Verastem, Inc. (VSTM) Earnings Call Transcript & Summary

Good morning, and welcome to the Verastem Oncology Investor Conference Call on Wednesday, September 16, 2020. [Operator Instructions] Please be advised that this call is being recorded at the company's request and will be available on the company's website for a period of 90 days from today. At this time, I would like to introduce Mr. John Doyle, Vice President of Investor Relations and Finance at Verastem Oncology. Please go ahead.

Welcome, everyone, and thank you for joining us this morning. With me today to discuss the updated clinical data from the ongoing Phase I/II FRAME study investigated in the combination of VS-6766 and defactinib in low-grade serous ovarian cancer are: Brian Stuglik, Chief Executive Officer; Dan Paterson, President and Chief Operating Officer; Rob Gagnon, Chief Financial Officer; and Dr. Rachel Grisham, Medical Oncologist, Memorial Sloan Kettering Cancer Center and the Co-Principal Investigator of the upcoming registration-directed trial in low-grade serous ovarian cancer. In addition, Dr. Jonathan Pacther, Chief Scientific Officer, is also in the room and will be available following the prepared remarks for Q&A. During today's call, Dan will provide an overview of the updated clinical data in low-grade serous ovarian cancer. Dr. Grisham will then discuss the LGSOC treatment landscape and provide her clinical perspective about where the VS-6766-defactinib combination may fit into the treatment continuum. Brian will then provide an overview of the market opportunity and some other program updates, and Rob will discuss certain corporate updates. After that, we will open the call up for your questions. Earlier today, we issued a press release reporting the updated clinical data from the ongoing Phase I/II FRAME study, which is being conducted by Dr. Udai Banerji in the United Kingdom. That press release is available on our website at verastem.com. Following the conclusion of today's call, a PDF copy of the slides being presented by the team today, plus live summarizing of preclinical data being presented later today at the RAS-Targeted Drug Development Summit will also be available on our website. Before we begin our formal comments, I'll remind you that we'll be making forward-looking assertions during today's call that represent the company's intentions, expectations or beliefs concerning future events, which constitute forward-looking statements for the purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. All forward-looking statements are subject to factors, risks and uncertainties such as those detailed in today's press releases and in our filings with the SEC, which may cause actual results to differ materially from the results expressed or implied by such statements. In addition, any forward-looking statements represent our views only as of the date of this recording and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligations to update any such statements. We refer you to the Disclosure Notice section in the press releases we issued today and the Risk Factors section of the annual report on Form 10-K for a discussion of important factors that could cause actual results to differ materially from these forward-looking statements. With that, I would now like to turn the call over to Dan Paterson. Dan?

Thank you, John. Good morning, everyone, and thank you for joining us on today's call. Before we jump into the data, I'd like to take a moment to give you a quick overview of the VS-6766 program in gynecological malignancies, so that you can see how this new data fits into the overall program. The FRAME study is an ongoing investigator-sponsored Phase I/II study that's evaluating the combination of VS-6766, a first-in-class and potentially best-in-class RAF/MEK inhibitor; and defactinib, a FAK inhibitor in various types of advanced solid tumors. The FRAME study now consists of a total of 6 cohorts, and the 2 cohorts focused on gynecological malignancies are shown here in the Rows 2 and 3. Today, we're reporting positive data from a total of 17 patients from the LGSOC cohort. We're currently pursuing LGSOC as our lead indication for this novel RAF/MEK inhibitor plus FAK inhibitor combination, and we're planning to commence a company-sponsored Phase II registration-directed study by the end of the year. Turning now to the data. On this slide, we show the evolution of an improved safety profile, starting on the far left, where VS-6766 was originally studied as a once-daily regimen, then as a twice-weekly regimen in the center column. The Phase II dosing regimen for the FRAME study was identified as 3.2 milligrams of VS-6766 dosed orally twice weekly for 3 out of every 4 weeks and 200 milligrams of defactinib dosed orally twice daily also for 3 of every 4 weeks. This dosing regimen has been generally well tolerated to date, and this slide shows a summary of the Grade 3 or greater adverse events. We're extremely pleased to see no worsening and possible mean improved safety profile with the recommended Phase II dose from the FRAME study. Of note, to date, no patients have discontinued from the ongoing FRAME study due to AEs. In just a moment, we'll be showing data from all of the patients in the FRAME study as well as those treated at the recommended Phase II dosing regimen. First, we'll look at the KRAS-G12 LGSOC study population. Of the 9 patients who had KRAS-G12 mutations, 5 responded for an overall response rate of 56%. Of the 17 LGSOC patients overall, 7 responded for an overall response rate of 41%. All of the responses were partial responses. Of the 7 responders, 5 that have received prior treatment with MEK inhibitor. Patients came off of MEK inhibitors primarily for progression. The study is still maturing, and response is developing. Following the data cutoff, 2 additional patients have met the tumor shrinkage criteria for PR, 1 of which has a KRAS mutation. And once confirmed, these responders will be added to the response rate results at the next data cut. As you can see from the swimmer's plot on the right, we're seeing excellent durability with 3 patients staying on treatment for 2 years or more, and 9 of the 17 patients or 53% still receiving treatment. We've more than doubled the number of patients reported at AACR and are very pleased to see the response rates holding up. Next, we'll look just at the patients who receive the recommended Phase II dosing regimen. Of the 6 patients who had KRAS mutations, 3 responded for an overall response rate of 50%. Of the 11 patients in the overall subgroup, 5 responded for an overall response rate of 45%. The 2 patients referred to previously who reached the threshold for PR, 1 wild-type and 1 KRAS mutation, were part of this cohort but are not yet included in the response rate calculation we're showing for this group. Among this group, we're also seeing excellent durability with 2 patients that have remained on treatment for 2.5 years, and 9 of the 11 patients or 82% are still on treatment. We met with the FDA, and they are supportive of both this adaptive study design as well as our overall development strategy for the novel combination and recurrent LGSOC, and now we look forward to commencing the registration-directed study by the end of this year. Assuming a positive outcome from this study, we plan to submit a new drug application to the FDA requesting accelerated approval for the VS-6766-defactinib combination or VS-6766 as a single agent in LGSOC. With that, I'll now turn the call over to Dr. Grisham for a discussion of the LGSOC treatment landscape and her clinical perspective. Dr. Grisham is a medical oncologist with clinical expertise in the diagnosis and treatment of women with gynecological malignancies, including ovarian, uterine and cervical cancers as well as other less common tumors such as LGSOC. Dr. Grisham?

