VSTM: Verastem Analysis and Research Report

2018-04-12 - by Asif , Contributing Analyst - 1134 views

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Business Overview

Verastem is a biopharmaceutical company focused on developing and commercializing drugs to improve the survival and quality of life of cancer patients. The company's most advanced product candidates, duvelisib and defactinib, utilize a multi-faceted approach to treat cancers originating either in the blood or major organ systems. Verastem is currently evaluating these compounds in both preclinical and clinical studies as potential therapies for certain cancers, including leukemia, lymphoma, lung cancer, ovarian cancer, mesothelioma, and pancreatic cancer. The company believe that these compounds may be beneficial as therapeutics either as single agents or when used in combination with immuno-oncology agents or other current and emerging standard of care treatments in aggressive cancers that are poorly served by currently available therapies.

Duvelisib targets the Phosphoinositide 3-kinase (PI3K) signaling pathway. The PI3K signaling pathway plays a central role in cancer proliferation and survival. Duvelisib is an investigational oral therapy designed to attack both malignant B-cells and T-cells and disrupt the tumor microenvironment to help thwart their growth and proliferation through the dual inhibition of PI3K delta and gamma. Duvelisib is being developed for the treatment of patients with hematologic cancers including chronic lymphocytic leukemia and small lymphocytic lymphoma (CLL/SLL) and indolent non-Hodgkin lymphoma (iNHL), which includes follicular lymphoma (FL), and other subtypes of lymphoma, including peripheral T-cell lymphoma (PTCL). Duvelisib has U.S. Food and Drug Administration (FDA) Fast Track Designation for patients with CLL or PTCL who have received at least one prior therapy and for patients with FL who have received at least two prior therapies. In addition, duvelisib has orphan drug designation for patients with CLL/SLL and FL in the United States and European Union.

Duvelisib was evaluated in late- and mid-stage clinical trials, including DUO™, a randomized, Phase 3 monotherapy study in patients with relapsed or refractory CLL/SLL, and DYNAMO™, a single-arm, Phase 2 monotherapy study in patients with double-refractory iNHL, including FL, SLL, and marginal zone lymphoma (MZL). Both DUO and DYNAMO achieved their primary endpoints upon top-line analysis of efficacy data. The company submitted a New Drug Application (NDA) to the FDA requesting the full approval of duvelisib for the treatment of patients with relapsed or refractory CLL/SLL and accelerated approval for the treatment of patients with relapsed or refractory FL in February 2018.

Defactinib is a targeted inhibitor of the Focal Adhesion Kinase (FAK) signaling pathway. FAK is a non-receptor tyrosine kinase encoded by the PTK-2 gene that is involved in cellular adhesion and, in cancer, metastatic capability. Similar to duvelisib, defactinib is also orally available and designed to be a potential therapy for patients to take at home under the advice of their physician. Defactinib has orphan drug designation in ovarian cancer in the United States and the European Union, and in mesothelioma in the United States, the European Union, and Australia.

Defactinib is currently being evaluated in a Phase 1b study in combination with Merck & Co.’s PD-1 inhibitor pembrolizumab and gemcitabine in patients with advanced pancreatic cancer, a Phase 1/2 clinical collaboration with Pfizer Inc. (Pfizer) and Merck KGaA to evaluate defactinib in combination with avelumab, an anti-PD-L1 antibody, in patients with ovarian cancer, and a Phase 1/2 study in collaboration with Cancer Research UK and Merck & Co. for the combination of defactinib with pembrolizumab in patients with non-small cell lung cancer (NSCLC), mesothelioma or pancreatic cancer.

THE PROBLEM

Cancer is a group of diseases characterized by uncontrolled growth and spread of abnormal cells. The American Cancer Society estimates that in the United States in 2018, approximately 1.7 million new cases of cancer will be diagnosed and approximately 610,000 people will die from the disease. Current treatments for cancer include surgery, radiation therapy, chemotherapy, hormonal therapy, immunotherapy, and targeted therapy. Despite years of intensive research and clinical use, current treatments often fail to cure cancer. Cancer remains one of the world’s most serious health problems and is the second most common cause of death in the United States after heart disease. The following table sets forth the U.S. annual incidence of certain cancers, based on 2017 estimates from the National Cancer Institute’s Surveillance, Epidemiology, and End Results Program (NCI; SEER).

Cancer typeU.S. annual incidence 
Lymphoma
 Non-Hodgkin lymphoma72240
Chronic lymphocytic leukemia/small lymphocytic leukemia20110
Follicular lymphoma14448
Solid tumor
 Lung and bronchus cancer222500
 Pancreatic cancer53670
 Ovarian cancer22440

With the application of new technologies and key discoveries, the company believe that Verastem is now entering an era of cancer research characterized by a more sophisticated understanding of the biology of cancer. The company believe that the potential of oral, targeted therapies, along with the rapidly advancing field of immunotherapy, or using the body’s immune system to fight cancer, are important new insights that present the opportunity to develop more effective cancer treatments.

STRATEGY

The company's product candidates seek to utilize a multi-faceted approach to treat cancer by directly targeting the cancer cells, enhancing anti-tumor immunity, and modulating the local tumor microenvironment. The company's goal is to build a leading biopharmaceutical company focused on the development and commercialization of novel drugs that use a multi-faceted approach to improving outcomes for patients with cancer.

Key elements of its strategy to achieve this goal are:

  • Selectively build a commercial infrastructure in the U.S. for the potential launch of duvelisib in hematologic malignancies as an oral monotherapy for patients needing additional lines of therapy following previous treatment.
  • Advance its product candidates through clinical development. Verastem has ongoing clinical trials of duvelisib and defactinib both as single agents and in combination with other agents in several hematologic and solid tumor indications.
  • Expand the indications in which its product candidates may be used. In parallel to CLL/SLL, iNHL, PTCL, NSCLC, ovarian cancer, pancreatic cancer and mesothelioma trials that Verastem is currently conducting, the company plan to pursue additional disease indications to expand the potential of its product candidates.
  • Collaborate selectively to augment and accelerate translational research, development and commercialization. The company may seek third‑party collaborators for the development and eventual commercialization of its product candidates. In particular, the company may enter into third‑party arrangements for target oncology indications in which its potential collaborator has particular expertise or for which the company need access to additional research, development, or commercialization resources.
  • Consider acquiring or in‑licensing rights to additional agents. The company may pursue the acquisition or in‑license of rights to additional agents from third parties that may supplement its internal programs and allow it to initiate clinical development of a diverse pipeline of agents more quickly.
  • Build and maintain scientific leadership in the areas of lymphoid malignancies, immuno-oncology, and the tumor microenvironment. The company plan to continue to conduct research in the hematological and immuno-oncology fields to further its understanding of the underlying biology of enhancing the body’s immune response to tumors as well as cancer progression and metastasis. The company also plan to continue fostering relationships with top scientific advisors, researchers and physicians. The company believe that exceptional advisors, employees and management are critical to leadership in the development of new therapies for the treatment of cancer.

PRODUCT CANDIDATES

Verastem is focused on the development and commercialization of small molecules for optimized efficacy and safety primarily as orally available drug candidates. Verastem has several product candidates currently in clinical trials, including duvelisib and defactinib. Verastem is running clinical trials in cancers where there are limited treatment options, including CLL/SLL, iNHL, T-cell lymphoma, lung cancer, ovarian cancer, pancreatic cancer, mesothelioma, and other advanced cancers.

