Verastem Oncology Reports First Quarter 2019 Financial Results

Company Reports $1.7 Million in Net Product Revenues from COPIKTRA™;
Issues Product Revenue Guidance for 2019

Cash, Cash Equivalents and Short-Term Investments of $211.7 Million
as of March 31, 2019

Company to Host Conference Call Today at 4:30 PM ET

BOSTON–(BUSINESS WIRE)–Verastem, Inc. (Nasdaq: VSTM), operating as Verastem Oncology, (or “the
Company”), focused on developing and commercializing medicines seeking
to improve the survival and quality of life of cancer patients, today
reported financial results for the three months ended March 31, 2019.

“We are now into the second full quarter of the COPIKTRA launch and
sales were up approximately 38% compared to the prior quarter,” said
Robert Forrester, President and Chief Executive Officer of Verastem
Oncology. “We have also made substantial progress securing broader
reimbursement for our product, with over 92% of targeted health plans
now listing and providing reimbursement for COPIKTRA. We continue to
receive positive feedback from physicians using COPIKTRA for the
treatment of patients with relapsed or refractory chronic lymphocytic
leukemia/small lymphocytic lymphoma (CLL/SLL) after at least two prior
therapies or follicular lymphoma (FL) after at least two prior systemic
therapies.”

“The commercial team has been diligently working to enhance physician
and advocacy group awareness of COPIKTRA, and to overcome certain
historical misperceptions concerning the PI3K class. We believe the
groundwork we have laid over the past several months will have an
increasingly positive impact through 2019 and into next year. In
parallel, we continue to advance duvelisib in additional lines of
therapy, both as a monotherapy and in combination, as well as in
additional indications like peripheral T-cell lymphoma (PTCL) for which
preliminary data are expected by the end of this year,” concluded Mr.
Forrester.

Key First Quarter 2019 and Recent Accomplishments:

COPIKTRA (duvelisib)

• Launched COPIKTRA in FL – In mid-March 2019, upon
  completion of the required 120-day waiting period following receipt of
  accelerated approval from the FDA, the Company launched its physician
  education and marketing campaign for COPIKTRA for the treatment of
  patients with FL after at least two prior systemic therapies.
  Accelerated approval in FL was based on overall response rate and
  continued approval may be contingent upon confirmatory trials, the
  first of which is expected to start in 2019.
• Presented COPIKTRA Data at the 23^rd
  Annual International Congress on Hematologic Malignancies (ICHM)
  – The Company presented four COPIKTRA abstracts at ICHM 2019,
  including an abstract highlighting Phase 3 DUO data in patients with
  relapsed or refractory CLL/SLL who have progressed following two prior
  lines of the therapy. This is the same indication for which COPIKTRA
  received approval from the FDA in September 2018. In this analysis,
  COPIKTRA demonstrated progression-free survival (PFS) of 16.4 months
  and an ORR of 78%, with a manageable safety profile. The remaining
  three abstracts featured data from a long-term (>2 years) efficacy and
  safety analysis, the Phase 3 DUO crossover extension study, and
  prognostic and immune-related factors associated with response to
  duvelisib from the Phase 2 DYNAMO™ study in indolent non-Hodgkin’s
  lymphoma (iNHL). Collectively, the data presented at ICHM 2019
  continue to support the use of COPIKTRA in its approved indications of
  relapsed or refractory CLL/SLL after at least two prior therapies and
  FL after at least two prior systemic therapies. PDF copies of all of
  the ICHM 2019 poster presentations are available here.
• Phase 2 DYNAMO Study Results Published in the Journal of
  Clinical Oncology – In February 2019, results of the Phase 2
  DYNAMO™ study, which evaluated COPIKTRA in patients with indolent
  non-Hodgkin lymphoma (iNHL) who were refractory to both rituximab and
  chemotherapy or radioimmunotherapy, was published online in the
  peer-reviewed Journal of Clinical Oncology. The full manuscript,
  titled “DYNAMO: A Phase II Study of Duvelisib (IPI-145) in Patients
  with Refractory Indolent Non-Hodgkin Lymphoma,” (Flinn, et al. DOI:
  10.1200/JCO.18.00915) can be accessed at www.ascopubs.org.
• Continued Commercialization of COPIKTRA in the United States –
  Verastem Oncology launched COPIKTRA, an oral inhibitor of
  phosphoinositide 3-kinase (PI3K), and the first approved dual
  inhibitor of PI3K-delta and PI3K-gamma, in the United States following
  FDA approval for the treatment of adult patients with relapsed or
  refractory CLL/SLL after at least two prior therapies. COPIKTRA also
  received accelerated approval for the treatment of adult patients with
  relapsed or refractory FL after at least two prior systemic therapies.