Thank you. Yes, thank you for the introduction. I'm a gynecologic medical oncologist and the Section Head of Ovarian Cancer Research at Memorial Sloan Kettering Cancer Center, where my research does focus specifically on low-grade serous ovarian cancer. So I've been asked to speak today about low-grade serous ovarian cancer and the treatment landscape. Low-grade serous ovarian cancer is a specific type of ovarian cancer that disproportionately affects younger women. Many of my patients with this disease are in their 40s, 30s or even 20s. Compared to the most common type of ovarian cancer, which is called high-grade serous ovarian cancer, low-grade serous ovarian cancer is a slower-growing disease with a median survival approaching 10 years. However, due to lack of effective treatments, almost all patients with recurrent disease will eventually die from their cancer. And these women often experience substantial pain and suffering from their cancer as these slow-growing tumors cause blockages of the digestive tract, kidneys, bladder and other organs. Most prior research in ovarian cancer has focused on the most common type of ovarian cancer, high-grade serous ovarian cancer. But we now understand that low-grade serous ovarian cancer is a different disease. It looks different under the microscope, behaves differently and has a different molecular profile, different mutations with a high rate of alterations affecting the MAP kinase pathway. Most commonly, the KRAS mutation is found in about 1/3 of our patients with this disease. Traditionally, we have treated low-grade serous ovarian cancer the same way as high-grade serous ovarian cancer but with poor results. While 80% to 90% of patients with high-grade serous ovarian cancer will respond to their initial chemotherapy, at most, 24% of patients with low-grade serous ovarian cancer will respond to their initial treatment. And the response rates quickly fall in the recurring setting to as low as 4%. Because of the lack of effective therapies and the distinct molecular profile of low-grade serous ovarian cancer, there has been a lot of interest in using drugs that specifically target the pathway leading to development of the disease. The first study of MEK inhibitors in low-grade serous ovarian cancer was just a MEK inhibitor called selumetinib in recurrent disease that showed a promising 15, 1-5, 15% response rate. We were really excited about this response rate, given the historically low responses to chemotherapy and endocrine therapy within this disease. Two subsequent Phase III studies using single-agent MEK inhibitors, binimetinib and trametinib, have shown response rates up to 25% with single-agent MEK inhibitor for treatment of this disease. We now know that MEK inhibitors are promising treatment for low-grade serous ovarian cancer. And the focus is now on determining the most effective targeted therapy for a combination therapy that will give our patients meaningful and durable responses and also to see if the KRAS biomarker can help identify our patients most likely to respond to targeted therapy. I was very excited to learn about the results of the FRAME study as the combination of Verastem's RAF/MEK inhibitor with FAK inhibitor here is showing really clinically meaningful responses, not only with a very high response rate but also with deep and durable responses that are clinically meaningful. Most responses in low-grade serous ovarian cancer with prior treatments have been moderate without a huge difference in overall tumor volume. But this combination is showing substantial tumor shrinkage, thus far. When a patient has a tumor blocking their intestine, it, makes a big difference whether that tumor shrinks by 30% or 60% and has a huge effect on quality of life and whether they can return to their normal activities. When I discuss the initial data and the plan for further development of Verastem's RAF/MEK inhibitor in combination with FAK inhibitor for our patients with recurrent low-grade serous ovarian cancer with my colleagues, the excitement is palpable, as most of us have a pool of young, smart women, low-grade serous ovarian cancer who are waiting for the right study to come along that will lead to new and better options for their disease. We're very excited for our upcoming study and to hopefully soon have better options for our patients. Now I'll turn it back to Brian. Thank you.