Conventional chemotherapy works by stopping the function of cancer cells through a variety of mechanisms. Chemotherapies are usually not targeted at any specific differences between cancer cells and normal cells. Rather, they kill cancer cells because cancer cells generally grow more rapidly than normal cells and, as a result, are relatively more affected by the chemotherapy than normal cells. As a result, the treatments may succeed at initially decreasing tumor burden but ultimately fail to kill all of the cancer cells or effectively disrupt the tumor microenvironment, potentially resulting in disease progression.

The company's goal is to develop targeted agents that both specifically kill cancer cells and disrupt the tumor microenvironment to enhance the efficacy of cancer treatment. Agents that can modulate the tumor microenvironment to increase cytotoxic T-cell access to the tumor cells and decrease immunosuppressive T-cells in tumors have been sought after to increase the proportion of responding cancer patients and the duration of response (DOR) to cancer treatment.

Chronic Lymphocytic Leukemia/Small Lymphocytic Leukemia, Non-Hodgkin Lymphoma

Hematologic malignancies are cancers of the blood or bone marrow such as CLL/SLL and non-Hodgkin lymphoma (NHL). In general, NHLs are a disease that occurs in patients over the age of 65.

The NCI estimates that there were 20,110 new cases of CLL/SLL in the U.S. in 2017 and that the five-year relative survival rate from 2007 to 2013 for patients with CLL/SLL was approximately 83%. As CLL/SLL is generally a slow-growing disease, the advent of new oral anti-cancer therapies since 2013 have been a significant advance as treatment options beyond chemotherapy or anti-B-lymphocyte antigen CD20 (CD20) immunotherapies, including ofatumumab. For example, the Bruton’s Tyrosine Kinase (BTK) and B-cell lymphoma 2 (BCL-2) inhibitors have demonstrable activity in the treatment of CLL/SLL. However, evidence coming from studies on real-world use of these agents is revealing that a significant number of patients either relapse following treatment, become refractory to current agents, or are unable to tolerate treatment due to unmanageable side effects resulting from treatment, representing a significant medical need.

The five‑year relative survival rate from 2007 to 2013 for patients with NHL was approximately 71%. The type and stage of the lymphoma can often provide useful information about a person’s prognosis, but for some types of lymphomas the stage is less informative on its own. In these cases, other factors can give doctors a better idea about a person’s prognosis. These factors are included in the International Prognostic Index and other metrics which take into account the patient’s age, stage of disease, presence of metastases, performance status and blood levels of lactate dehydrogenase.

The potential of additional oral agents, particularly as a monotherapy that can be used in the general community physician’s armamentarium, may hold significant value in the treatment of patients with CLL/SLL.

Follicular Lymphoma

FL comprises 20% of all NHL and as many as 70% of the indolent lymphomas reported in American and European clinical trials. Common symptoms of FL include enlargement of the lymph nodes in the neck, underarms, abdomen, or groin, as well as fatigue, shortness of breath, night sweats, and weight loss. Often, patients with FL have no obvious symptoms of the disease at diagnosis. Most patients with FL are age 50 years and older and present with widespread disease at diagnosis. Nodal involvement is most common and is often accompanied by splenic and bone marrow disease. Rearrangement of the BCL-2 gene is present in more than 90% of patients with FL; overexpression of the BCL-2 protein is associated with the inability to eradicate the lymphoma by inhibiting apoptosis.

Despite the advanced stage, the median survival ranges from 8 to 15 years, leading to the designation of being indolent. Patients with advanced-stage FL are not cured with current therapeutic options. The rate of relapse is fairly consistent over time, even in patients who have achieved complete responses to treatment.

There are various treatment options for FL based on the severity of associated symptoms and the rate of cancer growth. If patients show no or very few symptoms, physicians may recommend not to treat the disease right away, an approach referred to as "active surveillance" (also known as "watchful waiting"). Active treatment is started if the patient begins to develop lymphoma-related symptoms or there are signs that the disease is progressing based on testing during follow-up visits.

FL is generally responsive to radiation and chemotherapy. Radiation alone can provide a long-lasting remission in some patients with limited disease. In more advanced stages, physicians may use one or more chemotherapy drugs or the monoclonal antibody rituximab (Rituxan), alone or in combination with other agents.

There have been only incremental advances in treatment options for FL beyond chemotherapy or immunotherapies like the antibodies against CD20, such as rituximab and obinutuzumab, and the overall clinical outlook for patients still remains poor. The potential of additional oral agents, particularly as a monotherapy that can be used in the general community physician’s armamentarium, may hold significant value in the treatment of patients with FL.

Peripheral T-Cell Lymphoma

PTCL consists of a group of rare and usually aggressive (fast-growing) NHLs that develop from mature T-cells. Most T-cell lymphomas are PTCLs, which collectively account for about 10% to 15% of all NHL cases in the United States.

PTCLs are sub-classified into various subtypes, each of which are typically considered to be separate diseases based on their distinct clinical differences. Most of these subtypes are very rare; the three most common subtypes of PTCL, peripheral T-cell lymphoma not otherwise specified (PTCL-NOS), anaplastic large-cell lymphoma (ALCL), and angioimmunoblastic T-cell lymphoma (AITL), account for approximately 70% of all PTCLs in the United States.

For most subtypes of PTCL, the frontline treatment regimen is typically a combination chemotherapy, such as CHOP (cyclophosphamide, doxorubicin, vincristine, prednisone), EPOCH (etoposide, vincristine, doxorubicin, cyclophosphamide, prednisone), or other multi-drug regimens. Because most patients with PTCL will relapse, some oncologists recommend giving high-dose chemotherapy followed by an autologous stem cell transplant (in which patients receive their own stem cells) to some patients who had a good response to their initial chemotherapy. While promising, there is no firm clinical data to support that undergoing a transplant in this setting is better than not undergoing a transplant.

The potential of additional oral agents, particularly as a monotherapy that can be used in the general community physician’s armamentarium, may hold significant value in the treatment of patients with PTCL.

Ovarian Cancer

Ovarian cancer forms in tissues of the ovary, one of a pair of female reproductive glands in which the ova, or eggs, are formed. Most ovarian cancers are either ovarian epithelial carcinoma, cancer that begins in the cells on the surface of the ovary, or malignant germ cell tumors that begin in egg cells. According to the NCI, epithelial carcinoma of the ovary is one of the most common gynecologic malignancies and the fifth most frequent cause of cancer death in women, with 50% of all cases occurring in women older than 65 years. The American Cancer Society estimates that in 2018 there will be approximately 22,200 new cases of ovarian cancer diagnosed and approximately 14,100 ovarian cancer related deaths.

Most patients are treated with a combination of surgery, chemotherapy, targeted therapy and radiation therapy. Surgery is often comprehensive to remove as much of the tumor as possible and may include removal of the ovaries or a total hysterectomy where the uterus is also removed. Unfortunately, available therapies are rarely curative in the treatment of ovarian cancer and many tumors become resistant to platinum‑based chemotherapy, which is the primary treatment regimen. Further therapy with conventional chemotherapy is generally palliative, not curative, as the tumor is able to metastasize and spread to other sites in the body.

Pancreatic Cancer

Pancreatic cancer is the tenth most common cancer diagnosed in the United States and the disease represents the third leading cause of cancer-related death in the country.