  COPIKTRA
  contains a BOXED WARNING for fatal and/or serious toxicities including
  infections, diarrhea or colitis, cutaneous reactions, and pneumonitis.
  Verastem Oncology has implemented a Risk Evaluation and Mitigation
  Strategy to provide appropriate dosing and safety information to
  better support physicians in managing their patients on COPIKTRA.

  Additionally,
  use of COPIKTRA is associated with other adverse reactions which may
  also require dose reduction, treatment delay or discontinuation of
  COPIKTRA.

  Please see www.COPIKTRAHCP.com/prescribinginformation
  for full Prescribing Information including BOXED WARNING and Select
  Important Safety Information provided below.

Corporate and Financial

• Chief Commercial Officer Joseph Lobacki to Step Down in 2019 –
  Joseph Lobacki, Chief Commercial Officer of Verastem Oncology
  will be stepping down from the Company in 2019 to pursue other
  professional opportunities, including Board of Director roles. Mr.
  Lobacki intends to continue in his role until the Company identifies
  and appoints a successor. During this transition, Brian Stuglik, RPh,
  a member of the Company’s Board of Directors and the former Chief
  Marketing Officer of Lilly Oncology, will provide strategic oversight
  and advisory support for the commercial organization.
• Amended Hercules Loan Facility – In April 2019, the
  Company announced an amendment to its existing Loan and Security
  Agreement with Hercules Capital, Inc., changing key terms of the
  agreement, including a lower overall interest rate and an extended
  principal repayment timeline. The amendment also increases the
  borrowing limit from $50 million to $75 million in financing.

First Quarter 2019 Financial Results

Net product revenue for the 2019 Quarter was $1.7 million, which
reflects the second full quarter of recorded sales for COPIKTRA. The
Company did not have any product revenue for the 2018 Quarter as the FDA
approved COPIKTRA on September 24, 2018.

Research and development (R&D) expense for the 2019 Quarter was $9.8
million, compared to $10.9 million for the 2018 Quarter. The decrease of
$1.1 million, or 11%, was primarily related to a decrease in consulting
fees as a result of activities to file a New Drug Application for
COPIKTRA in the 2018 Quarter and lower R&D costs associated with the
development of COPIKTRA as a result of site closures in the Company’s
Phase 3 DUO and Phase 2 DYNAMO studies throughout 2018 and 2019 as
patients continue to complete treatment. All of these lower costs were
partially offset by an increase in costs related to the Phase 2 PRIMO
study for the treatment of patients with relapsed or refractory PTCL.

Selling, general and administrative expense for the 2019 Quarter was
$26.0 million, compared to $9.8 million for the 2018 Quarter. The
increase of $16.2 million, or 165%, was primarily due to higher
personnel and related costs, as well as promotional and consulting costs
in support of the launch of COPIKTRA.

Net loss for the three months ended March 31, 2019 (2019 Quarter) was
$38.1 million, or $0.52 per share (basic and diluted), as compared to
$21.1 million, or $0.41 per share (basic and diluted), for the three
months ended March 31, 2018 (2018 Quarter). In addition, net loss
includes non-cash stock-based compensation expense of $2.2 million and
$1.3 million for the 2019 and 2018 Quarters, respectively.

As of March 31, 2019, Verastem Oncology had cash, cash equivalents and
short-term investments of $211.7 million.

Financial Outlook

For 2019, the Company expects net product revenue from sales of COPIKTRA
to be in the range of $10-12 million, based on product revenue to date,
current run rates and near-term expectations.