Thank you, Dr. Grisham. I'd like to take a few moments now to discuss the market opportunity in reoccurring to LGSOC. As you heard from Dr. Grisham, while this indication is considered ultra orphan and the overall incidence numbers are fairly small because these patients live such a long time with this disease, the prevalence numbers are quite high. We estimate that there are approximately 6,000 people living with the disease in the U.S. at any one time and 80,000 patients living with the disease worldwide. Among these, it's estimated that roughly 32% have KRAS-mutated disease. For patients with LGSOC wild-type KRAS includes NRAS/BRAF mutations, among other. We believe our adaptive study design will allow us to potentially obtain the label in both KRAS-mutated LGSOC as well as the overall LGSOC population. On the left side of Slide 15, we have a schematic for the current treatment paradigm that Dr. Grisham described earlier. Later-stage frontline LGSOC patients will typically undergo chemotherapy or hormonal therapy, where the response rates are quite low. Upon disease reoccurrence, the available therapies, as seen on the right side of the slide, will also result in quite low response rates, with trametinib being the highest at approximately 25%. In addition, the discontinuation rate from MEK inhibitors range from 31% to 35% due to adverse events. Importantly, to date, there have been no treatment discontinuations in the FRAME study due to adverse events. As you can see, there is a high unmet need for these patients from the perspective of meeting both a more effective and tolerable treatment alternative. In closing LGSOC portion of the presentation, the key information to take away today is: first, KRAS mutations account for 32% of all LGSOC patients. Second, there are no FDA-approved treatments for LGSOC and the current drugs physicians use are limited by low response rates and/or toxicity issues. Third, this unmet need creates a very significant market opportunity for Verastem. Fourth, there are about 6,000 patients living with the disease in the U.S., which reflects an ultra-orphan opportunity. Fifth, the 56% overall response rate reported today in KRAS-mutant LGSOC represents a best-in-class opportunity for Verastem. And finally, the FDA has been supportive of our overall development plan and adaptive study design. The next steps for the LGSOC program are to: first, commence the planned company-sponsored Phase II registration trial by the end of this year; and second, report further updated data from the LGSOC cohort of the FRAME study by mid-2021. Based on the high unmet need in this patient population, an emerging product profile with the VS-6766 and defactinib combination, we believe LGSOC is a significant stand-alone opportunity for Verastem and its shareholders. Turning now to other program updates. As many of you know, the second indication that we are planned -- planning to pursue for the VS-6766-defactinib combination is in KRAS-G12V mutant non-small cell lung cancer. This is the patient subset that has shown the highest response rates with VS-6766 and where we see a significant market opportunity as there are no agents in late-stage development. The next step here is for Verastem to commence a Phase II registration-directed study, which we are planning to do by the end of this year. The study design is similar to what we described for LGSOC. It is an adaptive design, comprised of a selection phase and an expansion phase. In the selection phase, we will evaluate VS-6766, both as a single agent and in combination with defactinib to determine which regimen to advance forward into the expansion phase. Then in the expansion phase, we plan to evaluate the selected regimen in both patients with KRAS mutant -- KRAS-G12V mutations as well as patients with other KRAS non-G12V mutations. The primary endpoint of the study will be overall response rate. We believe that these adaptive study designs in both LGSOC and non-small cell lung cancer are the most cost-effective and efficient way to validate the safety and efficacy and achieve the quickest registration possible. Assuming a positive outcome from this study, we plan to submit a new drug application to the FDA, requesting accelerated approval. For our non-small cell lung cancer program, where we believe the KRAS market opportunity is substantial and where we have several potential paths to market in progress, the key information to take away today is: first, our plan is to focus primarily on patients with KRAS-G12V-mutated non-small cell lung cancer, given the clinical signals to date. Second, a G12V cohort has been added to the ongoing FRAME study. After recently resuming accrual following the global COVID-19 pandemic lockdown, there have been too few patients enrolled at the recommended Phase II dose and insufficient time for appropriate patient follow-up on the NSCLC arm of the FRAME study. From what we are hearing from Dr. Banerji and his team at the Royal Marsden, we believe a more meaningful update to the data is anticipated to occur in mid- to late 2021. Third, we are working towards completing the Phase I study, investigating VS-6766 in combination with everolimus. Goal here is to advance into a Phase II study in non-G12V KRAS-mutated non-small cell lung cancer. And today, at the RAS-targeted Drug Development Summit, we are reporting new preclinical data, demonstrating synergy and tumor regression with G12C inhibitors combined with VS-6766 and FAK inhibition in both in vitro and in vivo models. As we look beyond LGSOC and non-small cell lung cancer, we believe there are several other opportunities where the VS-6766-defactinib combination may be of use, including in pancreatic cancer, uveal melanoma and other tumors that have a high frequency of RAS mutations. To that end, the FRAME study is being expanded to include a cohort of pancreatic cancer patients, and we expect an IST investigating the combination in uveal melanoma to commence by the end of this year. On the preclinical front, we have also been exploring VS-6766 in combination with anti PD-1 inhibitors and have found that VS-6766 enhances the efficacy of these agents in preclinical models. On Slide 21 (sic) [ Slide 20 ], we have a snapshot of these pipeline programs, so you can get a sense for where each fits into the larger Verastem picture. Before we open the call up for questions, Rob has a few updates to provide on the corporate front. Rob?