Pancreatic cancer often has a poor prognosis, even when diagnosed early. Pancreatic cancer typically spreads rapidly and is seldom detected in its early stages, which is a major reason why it is a leading cause of cancer death. Signs and symptoms may not appear until pancreatic cancer is so advanced that complete surgical removal is not possible. An estimated 54,000 Americans were diagnosed with pancreatic cancer in 2017 and over 43,000 were estimated to have died from the disease. Pancreatic cancer is one of the few cancers where survival has not improved significantly during the past 40 years. Pancreatic cancer has a very high mortality rate with approximately 92% of patients dying within five years of their initial diagnosis based on the five-year relative survival rate from 2007 to 2013. The median age for diagnosis is 70 with the disease affecting males slightly more than females.

Treatment options for pancreatic cancer are limited with surgical resection of the tumor possible in less than 20% of patients. Chemotherapy or chemotherapy plus radiation is offered to patients whose tumors are unable to be removed surgically. Immuno-oncology agents have not demonstrated a significant improvement in treatment outcome for patients with pancreatic cancer. The limited impact of chemotherapies and immunotherapies to improve the outcome may be due to the dense stroma that is prevalent in pancreatic tumors and the tumor microenvironment.

Non-Small Cell Lung Cancer

According to the NCI, the most common types of NSCLC are squamous cell carcinoma, large cell carcinoma, and adenocarcinoma. Although NSCLCs are associated with cigarette smoke, adenocarcinomas may be found in patients who have never smoked. As a class, NSCLCs are relatively insensitive to chemotherapy and radiation therapy compared with small cell lung cancer (SCLC). The NCI estimates that in 2017 there were 222,500 new cases of lung cancer (both NSCLC and SCLC) in the United States and more than 150,000 deaths. Lung cancer is the leading cause of cancer‑related mortality in the United States. The five‑year relative survival rate from 2007 to 2013 for patients with lung cancer was approximately 18%.

Patients with resectable disease may be cured by surgery or surgery followed by chemotherapy. Local control can be achieved with radiation therapy in a large number of patients with unresectable disease, but cure is seen only in a small number of patients. Patients with locally advanced unresectable disease may achieve long‑term survival with radiation therapy combined with chemotherapy. Patients with advanced metastatic disease may achieve improved survival and palliation of symptoms with chemotherapy, targeted agents, and other supportive measures. The disease becomes resistant to therapy and returns in the vast majority of patients.

Mesothelioma

Mesothelioma is a form of cancer most often caused by asbestos, that affects the smooth lining of the chest, lungs, heart, and abdomen. The layer of tissue surrounding these organs is made up of mesothelial cells, hence the name mesothelioma. Mesothelioma most often forms in the pleural cavity of the chest or into the abdomen. Mesothelioma forms a solid tumor that begins as a result of insult to the tissues caused by asbestos particles, which penetrate into the pleural cavity of the chest.

Pleural mesothelioma accounts for approximately 2,500 - 3,000 cases a year in the United States. This disease affects the pleura, which is the thin balloon shaped lining of the lungs. In its early stages, mesothelioma is difficult to detect as it may start with a thickening of the pleural rind, or fluid, which can be associated with many other conditions. This rind is normally thin and smooth in the non-diseased state. In time it begins to demonstrate progression, forming a more pronounced irregular rind and nodules which coalesce into a crust that compresses and invades into adjacent structures compromising lung and cardiac function.

The symptoms of mesothelioma gradually become more noticeable, prompting the patient to seek a medical consultation. By this time the progression of the disease may already be too advanced, as the tumor may have spread to the lymph nodes and/or begun to metastasize to remote organs of the body like the brain, spleen, liver or kidneys.

PI3K Inhibition Program

PI3K refers to a family of enzymes involved in multiple cellular functions, including cell proliferation and survival, cell differentiation, cell migration, and immunity. PI3K-delta and PI3K-gamma are two proteins with distinct and mostly non-overlapping roles believed to support the growth and survival of malignant B-cells and T-cells. Specifically, preclinical data suggest that PI3K-delta signaling can lead to the proliferation of malignant B-cells, and that both PI3K-gamma and PI3K-delta play an important role in the formation and maintenance of the supportive tumor microenvironment.

Duvelisib

The company's lead product candidate, duvelisib, is an oral, dual inhibitor of PI3K-delta and PI3K-gamma. Duvelisib is an investigational compound in clinical trials for hematologic malignancies, and its safety and efficacy have not yet been evaluated by the FDA or any other health authority for marketing authorization.

The clinical investigation program for duvelisib is supported by data from a Phase 1, open-label, dose-escalation study designed to evaluate the safety, pharmacokinetics and clinical activity of duvelisib in patients with advanced hematologic malignancies. The maximum tolerated dose of duvelisib was defined at 75 mg twice daily (BID) and the trial has been completed. A 25 mg BID dosing regimen was determined for further development based on efficacy, safety, pharmacokinetics and pharmacodynamics. Data from this study, presented in December 2014 at the Annual Meeting of the American Society for Hematology (ASH 2014), showed that duvelisib is clinically active in CLL/SLL, iNHL, and T-cell lymphoma, as well as other hematologic malignancies.

Chronic Lymphocytic Leukemia/Small Lymphocytic Leukemia, Non-Hodgkin Lymphoma

The FDA and European Medicines Agency (EMA) have granted orphan drug designation to duvelisib for the potential treatment of CLL/SLL, and the FDA has granted fast track designation to the investigation of duvelisib for the treatment of patients with CLL/SLL who have received at least one prior therapy. Duvelisib was evaluated for the treatment of CLL/SLL in the DUO™ study. The DUO study is a Phase 3, monotherapy, open-label, two- arm, randomized, superiority trial designed to evaluate the efficacy and safety of duvelisib at 25mg BID compared to ofatumumab, a monoclonal antibody treatment, administered to patients who have been diagnosed with CLL/SLL whose disease is relapsed or refractory. Patients in DUO that continue to derive benefit remain on treatment. DUO enrollment criteria included patients with CLL/SLL, whose disease had progressed during or relapsed after at least one previous CLL/SLL therapy. The primary endpoint of the study was Progression-Free Survival (PFS).

The investigation of duvelisib in DUO is supported by preliminary data from a Phase 1 study that demonstrated that duvelisib administered at 25 mg BID was clinically active in patients with relapsed or refractory CLL, with a 57% overall response rate (ORR) (17 of 30 evaluable patients), including one complete response, as per investigator assessment. At the time of the presentation of the study at ASH 2014, the median PFS in the 31 patients who received the 25 mg BID dose had not yet been reached with 66% of patients progression free at twelve months and 59% of patients progression free at 24 months.

The majority of side effects were Grade 1 or 2 in severity, reversible and/or clinically manageable. Across all doses evaluated in the study (n=55), the most common Grade 3 side effects were pneumonia (24%), neutropenia (18%) and anemia (16%). Grade 4 side effects included pneumonia in one patient (2%), neutropenia in 13 patients (24%) and anemia in one patient (2%).

The results from the DUO study were presented at the 2017 Annual Meeting of the American Society for Hematology conference (ASH 2017). The DUO study met its primary endpoint with oral duvelisib monotherapy achieving a statistically significant improvement in PFS compared to ofatumumab in patients with relapsed or refractory CLL/SLL per a blinded Independent Review Committee (IRC) using modified international workshop on CLL (iwCLL) or revised International Working Group (IWG) Response Criteria (median PFS=13.3 months versus 9.9 months, respectively; HR=0.52, p<0.0001), representing a 48% reduction in the risk of progression or death.