Conference Call and Webcast Information

The Verastem Oncology management team will host a conference call and
webcast today, Thursday, May 9, 2019, at 4:30 PM (ET). The call can be
accessed by dialing (877) 341-5660 (U.S. and Canada) or (315) 625-3226
(international), five minutes prior to the start of the call and
providing the passcode 7199457.

The live, listen-only webcast of the conference call can be accessed by
visiting the investors section of the Company’s website at www.verastem.com.
A replay of the webcast will be archived on the Company’s website for 90
days following the call.

About Chronic Lymphocytic Leukemia/Small Lymphocytic Lymphoma

Chronic lymphocytic leukemia (CLL) and small lymphocytic lymphoma (SLL)
are cancers that affect lymphocytes and are essentially the same
disease, with the only difference being the location where the cancer
primarily occurs. When most of the cancer cells are located in the
bloodstream and the bone marrow, the disease is referred to as CLL,
although the lymph nodes and spleen are often involved. When the cancer
cells are located mostly in the lymph nodes, the disease is called SLL.
The symptoms of CLL/SLL include a tender, swollen abdomen and feeling
full even after eating only a small amount. Other symptoms can include
fatigue, shortness of breath, anemia, bruising easily, night sweats,
weight loss, and frequent infections. However, many patients with
CLL/SLL will live for years without symptoms. In 2018, there were
approximately 200,000 patients in the United States affected by CLL/SLL
with nearly 20,000 new diagnoses. While there are therapies currently
available, real-world data reveals that a significant number of patients
either relapse following treatment, become refractory to current agents,
or are unable to tolerate treatment, representing a significant medical
need. 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.

About Follicular Lymphoma

Follicular lymphoma (FL) is typically a slow-growing or indolent form of
non-Hodgkin lymphoma (NHL) that arises from B-lymphocytes, making it a
B-cell lymphoma. In 2018, this lymphoma subtype accounted for 20 to 30
percent of all NHL cases, with more than 140,000 people in the United
States with FL and more than 13,000 newly diagnosed patients. 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. Follicular lymphoma is usually not
considered to be curable, but more of a chronic disease, with patients
living for many years with this form of lymphoma. 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.

About Peripheral T-Cell Lymphoma

Peripheral T-cell lymphoma (PTCL) is a rare, aggressive type of
non-Hodgkin lymphoma (NHL) that develops in mature white blood cells
called “T cells” and “natural killer (NK) cells”¹ which
circulate with the lymphatic system.² PTCL accounts for
between 10-15% of all non-Hodgkin lymphomas (NHLs) and generally affects
people aged 60 years and older.¹ Although there are many
different subtypes of peripheral T-cell lymphoma, they often present in
a similar way, with widespread, enlarged, painless lymph nodes in the
neck, armpit or groin.² There is currently no established
standard of care for patients with relapsed or refractory disease.¹

About COPIKTRA™ (duvelisib)

COPIKTRA is an oral inhibitor of phosphoinositide 3-kinase (PI3K), and
the first approved dual inhibitor of PI3K-delta and PI3K-gamma, two
enzymes known to help support the growth and survival of malignant
B-cells. PI3K signaling may lead to the proliferation of malignant
B-cells and is thought to play a role in the formation and maintenance
of the supportive tumor microenvironment.^3,4,5 COPIKTRA is
indicated for the treatment of adult patients with relapsed or
refractory chronic lymphocytic leukemia/small lymphocytic lymphoma
(CLL/SLL) after at least two prior therapies and relapsed or refractory
follicular lymphoma (FL) after at least two prior systemic therapies.
COPIKTRA is also being developed by Verastem Oncology for the treatment
of peripheral T-cell lymphoma (PTCL), for which it has received Fast
Track status, and is being investigated in combination with other agents
through investigator-sponsored studies.⁶ For more information
on COPIKTRA, please visit www.COPIKTRA.com.
Information about duvelisib clinical trials can be found on www.clinicaltrials.gov.