Thank you, Brian. We were very pleased to recently execute a high-value strategic transaction to sell rights to our marketed asset, COPIKTRA, to a private company Secura Bio. The deal, which is valued at up to $311 million plus royalties, provides Verastem with a cash runway through at least 2024. It also significantly lowered our operating expenses. And beginning in 2021, we forecast that our annual OpEx will be approximately $50 million. Our balance sheet is healthy with pro forma cash as of June 30, 2020, inclusive of the $70 million received upfront at closing is projected to be $230 million before closing costs. Our outstanding debt is down to approximately $63 million as of June 30, 2020. Now I would like to provide a quick overview of our key upcoming milestones, including the initiation of 2 registration-directed trials, 1 in our lead indication LGSOC and 1 in KRAS-mutant non-small cell lung cancer, both by the end of this year. We also look forward to closing the Secure Bio transaction by the end of this month. As you can see, the past year has been a transformative year for Verastem. We began the year by restructuring our debt and significantly improving the health of our balance sheet. In January, we in-licensed VS-6766 and then reported positive preliminary and updated data from the ongoing FRAME study throughout 2020. We then executed the strategic financing as well as the divestiture of COPIKTRA, which provides us with the capital to be focused on execution of these high-value programs. With that, I will turn the call back to Brian for some closing remarks.

Thanks, Rob. In closing, I would just like to say that the data presented here today and reoccurrent to LGSOC are highly compelling, and we believe we could take the VS-6766 combination across the finish line in this high unmet need indication where patients and physicians are anxiously awaiting new treatment options. We believe LGSOC is a very stand -- is a very compelling stand-alone opportunity that has the potential to create significant value for Verastem and its shareholders. We also believe that we have a very compelling opportunity in KRAS-G12V non-small cell lung cancer. And we look forward to further elucidating the safety and efficacy of this novel combination in that patient population. The VS-6766-defactinib combination is supported by a strong biologic understanding of the RAS pathway. And we believe we have the potential to be the new backbone of therapy for RAS tumors. Today's report of synergy of our original -- the G12C inhibitors further adds to this excitement and potential. We are extremely excited about the rapidly developing VS-6766-defactinib combination program, and we look forward to keeping you updated in the months and quarters ahead. With that, we'll now open the call up for your questions. Operator?

[Operator Instructions] Our first question comes from Alethia Young of Cantor Fitzgerald.

Congrats on the progress to date. Just a couple of questions from me. I wanted to get the doctor's kind of a little bit more deep dive on how these patients are cared for. Currently, it sounds like not very well. And how frequently you kind of see these patients just to kind of get a grasp of the commercial opportunity. And then, I guess, as it relates to Dr. Banerji's non-small cell cancer study, would you guys be able to open up new sites, perhaps? Or is it like you just have an arrangement with him, where you kind of get the trial going? It seems like it would be encouraging kind of to get that -- that you're having encouraging results in low-grade ovarian. So like I'm curious if you can get some results there. And then lastly, for maybe the whole group, what kind of bandwidth do you have in starting some of these studies that you were hypothesizing about? Like how frequently -- how soon do you think you can start some of these kind of maybe broader studies using the combination?