Median PFS per IRC

Similar efficacy of duvelisib was observed regardless of whether patients had 17p deletion (del[17p]). The primary outcome of median PFS via IRC review in the del[17p] subpopulation significantly favored duvelisib over ofatumumab (median PFS=12.7 months versus 9.0 months, respectively; HR=0.41, p=0.0011), representing a 59% reduction in the risk of progression or death. Per investigator assessment, duvelisib demonstrated a median PFS of 17.6 months, compared to 9.7 months for ofatumumab (HR=0.40, p<0.0001). Duvelisib maintained a PFS advantage in all patient subgroups analyzed as a subset of pre-specified sensitivity analyses.

Median PFS per IRC for del[17p] Subpopulation

Median PFS per Investigator Assessment

Median PFS by Subgroup

The secondary efficacy outcome of ORR via IRC assessment according to modified iwCLL/IWG criteria, significantly favored duvelisib over ofatumumab, 74% versus 45%, respectively (p<0.0001), and reduced lymph node burden by more than 50% in most patients compared to ofatumumab, 85% versus 16%, respectively. In the del[17p] subpopulation of patients, ORR was also significantly higher for duvelisib compared to ofatumumab, 70% versus 43%, respectively (p=0.0182).

Patients who progressed in the DUO study were given the option to enroll in a crossover study to receive the opposite treatment. In the optional crossover study, 89 patients who were previously treated with ofatumumab in DUO and experienced confirmed disease progression were subsequently treated with duvelisib as a monotherapy. As in the parent DUO study, duvelisib demonstrated robust clinical activity in this crossover study with an ORR of 73%, a median DOR of 12.7 months and a median PFS of 15 months by investigator assessments.

In the DUO study, the overall survival in the intent to treat (ITT) population was similar for those randomized to duvelisib and to ofatumumab during the study (HR=0.99, p=0.4807), as expected there was no detrimental effect on overall survival. Though the FDA has noted that overall survival is the most reliable and therefore the preferred endpoint for approval of drugs for oncology indications in general, the FDA has publicly stated that it understands the challenges of showing an overall survival improvement in CLL/SLL, given the long natural history of the disease and availability of multiple therapies. Therefore, while they may request drug companies to collect overall survival data to ensure there is no detrimental effect on overall survival and to observe any potential improvement, an improvement in overall survival is not necessary for approval in CLL. Rather, improvements in PFS together with a favorable benefit-risk profile may be acceptable to receive FDA approval.

Following prolonged exposure, duvelisib, as a monotherapy, demonstrated a manageable safety profile, with results from this study consistent with the well-characterized safety profile of duvelisib monotherapy in patients with advanced hematologic malignancies in previous studies. For duvelisib-treated patients, the median time on treatment was 50.3 weeks (range, 0.9 - 160.0) compared to 23.1 weeks (range, 0.1 - 26.1) for ofatumumab. The most common Grade ≥3 treatment-emergent hematologic adverse events (occurring in more than 10% of patients) were neutropenia (30%) and anemia (13%). The most common Grade ≥3 non-hematologic treatment-emergent adverse events (occurring in more than 10% of patients) were diarrhea (15%), pneumonia (14%) and colitis (12%). The rate of severe opportunistic infections was 6%, including two patients (1%) with Pneumocystis jirovecii pneumonia (PJP), neither of whom was on prophylaxis for PJP at the time of the event. Adverse events led to discontinuation of treatment in 35% of patients. Approximately 40% of patients treated with duvelisib remained on treatment for over 18 months, with a median total follow-up of nearly two years

Adverse events of special interest infrequently led to discontinuation of duvelisib treatment (e.g., diarrhea (5%), colitis (5%), pneumonitis (2%), neutropenia (1%), pneumonia (1%), transaminase elevations (1%), and rash (1%). Duvelisib treatment-related adverse events leading to death (n=4) include general physical health deterioration (n=1), pneumonia staphylococcal (n=2) and sepsis (n=1)).

Indolent Non-Hodgkin Lymphoma

The FDA and EMA have granted orphan drug designation to duvelisib for the potential treatment of FL, and the FDA has granted Fast Track Designation to the investigation of duvelisib for the treatment of patients with FL who have received at least two prior therapies. The DYNAMO study is a Phase 2, open-label, single-arm monotherapy study evaluating the safety and efficacy of duvelisib dosed at 25 mg BID in 129 patients with iNHL. Patients in DYNAMO that continue to derive a benefit remain on treatment. DYNAMO enrollment criteria included patients with FL, the most common subtype of iNHL, MZL and SLL, whose disease is double-refractory to rituximab, an anti-CD20 monoclonal antibody, and to either chemotherapy or radioimmunotherapy and who must have progressed within six months of receiving their final dose of a previous therapy. The primary endpoint of the study was an ORR as assessed by IRC and according to the revised IWG Criteria, which includes a change in target nodal lesions in combination with other measurements to determine response to treatment.

The results from the DYNAMO study were presented at the 2016 Annual Meeting of the American Society for Hematology conference (ASH 2016). DYNAMO achieved the primary endpoint in a heavily pre-treated, double-refractory patient population with an ORR of 46% (p=0.0001) in the ITT population, as assessed by an IRC with a median DOR of 10 months. The breakdown of ORR in the three subtypes of iNHL for the overall study population was 41% in FL (n=83), 68% in SLL (n=28) and 33% in MZL (n=18). 83% of patients had a reduction of target nodal lesions in lymph nodes.

Duvelisib demonstrated a consistent and manageable safety profile with appropriate risk mitigation. The majority of adverse events were Grade 1 or 2 in severity, reversible and/or clinically manageable. The most common (greater than 5%) Grade 3 adverse effects were an increase in diarrhea (14%), anemia (10%), and neutropenia (9%). Grade 3 or 4 adverse effects of special interest included neutropenia (28%), infection (18%), diarrhea (15%), thrombocytopenia (13%), anemia (12%), pneumonia (9%), hepatotoxicity (8%), rash (7%), colitis (5%), and pneumonitis (2%). Serious opportunistic infections were less than 5% with none being fatal. Four treatment-related adverse events had the outcome of death (one septic shock; one viral infection; one drug reaction/eosinophilia/systemic symptoms; and one toxic epidermal necrolysis/sepsis syndrome).

T-cell Lymphoma, Aggressive NHL and Other Lymphomas

In the Phase 1 study, the ORR in patients with PTCL (n=16) was 50%, including three complete responses (CRs) and five partial responses (PRs). Responses were seen across the spectrum of PTCL subtypes, including CRs and PRs in patients with enteropathy-associated T-cell lymphoma (EATL), AITL, subcutaneous panniculitis-like T-cell lymphoma (SPTCL), and anaplastic large-cell lymphoma (ALCL), among others. DOR in the PTCL population ranged from 1.8 to 17.3 months with median PFS of 8.3 months and median overall survival of 8.4 months. In cutaneous T-cell lymphoma (CTCL) (n=19), the ORR was 32%, with six PRs. DOR ranged from 0.7 to 10.1 months and median PFS was 4.5 months. Median overall survival was not reached; however, the estimated probability of survival was determined to be of 90% at 6 months, 79% at 12 and 18 months, and 73% at 24 months. Duvelisib monotherapy demonstrated a manageable safety profile, with results from this study consistent with the well-characterized safety profile of duvelisib monotherapy in patients with hematologic malignancies in other studies. These clinical results were supported by preclinical findings showing that duvelisib exhibited cell-killing activity in vivo and promoted beneficial changes within the tumor microenvironment.