About Verastem Oncology

Verastem Oncology (Nasdaq: VSTM) is a commercial biopharmaceutical
company committed to the development and commercialization of medicines
to improve the lives of patients diagnosed with cancer. We are driven by
the strength, tenacity and courage of those battling cancer –
single-minded in our resolve to deliver new therapies that not only keep
cancer at bay, but improve the lives of patients diagnosed with cancer.
Because for us, it’s personal.

Our first FDA approved product is now available for the treatment of
patients with certain types of indolent non-Hodgkin’s lymphoma (iNHL).
Our pipeline comprises product candidates that seek to treat cancer by
modulating the local tumor microenvironment. For more information,
please visit www.verastem.com.

COPIKTRA™ (duvelisib) – Select Important Safety Information

WARNING: FATAL AND SERIOUS TOXICITIES: INFECTIONS, DIARRHEA OR
COLITIS, CUTANEOUS REACTIONS, and PNEUMONITIS

See full prescribing information for complete boxed warning.

• Fatal and/or serious infections occurred in 31% of COPIKTRA-treated
  patients. Monitor for signs and symptoms of infection. Withhold
  COPIKTRA if infection is suspected.
• Fatal and/or serious diarrhea or colitis occurred in 18% of
  COPIKTRA-treated patients. Monitor for the development of severe
  diarrhea or colitis. Withhold COPIKTRA.
• Fatal and/or serious cutaneous reactions occurred in 5% of
  COPIKTRA-treated patients. Withhold COPIKTRA.
• Fatal and/or serious pneumonitis occurred in 5% of COPIKTRA-treated
  patients. Monitor for pulmonary symptoms and interstitial infiltrates.
  Withhold COPIKTRA.

WARNINGS AND PRECAUTIONS

• Hepatotoxicity: Monitor hepatic function.
• Neutropenia: Monitor blood counts.
• Embryo-Fetal toxicity: COPIKTRA can cause fetal harm. Advise patients
  of potential risk to a fetus and to use effective contraception.

ADVERSE REACTIONS: The most common adverse reactions (> 20%) are
diarrhea or colitis, neutropenia, rash, fatigue, pyrexia, cough, nausea,
upper respiratory infection, pneumonia, musculoskeletal pain, and anemia.

To report SUSPECTED ADVERSE REACTIONS, contact Verastem, Inc. (Verastem)
at 877-7RXVSTM or 1-877-779-8786, or U.S. Food and Drug Administration
(FDA) at 1-800-FDA-1088 or www.fda.gov/medwatch.

DRUG INTERACTIONS

• CYP3A inducers: Avoid co-administration with strong CYP3A inducers.
• CYP3A inhibitors: Monitor for COPIKTRA toxicities when co-administered
  with strong or moderate CYP3A inhibitors. Reduce COPIKTRA dose to 15
  mg twice daily when co-administered with strong CYP3A4 inhibitors.
• CYP3A substrates: Monitor for signs of toxicities when
  co-administering COPIKTRA with sensitive CYP3A substrates.

See full Prescribing Information, including Boxed Warning, at www.COPIKTRA.com

Forward looking statements notice

This press release and the commentary in the conference call to be held
today each include forward-looking statements about Verastem Oncology’s
strategy, future plans and prospects, including statements regarding the
development and activity of Verastem Oncology’s lead product COPIKTRA,
and Verastem Oncology’s PI3K program generally, its commercialization of
COPIKTRA, the potential commercial success of COPIKTRA, including
financial guidance and patient population estimates, the anticipated
adoption of COPIKTRA by patients and physicians, the structure of its
planned and pending clinical trials and the timeline and indications for
clinical development, regulatory submissions and commercialization
activities. The words “anticipate,” “believe,” “estimate,” “expect,”
“intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,”
“will,” “would,” “could,” “should,” “continue,” and similar expressions
are intended to identify forward-looking statements, although not all
forward-looking statements contain these identifying words. Each
forward-looking statement is subject to risks and uncertainties that
could cause actual results to differ materially from those expressed or
implied in such statement.

