Verastem: New Assets, New Indications
Summary
- Verastem monetised its approved asset Copiktra and now has a decent cash runway.
- Last year, it acquired new assets that it is running through trials.
- Trial completion is 3-4 years away.
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I covered Verastem (NASDAQ:VSTM) a few years ago, when they were running duvelisib through the PDUFA. That molecule, now called Copiktra, got approved in 2018 for the following indications:
For adult patients with relapsed or refractory chronic lymphocytic leukemia (CLL) or small lymphocytic lymphoma (SLL) after at least two prior therapies.
In addition, duvelisib received accelerated approval for adult patients with relapsed or refractory follicular lymphoma (FL) after at least two prior systemic therapies.
After commercialising it and not doing too well with it, Verastem sold rights to the molecule for $70mn upfront in August last year. That effectively ends the story of duvelisib as far as Verastem is concerned. The entire deal wordings say - “Verastem will receive $70M upfront, two milestone payments totaling $45M on FDA and EMA nods for peripheral T-cell lymphoma, $50M for cumulative worldwide sales beginning at $100M, licensing milestones valued up to $146M, low double-digit royalties on net sales over $100M in the U.S., Europe and UK and unspecified royalties on sales outside of the U.S., Europe and UK.” - so Verastem may or may not receive the rest of the funds. However, with the added cash, the company is now focusing on its newly-acquired pipeline, which consists of:
RAF/MEK inhibitor (VS-6766)
Focal adhesion kinase (FAK) inhibitor (defactinib)
Both these assets target RAS mutant cancers, which together constitute 30% of all human cancers.
VS-6766 and defactinib
VS-6766 is a RAF/MEK dual inhibitor inlicensed from Chugai in January 2020. Defactinib is a FAK inhibitor. The company began two registration-directed phase 2 studies in LGSOC and NSCLC, respectively. LGSOC - low-grade serous ovarian carcinoma; NSCLC - non-small cell lung cancer.
The details of the two trials are:
A Study of VS-6766 v. VS-6766 + Defactinib in Recurrent Low-Grade Serous Ovarian Cancer With and Without a KRAS Mutation - link
A Study of VS-6766 v. VS-6766 + Defactinib in Recurrent G12V or Other KRAS-Mutant Non-Small Cell Lung Cancer - link
Both studies have primary completion dates of early to mid-2023 and estimated completion dates of late 2025. That means, these phase 2 studies will not have data until another 3 to 4 years; whether these will end up being registrational or not also cannot be determined until they have data to show the FDA.
In earlier studies, VS-6766 was shown to inhibit MEK phosphorylation, unlike other MEK inhibitors in trials, for example, Springworks’ mirdametinib.
This is important because other MEK inhibitors, according to the company, induce MEK phosphorylation, which may lead to problematic cellular processes. VS-6766 also inhibits ERK signalling: “the ERK signalling pathway is in a central position in the cell signal transduction network, and any errors in activation can profoundly influence cellular processes.”
The company tabulates a number of challenges in targeting RAS pathway driven tumors, and how VS-6766 could overcome them:
Current challenges | VS-6766 solutions |
Blocking any single target in the pathway is insufficient for maximum depth and duration of anti-tumor efficacy • e.g.,, SHP2i, KRAS-G12Ci, RAFi, MEKi, ERKi | Vertical inhibition (RAF and MEK blockade) in a single drug |
Vertical inhibition concept is now well established • Necessary to block more than 1 target in the pathway | Best-in-class tolerability with established twice weekly dosing regimen • Should enable tolerable combinations |
Many of these agents (e.g., SHP2i, MEKi) have poor tolerability as monotherapy and in combination | Compelling synergy data (preclinical) emerging for VS-6766 combinations (e.g., with KRAS-G12C inhibitors) |
Source - company presentation
Here’s a list of currently ongoing trials with VS-6766:
In clinical trials, VS-6766 has shown both safety and efficacy indications.
In an updated data readout from December, these figures have consistently continued to improve. The company also reported that “the most common side effects seen in the study were rash, creatine kinase elevation, nausea, hyperbilirubinemia and diarrhea, most being NCI CTC Grade 1/2 and all were reversible.” A recent poster presentation also buoyed up the stock. These are very early results, but if these can be repeated in the ongoing phase 2 trial, that could be very interesting.
Financials
VSTM has a market cap of $485mn and a cash reserve of $141mn. They have given guidance for a $50mn annual expense. If that is correct, this cash will last them a while.
The company is equally owned between public and private money. Baker Brothers recently announced a stake of over 10mn shares. There isn’t much insider activity:
The lead indication, LSGOC, is a type of ovarian cancer in young women. It is a relatively rare disease, affecting 1,000 to 2,000 patients in the U.S. and 15,000 to 30,000 worldwide each year, but it has a long duration, with 10-year prevalence being up to 6000 in the US; and this is the target market for the molecule. There are very limited treatment options.
Bottom Line
VSTM has had mixed success taking a drug through the regulatory process and then commercialising it. The company has managed to generate some cash from that asset, and it has acquired new assets. However, these are far from the market at present, and while the thesis looks good on paper, we need to wait for further confirmation. Until then, or right before that happens, we will sit on the sidelines on this one.
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This article was written by
Avisol Capital Partners is made up of a team of medical experts, finance professionals and techies, all of whom invest their own money in the picks they share. They aim to help readers find the middle ground between value and growth investing, as they demystify the biopharma industry.
They lead the investing group Total Pharma Tracker where they offer a monthly updated catalyst database, an investability scoring system for quick reference ideas, and direct access in chat for dialogue and questions. Learn more.Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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