During 2017, the FDA granted Fast Track designation for the treatment of patients with PTCL, who have received at least one prior therapy. During the first quarter of 2018, the company initiated an open-label, multicenter, Phase 2 clinical trial evaluating the efficacy and safety of duvelisib in patients with relapsed or refractory PTCL. The company expect the study to be conducted in both the United States, the European Union, and Japan.

FAK Inhibition Program

The company's product candidates that inhibit FAK utilize a multi-faceted approach to treat cancer by enhancing anti-tumor immunity and modulating the local tumor microenvironment. The company's lead FAK inhibitor is known as defactinib. The effects of FAK inhibition on the tumor microenvironment make defactinib a good candidate for combination therapy with immuno-oncology agents and other anti-cancer compounds. FAK expression is greater in many tumor types compared to normal tissue, particularly in cancers that have a high invasive and metastatic capability. The contact between cancer cells and connective tissue stimulates FAK signaling.

In September 2015, researchers from the University of Edinburgh published a study in the journal Cell that highlights the potential of FAK inhibition to enable the body’s immune system to fight cancer. The paper discussed results from preclinical research showing that FAK enables cancer cells to evade attack by the immune system. This research showed that genetic knock down of FAK or oral dosing of mice with a FAK inhibitor decreases immunosuppressive cells called T-regulatory cells (Figure 1a) and increases cytotoxic T-cells (Figure 1b) in skin cancer tumors leading to a reduction in tumor burden (Figure 1c). This work has since been expanded into pancreatic cancer and colorectal cancer models in which FAK inhibition similarly extends survival of tumor-bearing mice through increasing cytotoxic T-cells in the tumor and decreasing T regulatory cells as published in Nature Medicine in August, 2016. Additionally, FAK inhibition was found to decrease other key immunosuppressive cell populations in tumors, known as myeloid-derived suppressor cells and M2 tumor-associated macrophages. Coincident with this immuno-modulation, FAK inhibition was shown to substantially increase survival of mice when combined with an anti-PD-1 immune checkpoint antibody. These results have indicated the potential promise of FAK inhibitors in combination with immune checkpoint inhibitors in the clinic.

In the 2016 Nature Medicine paper, preclinical data were presented (Jiang, et al) demonstrating that FAK inhibition reduces stromal density and increases T-cell entry into tumors. In this study, it was discovered that treating mice bearing pancreatic cancer tumors with a FAK inhibitor reduces stromal density. This was measured as a decrease in the number (Figure 2a) and proliferation (Figure 2b) of tumor-associated fibroblasts, together with a decrease in collagen and other extracellular matrix proteins (Figure 2c) in the tumors. The paper’s authors went on to show that this reduction in stromal density by FAK inhibition augments the effectiveness of the chemotherapeutic agent gemcitabine, and also allowed cytotoxic T-cells to enter the tumors (Figure 2d) to induce more durable survival of transgenic mice bearing pancreatic tumors (Figure 3). The company believe these data provide strong rationale for the clinical evaluation of FAK inhibitors, including defactinib, in combination with a PD-1 or PD-L1 antibody in patients with pancreatic and other cancers. Based on this research, Verastem has initiated clinical trials to assess the combination of defactinib with either avelumab (anti-PD-L1) or pembrolizumab (anti-PD-1) for the treatment of patients with ovarian cancer, pancreatic cancer, mesothelioma, or NSCLC.

Defactinib

Defactinib is an orally‑available small molecule kinase inhibitor designed to inhibit FAK signaling. Verastem is currently evaluating defactinib as a potential therapy for ovarian cancer, pancreatic cancer, mesothelioma, NSCLC, and other solid tumors. Defactinib has orphan drug designation in ovarian cancer in the United States and the European Union and in mesothelioma in the United States, the European Union, and Australia.

The clinical evaluation of defactinib is supported by a growing body of preclinical research suggesting that FAK inhibition, when combined with PD-1 inhibitors, increases the anti-tumor activity of these immunotherapeutic agents. As published in the journals Cell and Nature Medicine, FAK inhibition has been shown to increase cytotoxic (CD8+) T-cells in tumors, decrease T-cell exhaustion, decrease immunosuppressive cell populations, enhance T-cell killing of tumor cells, and create a generally more favorable tumor microenvironment, which may allow for enhanced efficacy of immuno-oncology therapeutics.

Pancreatic cancer, along with other tumors such as ovarian cancer and prostate cancer, are tumor types in which immunotherapeutics have achieved limited clinical benefit, possibly due to the dense desmoplastic stroma and the abundance of immunosuppressive cells. Preclinical research has demonstrated that high stromal density prevents anti-cancer agents and T-cells from entering pancreatic tumors thereby limiting efficacy. In preclinical research conducted by it and others, FAK inhibition was shown to reduce stromal density and allow cytotoxic T-cells to better penetrate the tumor and kill the cancer cells. Collectively, these data provide strong rationale for combining its FAK inhibitors with checkpoint inhibitors in the clinic for pancreatic and other solid tumors.

Phase 1/2 study with Pfizer and Merck KGaA in combination with immunotherapy in ovarian cancer. In March 2016, the company announced a new clinical collaboration with Pfizer and Merck KGaA to evaluate defactinib in combination with avelumab in patients with ovarian cancer. Avelumab is a human programmed death ligand 1 (PD-L1), blocking antibody that binds to the PD-L1 ligand expressed on tumor cells.

Phase 1/2 study with Cancer Research United Kingdom (CRUK) in combination with pembrolizumab. In September 2016, the company announced a new clinical collaboration with CRUK and Merck & Co. to evaluate defactinib in combination with pembrolizumab, a PD-1 inhibitor, in patients with NSCLC, mesothelioma, or pancreatic cancer.

Phase 1/1b study in combination with immunotherapy in pancreatic cancer. Defactinib is in a dose escalation study in combination with Merck & Co.’s PD-1 inhibitor pembrolizumab and gemcitabine in patients with advanced pancreatic cancer. This Phase 1 clinical trial is anticipated to enroll approximately 50 patients and is being conducted at the Washington University School of Medicine’s Division of Oncology under the direction of Andrea Wang-Gillam, M.D., Ph.D., Clinical Director of the Gastrointestinal Oncology Program. This trial is primarily designed to evaluate the safety of the combination regimen and may also provide a greater understanding of how FAK inhibition in combination with immunotherapies could improve outcomes for patients with pancreatic cancer.

MANAGEMENT TEAM AND SCIENTIFIC CO‑FOUNDERS AND ADVISORS

The company's experienced management team includes its President and Chief Executive Officer, Robert Forrester, Chief Strategy Officer, Steven Bloom, Chief Financial Officer, Julie Feder, Chief Medical Officer, Diep Le, M.D., Ph.D., Chief Commercial Officer, Joseph Lobacki, and Chief Operating Officer, Daniel Paterson.

Mr. Forrester has been the Chief Executive Officer, Chief Operating Officer and Chief Financial Officer of both private and public life science companies, including Forma Therapeutics, Inc., CombinatoRx, Inc. and Coley Pharmaceutical Group, Inc., which was acquired by Pfizer Inc. in 2007.

Mr. Bloom joined Verastem in March 2014 and recently took on the role of Chief Strategy Officer, focusing on Corporate and Business Development, Medical Affairs, Patient Advocacy and Corporate Communications. Prior to joining the company, Mr. Bloom was Senior Vice President at Ziopharm Oncology where for 6 years he led business development and the commercial planning initiatives for a late stage oncology asset. Before joining Ziopharm, Mr. Bloom was Vice President for the health informatics company Pharmetrics and spent the first 19 years of his career at Eli Lilly and Company in leadership roles in marketing, sales and corporate affairs.

