial of VS-6766 in combination with defactinib[113]. - The company has initiated registration-directed trials entitled RAMP 201 and RAMP 202 to evaluate the efficacy and safety of VS-6766 alone and in combination with defactinib[109]. - Approximately 80% of patients remained on study treatment with a median duration of follow-up of four months in the interim analysis of the RAMP 201 trial[110]. - The company anticipates incurring significant expenses and continuing operating losses due to ongoing research and development efforts for VS-6766 and defactinib[117]. - Research and development expenses increased by 53% to $14.9 million in the 2022 Quarter from $9.7 million in the 2021 Quarter, driven by higher contract research organization costs and drug substance costs[128]. - Research and development expenses for the six months ended June 30, 2022, were $28.5 million, up 53% from $18.6 million in the same period of 2021, mainly due to increased CRO and drug product costs[141]. Debt and Financing - The company raised $24.1 million in net proceeds from a loan and security agreement with Oxford during the 2022 Period[156]. - The company entered into a loan agreement allowing for up to $150 million in term loans, with an initial loan of $25 million funded at closing[157]. - Interest expense decreased by 65% to $0.7 million in the 2022 Period from $2.0 million in the 2021 Period, attributed to the conversion of $28.0 million principal of convertible senior notes[148]. - The company entered into a Loan Agreement on March 25, 2022, borrowing $25.0 million, with interest rates subject to fluctuations based on the one-month CME Secured Overnight Financing Rate plus a margin[193]. - The company may finance its cash needs through equity offerings, debt financings, collaborations, and licensing arrangements, which may dilute existing stockholders' interests[188]. Licensing and Agreements - The Secura APA resulted in an upfront payment of $70 million, with potential regulatory milestone payments up to $45 million and sales milestone payments up to $50 million[174]. - The company expects to receive low double-digit royalties on annual aggregate net sales above $100 million in the U.S., EU, and the UK from the Secura agreement[174]. - The company sold its COPIKTRA license and no longer sells COPIKTRA in the U.S., expecting to finance operations through future milestones and royalties[150]. - In the 2022 Period, the company recognized $2.6 million in revenue from the sale of the COPIKTRA license and related assets, primarily due to a regulatory milestone achieved by Secura's sublicensee, CSPC, amounting to $2.5 million[177]. - The company is obligated to pay Chugai a non-refundable payment of $3.0 million under the Chugai Agreement, along with double-digit royalties on net sales of products containing VS-6766[179]. - The Chugai Agreement allows Chugai to obtain opt-back rights for development and commercialization in the EU, Japan, and Taiwan, contingent upon certain conditions[180]. - The company may terminate the Chugai Agreement with 180 days' written notice, while Chugai may terminate under certain conditions related to patent challenges[182]. Operational Risks - The company expects to incur significant expenses and operating losses as it continues ongoing clinical trials for product candidates VS-6766 and defactinib, and anticipates that existing cash resources will be sufficient for at least the next twelve months[183]. - The company is subject to fluctuations in foreign currency rates due to contracts with CROs and contract manufacturers globally[192].