Verastem(VSTM) - 2025 Q2 - Quarterly Report

Forward-Looking Statements Overview of Forward-Looking Statements 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] - Key products and candidates mentioned include AVMAPKI™ FAKZYNJA™ CO-PACK, avutometinib (RAF/MEK program), defactinib (FAK program), and VS-7375 (KRAS G12D inhibitor)[10] - 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] Risks and Uncertainties 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] - 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] - 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][12] PART I—FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (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 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 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][212][231] - 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][216][235][236] - 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][221][239] Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' (Deficit) Equity 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] - 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] - 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][149] Condensed Consolidated Statements of Cash Flows 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][252] - 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][255] Notes to Condensed Consolidated Financial Statements 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 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] - 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] - The company's pipeline focuses on novel small molecule drugs inhibiting RAF/MEK, FAK, and KRAS G12D pathways[25] - 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][29] 2. Summary of significant accounting policies 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] - 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] - 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] - 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][49] 3. Cash, cash equivalents and restricted cash 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] 4. Fair value of financial instruments 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][68][124] - 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] 5. Investments 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] - No securities were in an unrealized loss position as of June 30, 2025, or December 31, 2024[72] 6. Accrued expenses 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 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] - Trade discounts and Payer chargebacks are reductions to accounts receivable, while trade allowances, government rebates, and returns are recorded as accrued expenses[76] 8. Inventory 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] - No reserve related to inventory was required as of June 30, 2025[77] 9. Intangible Assets 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][163][165] - 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] 10. Debt 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] - 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][82] - 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][244] - 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] 11. Leases 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][103] | 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] 12. Notes Payable 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] - The outstanding balance was $0.5 million at June 30, 2025, with monthly payments of $0.1 million through November 2025[105] 13. Vendor Financing Arrangement 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] - The company expects to pay the vendor financing liabilities during 2026[106] - Interest expense of $0.2 million was recorded for the six months ended June 30, 2025, related to these extended payment terms[106] 14. Segment Reporting 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] - 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] | 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 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][112] - A Stock Purchase Agreement in January 2025 resulted in $7.4 million net proceeds from the sale of common stock to SPA Investors[113] - The July 2024 Public Offering raised approximately $50.8 million in net proceeds from common stock and accompanying warrants[116] - 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][124][125] - 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][142][149] 16. Stock-based compensation 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] | 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] 17. Net loss per share 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] - 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] 18. License, collaboration and commercial agreements 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] - 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] - 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][167][169] - 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] 19. Income taxes 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] - 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] 20. Commitments and contingencies 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] - 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] 21. Subsequent events 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] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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][190] - 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] - 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][193] - 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][200][201][202] - 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][206] Critical Accounting Policies and Significant Judgments and Estimates 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] - No material changes to critical accounting policies were identified during the six months ended June 30, 2025[211] Results of Operations 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 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] - 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] - Interest expense decreased by $0.9 million due to the termination of the Loan Agreement with Oxford in January 2025[224] - 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] Comparison of the six months ended June 30, 2025 and 2024 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][236] - 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] - A $1.8 million loss on debt extinguishment was recognized due to the early repayment of the Loan Agreement in January 2025[244] - 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] - 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] Liquidity and Capital Resources 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] - 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] | 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] Contractual Obligations and Commitments 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] Item 3. Quantitative and Qualitative Disclosures About Market Risk 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] - 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] - 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][260] - The company also faces immaterial foreign currency fluctuation risk from global CRO and contract manufacturer agreements[258] Item 4. Controls and Procedures 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] - No material changes in internal control over financial reporting occurred during the three months ended June 30, 2025[262] PART II—OTHER INFORMATION Item 1. Legal Proceedings The company reported no legal proceedings - There are no legal proceedings to report[264] Item 1A. Risk Factors 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] - Uncertainty exists regarding potential regulatory developments under the new presidential administration, which could adversely affect drug approval standards, marketing, and FDA oversight[274] - 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] - 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] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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] - The company did not purchase any of its equity securities during the reporting period[279] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - There were no defaults upon senior securities[280] Item 4. Mine Safety Disclosures The company reported no mine safety disclosures - There are no mine safety disclosures to report[281] Item 5. Other Information 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] - 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] - 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] Item 6. Exhibits 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] - 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] SIGNATURES Signatures of Authorized Officers 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]