Ms. Feder joined Verastem in July 2017 as its Chief Financial Officer. Ms. Feder served as the Chief Financial Officer for the Clinton Health Access Initiative, Inc. (CHAI) for the previous six years. Prior to joining CHAI, Ms. Feder spent three years at Genzyme Corporation, first as Vice President of Internal Audit and also as Finance Integration Leader. In these roles, she managed the day-to-day operations of Genzyme’s global internal audit function, while leading the Genzyme Global Finance integration into Sanofi’s organization following Sanofi’s acquisition of Genzyme.

Dr. Le joined it in October 2017 as its Chief Medical Officer, is a trained medical oncologist, board certified in internal medicine and has 15 years of drug development experience across all phases in both solid and hematologic malignancies as well as IND and NDA submissions. Dr. Le joins Verastem from MedImmune (a subsidiary of AstraZeneca) where she served as Vice President, Immuno-Oncology Innovative Medicines and led the product development teams for multiple high-priority immuno-oncology assets. Prior to joining MedImmune, Dr. Le held roles of increasing responsibility at Novartis and at GlaxoSmithKline where she led the MEK inhibitor, trametinib (Mekinist™), from the first-in-human studies to FDA approval.

Mr. Lobacki joined Verastem in January 2018 as its Chief Commercial Officer. He most recently served as the Chief Operating Officer of Finch Therapeutics Group and previously as the Chief Commercial Officer and Executive Council Member of Medivation, where he was responsible for the strategy and execution of commercial operations including Xtandi, a treatment for advanced prostate cancer. Previously, Mr. Lobacki was Senior Vice President and Chief Commercial Officer of Micromet Inc., where he oversaw commercial activities including medical affairs and strategic marketing. Prior to joining Micromet, Mr. Lobacki was Senior Vice President and General Manager at Genzyme Corporation, where he managed the launch of Mozobil and Clolar/Evoltra in the US and EU.

Mr. Paterson has over 25 years of experience in management roles at healthcare and biotechnology companies, including as chief executive officer, Chief Operating Officer and Chief Business Officer, and specific expertise in oncology drug and diagnostic product development, business development, and launch planning. Mr. Paterson was Head of Global Strategy for Specialty Market and Patient‑Level Data at IMS Health after playing a key role in the acquisition of PharMetrics by IMS Health as Vice President of Marketing and Corporate Development.

The company's scientific co‑founders are recognized leaders in the field of cancer biology. Robert Weinberg, Ph.D., Founding Member of the Whitehead Institute and Professor of Biology at MIT, has played a key role in identifying the genetic basis of cancer. Dr. Weinberg discovered the first tumor oncogene, the first tumor suppressor gene, the role of a protein related to the cell surface receptor HER2 in preclinical studies and the mechanisms underlying the formation of cancer stem cells. Eric Lander, Ph.D., Founding Director of the Broad Institute, Professor of Biology at MIT and Professor of Systems Biology at Harvard Medical School, played a central role in the Human Genome Project.

INTELLECTUAL PROPERTY

The company strive to protect the proprietary technology that the company believe is important to its business, including seeking and maintaining patents intended to cover its product candidates and compositions, their methods of use and processes for their manufacture, and any other aspects of inventions that are commercially important to the development of its business. The company also rely on trade secrets to protect aspects of its business that are not amenable to, or that the company do not consider appropriate for, patent protection.

The company plan to continue to expand its intellectual property estate by filing patent applications directed to compositions, methods of treatment and patient selection created or identified from its ongoing development of its product candidates. The company's success will depend on its ability to obtain and maintain patent and other proprietary protection for commercially important technology, inventions and know‑how related to its business, defend and enforce its patents, preserve the confidentiality of its trade secrets and operate without infringing the valid and enforceable patents and proprietary rights of third parties. The company also rely on know‑how, continuing technological innovation and in‑licensing opportunities to develop and maintain its proprietary position. The company seek to obtain domestic and international patent protection, and endeavor to promptly file patent applications for new commercially valuable inventions.

The patent positions of biopharmaceutical companies like it are generally uncertain and involve complex legal, scientific and factual questions. In addition, the coverage claimed in a patent application can be significantly reduced before the patent is issued, and patent scope can be reinterpreted by the courts after issuance. Moreover, many jurisdictions permit third parties to challenge issued patents in administrative proceedings, which may result in further narrowing or even cancellation of patent claims. The company cannot predict whether the patent applications Verastem is currently pursuing will issue as patents in any particular jurisdiction or whether the claims of any issued patents will provide sufficient protection from competitors.

Because patent applications in the United States and certain other jurisdictions are maintained in secrecy for 18 months or potentially even longer, and since publication of discoveries in the scientific or patent literature often lags behind actual discoveries, the company cannot be certain of the priority of inventions covered by pending patent applications. Moreover, the company may have to participate in interference proceedings or derivation proceedings declared by the U.S. Patent and Trademark Office to determine priority of invention.

Patents

The company's patent portfolio includes issued and pending applications worldwide. These patent applications fall into three categories: (1) PI3K inhibition program; (2) FAK inhibition program; and (3) other programs.

PI3K inhibition program

Verastem is currently developing the PI3K inhibitor duvelisib.

Verastem has exclusively licensed a portfolio of patent applications owned by Intellikine LLC and Infinity Pharmaceuticals, Inc. (Infinity), which are directed to PI3K inhibitor compounds and methods of their use, for example, in cancer. Certain patent families are related to duvelisib. These patent families include issued patents having claims covering duvelisib generically and specifically. Also included are issued patents covering certain polymorphs of duvelisib. Exemplary patents covering duvelisib, pharmaceutical compositions comprising duvelisib, methods of use, polymorphs, and methods of manufacture include US 8,193,182; US 8,785,456, and US 9,216,982. These U.S. patents have issued and will expire between 2029 and 2032. Related issued and pending worldwide patents and applications with claims to duvelisib, pharmaceutical compounds, methods of use, polymorphs, and methods of manufacture are pending in about 40 countries. Additional patent applications related to certain methods of use and combination therapies, as issued, would expire between 2029 and 2036.

FAK inhibition program

Verastem is currently developing the FAK inhibitor defactinib.

Verastem has exclusively licensed a portfolio of patent applications owned by Pfizer, which are directed to FAK inhibitor compounds and methods of their use, for example in cancer. One patent family is related generally to defactinib. This patent family includes issued patents having claims covering defactinib generically and specifically. For example, US 7,928,109 covers the composition of matter of defactinib specifically and US 8,247,411 covers the composition of matter of defactinib generically. Also included are issued and pending patent applications having claims directed to methods of treatment and methods of making defactinib. For example, US 8,440,822 covers methods of making defactinib. Any U.S. patents that have issued or will issue in this family will have a statutory expiration date in April of 2028. Related cases are pending worldwide, including for example in Europe, Brazil, Thailand, Hong Kong, and India, and granted in Australia, Mexico, Canada, China, Korea, Israel, New Zealand, South Africa, Singapore, Taiwan, and Japan.

In addition to the issued and pending patent applications exclusively licensed from Pfizer, the company own three patent families covering defactinib. One family is directed to compositions (e.g., oral dosage forms) of defactinib and certain methods of use. Any U.S. patents that will issue in this family will have a statutory expiration date in January of 2035. The other two families are directed to methods of using a FAK inhibitor in combination with another agent, such as defactinib in combination with a mitogen-activated protein kinase kinase enzymes (MEK) inhibitor for treating a patient or defactinib in combination with an immunotherapeutic agent. Any U.S. patents that will issue in these families will have a statutory expiration date in February of 2035 and June of 2036.

The company's licensed portfolio of patent applications from Pfizer also includes four families of patent applications directed to VS‑6062 and related methods of use. The patent families include issued and pending patent applications having claims directed to VS‑6062, methods of manufacture, and pharmaceutical salts. Patents have issued in these families in the U.S. that will expire in December of 2023, April of 2025, and November of 2028, respectively. Related cases have been granted worldwide, including for example in Australia, Canada, China, Japan, and Europe.

Patent Term

The base term of a U.S. patent is 20 years from the filing date of the earliest‑filed non‑provisional patent application from which the patent claims priority. The term of a U.S. patent can be lengthened by patent term adjustment, which compensates the owner of the patent for administrative delays at the U.S. Patent and Trademark Office. In some cases, the term of a U.S. patent is shortened by terminal disclaimer that reduces its term to that of an earlier‑expiring patent.

The term of a United States patent may be eligible for patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, referred to as the Hatch‑Waxman Act, to account for at least some of the time the drug is under development and regulatory review after the patent is granted. With regard to a drug for which FDA approval is the first permitted marketing of the active ingredient, the Hatch‑Waxman Act allows for extension of the term of one United States patent that includes at least one claim covering the composition of matter of an FDA‑approved drug, an FDA‑approved method of treatment using the drug, and/or a method of manufacturing the FDA‑approved drug. The extended patent term cannot exceed the shorter of five years beyond the non‑extended expiration of the patent or 14 years from the date of the FDA approval of the drug. Some foreign jurisdictions, including Europe and Japan, have analogous patent term extension provisions, which allow for extension of the term of a patent that covers a drug approved by the applicable foreign regulatory agency. In the future, if and when its pharmaceutical products receive FDA approval, the company expect to apply for patent term extension on patents covering those products, their methods of use, and/or methods of manufacture.

LICENSES

Infinity Pharmaceuticals, Inc.

In November 2016, the company entered into an amended and restated license agreement with Infinity, under which the company acquired an exclusive worldwide license for the research, development, commercialization, and manufacture of products in oncology indications containing duvelisib. In connection with the license agreement, the company assumed operational and financial responsibility for certain activities that were part of Infinity’s duvelisib program, including the DUO study for patients with relapsed/refractory CLL/SLL, and Infinity assumed financial responsibility for the shutdown of certain other clinical studies up to a maximum of $4.5 million. Verastem is obligated to use diligent efforts to develop and commercialize a product in an oncology indication containing duvelisib. During the term of the license agreement, Infinity has agreed not to research, develop, manufacture or commercialize duvelisib in any other indication in humans or animals.

Pursuant to the terms of the license agreement, Verastem is required to make the following payments to Infinity in cash or, at its election, in whole or in part, in shares of its common stock: (i) $6.0 million upon the completion of the DUO study if the results of the study meet certain pre-specified criteria, which was paid in cash by it to Infinity in October 2017, and (ii) $22.0 million upon the approval of an NDA in the United States or an application for marketing authorization with a regulatory authority outside of the United States for a product in an oncology indication containing duvelisib. For any portion of any of the foregoing payments that the company elect to issue in shares of its common stock in lieu of cash, the number of shares of common stock to be issued will be determined by multiplying (1) 1.025 by (2) the number of shares of common stock equal to (a) the amount of the payment to be paid in shares of common stock divided by (b) the average closing price of a share of common stock as quoted on Nasdaq for a twenty-day period following the public announcement of the applicable milestone event. The shares of common stock will be issued as unregistered securities, and the company will have an obligation to promptly file a registration statement with the SEC to register such shares for resale. Any issuance of shares will be subject to the satisfaction of closing conditions, including that all material authorizations, consents, approvals and the like necessary for such issuance shall have been obtained.

Verastem is also obligated to pay Infinity royalties on worldwide net sales of any products in an oncology indication containing duvelisib ranging from the mid-single digits to the high single digits. The royalties will expire on a product-by-product and country-by-country basis until the latest to occur of (i) the last-to-expire patent right covering the applicable product in the applicable country, (ii) the last-to-expire patent right covering the manufacture of the applicable product in the country of manufacture of such product, (iii) the expiration of non-patent regulatory exclusivity in such country and (iv) ten years following the first commercial sale of a product in a country, provided that if royalties on net sales for a product in the United States are payable solely on the basis of non-patent regulatory exclusivity, the applicable royalty on net sales for such product in the United States will be reduced by 50%. The royalties are also subject to reduction by 50% of certain third-party royalty payments or patent litigation damages or settlements which might be required to be paid by it if litigation were to arise, with any such reductions capped at 50% of the amounts otherwise payable during the applicable royalty payment period.

In addition to the foregoing, Verastem is obligated to pay Infinity an additional royalty of 4% on worldwide net sales of any products in an oncology indication containing duvelisib to cover the reimbursement of research and development costs owed by Infinity to Mundipharma International Corporation Limited (MICL) and Purdue Pharmaceutical Products L.P. (Purdue). Once Infinity has fully reimbursed MICL and Purdue, the royalty obligations will be reduced to 1% of net sales in the United States. These trailing MICL royalties are payable until the later to occur of the last-to-expire of specified patent rights and the expiration of non-patent regulatory exclusivities in a country. Each of the above royalty rates is reduced by 50% on a product-by-product and country-by-country basis if the applicable royalty is payable solely on the basis of non-patent regulatory exclusivity. In addition, the trailing MICL royalties are subject to reduction by 50% of certain third-party royalty payments or patent litigation damages or settlements which might be required to be paid by it if litigation were to arise, with any such reductions capped at 50% of the amounts otherwise payable during the applicable royalty payment period.

Pfizer Inc.

On July 11, 2012, the company entered into a license agreement with Pfizer under which Pfizer granted it worldwide, exclusive rights to research, develop, manufacture and commercialize products containing certain of Pfizer’s inhibitors of FAK, including defactinib, for all therapeutic, diagnostic and prophylactic uses in humans. Verastem has the right to grant sublicenses under the foregoing licensed rights, subject to certain restrictions. Verastem is solely responsible, at its own expense, for the clinical development of these products, which is to be conducted in accordance with an agreed‑upon development plan. Verastem is also responsible for all manufacturing and commercialization activities at its own expense. Pfizer provided it with an initial quantity of clinical supplies of one of the products for an agreed upon price.

Upon entering into the license agreement, the company made a one‑time cash payment to Pfizer in the amount of $1.5 million and issued 192,012 shares of its common stock. Pfizer is also eligible to receive up to $2.0 million in developmental milestones and up to an additional $125.0 million based on the successful attainment of regulatory and commercial sales milestones. Pfizer is also eligible to receive high single to mid-double digit royalties on future net sales of the products. The company's royalty obligations with respect to each product in each country begin on the date of first commercial sale of the product in that country, and end on the later of 10 years after the date of first commercial sale of the product in that country or the date of expiration or abandonment of the last claim contained in any issued patent or patent application licensed by Pfizer to it that covers the product in that country.

The license agreement will remain in effect until the expiration of all of its royalty obligations to Pfizer, determined on a product‑by‑product and country‑by‑country basis. So long as Verastem is not in breach of the license agreement, Verastem has the right to terminate the license agreement at will on a product‑by‑product and country‑by‑country basis, or in its entirety, upon 90 days written notice to Pfizer. Either party has the right to terminate the license agreement in connection with an insolvency event involving the other party or a material breach of the license agreement by the other party that remains uncured for a specified period of time. If the license agreement is terminated by either party for any reason, worldwide rights to the research, development, manufacture and commercialization of the products revert back to Pfizer.

COMPETITION

The biotechnology and pharmaceutical industries are characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary products. While the company believe that its technology, development experience and scientific knowledge provide it with competitive advantages, the company face potential competition from many different sources, including major pharmaceutical, specialty pharmaceutical and biotechnology companies, academic institutions and governmental agencies and public and private research institutions. Any product candidates that the company successfully develop and commercialize will compete with existing therapies and new therapies that may become available in the future.

Many of its competitors may have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than the company do. Mergers and acquisitions in the pharmaceutical, biotechnology and diagnostic industries may result in even more resources being concentrated among a smaller number of its competitors. These competitors also compete with it in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, its programs. Smaller or early stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.

The key competitive factors affecting the success of all of its product candidates, if approved, are likely to be their efficacy, safety, convenience, price, the level of generic competition and the availability of reimbursement from government and other third‑party payors.

The company's commercial opportunity could be reduced or eliminated if its competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than any products that the company may develop. The company's competitors also may obtain FDA or other regulatory approval for their products more rapidly than the company may obtain approval for ours, which could result in its competitors establishing a strong market position before Verastem is able to enter the market. In addition, its ability to compete may be affected in many cases by insurers or other third‑party payors seeking to encourage the use of generic products. There are many generic products currently on the market for the indications that Verastem is pursuing, and additional products are expected to become available on a generic basis over the coming years. If its therapeutic product candidates are approved, the company expect that they will be priced at a significant premium over competitive generic products.

The most common methods of treating patients with cancer are surgery, radiation and drug therapy, including chemotherapy, hormone therapy and targeted drug therapy. There are a variety of available drug therapies marketed for cancer. In many cases, these drugs are administered in combination to enhance efficacy. While its product candidates may compete with many existing drug and other therapies, to the extent they are ultimately used in combination with or as an adjunct to these therapies, its product candidates will not be competitive with them. Some of the currently approved drug therapies are branded and subject to patent protection, and others are available on a generic basis. Many of these approved drugs are well established therapies and are widely accepted by physicians, patients and third‑party payors. In general, although there has been considerable progress over the past few decades in the treatment of cancer and the currently marketed therapies provide benefits to many patients, these therapies all are limited to some extent in their efficacy and frequency of adverse events, and none of them are successful in treating all patients. As a result, the level of morbidity and mortality from cancer remains high.

In addition to currently marketed therapies, there are also a number of products in late stage clinical development to treat cancer. These products in development may provide efficacy, safety, convenience and other benefits that are not provided by currently marketed therapies. As a result, they may provide significant competition for any of its product candidates for which the company obtain market approval.

The company's competitors may commence and complete clinical testing of their product candidates, obtain regulatory approvals and begin commercialization of their products sooner than the company may for its own product candidates. These competitive products may have superior safety or efficacy, or be manufactured less expensively, than its product candidates. If Verastem is unable to compete effectively against these companies on the basis of safety, efficacy or cost, then the company may not be able to commercialize its product candidates or achieve a competitive position in the market. This would adversely affect its business.

PI3K inhibition program

The company believe that the following companies, among others, have developed or are in the clinical stage of development of compounds targeting PI3K:

  • Gilead Sciences, Inc. has received approval from the FDA of idelalisib for the treatment of patients with CLL, SLL, or FL, and which the company believe is conducting a Phase 1b clinical trial of acalisib (GS-9820);
  • Bayer AG has received approval from the FDA of copanlisib for the treatment of patients with relapsed FL;
  • Novartis, which the company believe is conducting a Phase 2 clinical trial of buparlisib;
  • AstraZeneca, which the company believe is conducting Phase 2 clinical trials of ACP 319;
  • TG Therapeutics, Inc., which the company believe is conducting multiple clinical trials of TGR-1202; and
  • Incyte Corporation, which the company believe is conducting a Phase 2 clinical trial of INCB-050465, and which the company also believe is conducting a Phase 2 clinical trial of INCB-040093.

In addition, many companies are developing product candidates directed to disease targets such as Bruton’s Tyrosine Kinase (BTK), B-cell lymphoma 2 (BCL-2), Janus Kinase (JAK), B-lymphocyte antigen CD-19, and programmed death 1/ligand 1 (PD-1/PD-L1), Cluster of Differentiation 79B antibody-drug conjugate (CD79B ADC), and pleiotropic pathways in the fields of hematology-oncology, including in the specific diseases for which Verastem is currently developing duvelisib, or for which the company may develop duvelisib or other PI3K inhibitors in the future. Such companies include:

  • Pharmacyclics LLC, a wholly-owned subsidiary of AbbVie, through its collaboration with Janssen Biotech, which has received approval from the FDA of ibrutinib, a BTK inhibitor, for the treatment of patients with mantle cell lymphoma (MCL), CLL, MZL, SLL, or Waldenström’s macroglobulinemia, and is conducting multiple late stage clinical studies of ibrutinib in additional hematologic malignancies;
  • AbbVie, through its collaboration with Roche, which has received approval from the FDA of venetoclax, a BCL-2 inhibitor, for the treatment of patients with CLL, and is conducting multiple late stage clinical studies of venetoclax in additional hematologic malignancies;
  • Celgene Corporation, which has received FDA approval of lenalidomide, an immunomodulator, for the treatment of patients with multiple myeloma, MCL, and myelodyplastic syndromes, and is conducting late stage clinical studies of lenalidomide in additional hematologic malignancies; the company also believe that Celgene is conducting a Phase 1 clinical trial of CC-292, a BTK inhibitor, in patients with CLL;
  • AstraZeneca, which the company believe is conducting a Phase 3 clinical trial of ACP-196, a BTK inhibitor, in patients with CLL; and
  • Incyte Corporation, which has received FDA approval of ruxolitinib, a JAK inhibitor, in patients with intermediate or high-risk myelofibrosis, and which the company believe is conducting Phase 2 clinical trials in CLL.

FAK inhibition program

There are other companies working to develop therapies to treat cancer including some who also target the tumor microenvironment. These companies include divisions of large pharmaceutical companies including Astellas Pharma Inc., Celgene, Inc., Sanofi‑Aventis U.S. LLC, GlaxoSmithKline plc, Boehringer Ingelheim GmbH, Pfizer Inc. and others.

MANUFACTURING

The company do not own or operate, and currently have no plans to establish, any manufacturing facilities. The company currently rely, and expect to continue to rely, on third parties for the manufacture of its product candidates and any products that the company may develop, other than small amounts of compounds that the company may synthesize itself  for preclinical testing. To date, Verastem has obtained starting materials for its supply of the bulk drug substance and drug product for its product candidates from third‑party manufacturers. The company obtain its supplies from these manufacturers on a purchase order basis and do not have long‑term supply arrangements in place. The company do not currently have arrangements in place for redundant supply or a second source for bulk drug substance and drug product. If its current third‑party manufacturers should become unavailable to it for any reason, the company believe that there are several potential replacements, although the company might incur some delay in identifying and qualifying such replacements.

All of its drug candidates are organic compounds of low molecular weight, generally called small molecules. The company select compounds not only on the basis of their potential efficacy and safety, but also for their ease of synthesis and reasonable cost of their starting materials. The company expect to continue to develop drug candidates that can be produced cost‑effectively at third‑party manufacturing facilities.


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