Applicable risks and uncertainties include the risks and uncertainties,
among other things, regarding: the commercial success of COPIKTRA in the
United States; physician and patient adoption of COPIKTRA, including
those related to the safety and efficacy of COPIKTRA; the uncertainties
inherent in research and development of COPIKTRA, such as negative or
unexpected results of clinical trials; whether and when any applications
for COPIKTRA may be filed with regulatory authorities in any other
jurisdictions; whether and when regulatory authorities in any other
jurisdictions may approve any such other applications that may be filed
for COPIKTRA, which will depend on the assessment by such regulatory
authorities of the benefit-risk profile suggested by the totality of the
efficacy and safety information submitted and, if approved, whether
COPIKTRA will be commercially successful in such jurisdictions; our
ability to obtain, maintain and enforce patent and other intellectual
property protection for COPIKTRA and our other product candidates; the
scope, timing, and outcome of any legal proceedings; decisions by
regulatory authorities regarding labeling and other matters that could
affect the availability or commercial potential of COPIKTRA; the fact
that regulatory authorities in the U.S. or other jurisdictions, if
approved, could withdraw approval; whether preclinical testing of our
product candidates and preliminary or interim data from clinical trials
will be predictive of the results or success of ongoing or later
clinical trials; that the timing, scope and rate of reimbursement for
our product candidates is uncertain; that third-party payors (including
government agencies) may not reimburse for COPIKTRA; that there may be
competitive developments affecting our product candidates; that data may
not be available when expected; that enrollment of clinical trials may
take longer than expected; that COPIKTRA or our other product candidates
will cause unexpected safety events, experience manufacturing or supply
interruptions or failures, or result in unmanageable safety profiles as
compared to their levels of efficacy; that COPIKTRA will be ineffective
at treating patients with lymphoid malignancies; that we will be unable
to successfully initiate or complete the clinical development and
eventual commercialization of our product candidates; that the
development and commercialization of our product candidates will take
longer or cost more than planned; that we may not have sufficient cash
to fund our contemplated operations; that we, CSPC Pharmaceutical Group,
Yakult Honsha Co., Ltd. or Infinity Pharmaceuticals, Inc. will fail to
fully perform under the duvelisib license agreements; that we may be
unable to make additional draws under our debt facility or obtain
adequate financing in the future through product licensing,
co-promotional arrangements, public or private equity, debt financing or
otherwise; that we will not pursue or submit regulatory filings for our
product candidates, including for duvelisib in patients with chronic
lymphocytic leukemia/small lymphocytic lymphoma (CLL/SLL) or indolent
non-Hodgkin lymphoma (iNHL) in other jurisdictions; and that our product
candidates will not receive regulatory approval, become commercially
successful products, or result in new treatment options being offered to
patients.

Other risks and uncertainties include those identified under the heading
“Risk Factors” in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2018 as filed with the SEC on March 12, 2019 and in
any subsequent filings with the SEC. The forward-looking statements
contained in this press release reflect Verastem Oncology’s views as of
the date hereof, and the Company does not assume and specifically
disclaims any obligation to update any forward-looking statements
whether as a result of new information, future events or otherwise,
except as required by law.

References

¹ The Leukemia & Lymphoma Society. Peripheral T-Cell Lymphoma
Facts. July 2014.

² Leukemia Foundation. http://www.leukaemia.org.au/blood-cancers/lymphomas/non-hodgkin-lymphoma-nhl/peripheral-t-cell-lymphoma

³ Winkler D.G., Faia K.L., DiNitto J.P. et al. PI3K-delta and
PI3K-gamma inhibition by IPI-145 abrogates immune responses and
suppresses activity in autoimmune and inflammatory disease models. Chem
Biol 2013; 20:1-11.

⁴ Reif K et al. Cutting Edge: Differential Roles for
Phosphoinositide 3 kinases, p110-gamma and p110-delta, in lymphocyte
chemotaxis and homing. J Immunol 2004:173:2236-2240.

⁵ Schmid M et al. Receptor Tyrosine Kinases and TLR/IL1Rs
Unexpectedly activate myeloid cell PI3K, a single convergent point
promoting tumor inflammation and progression. Cancer Cell
2011;19:715-727.

⁶ www.clinicaltrials.gov,
NCT03372057

Verastem, Inc. Condensed Consolidated Balance Sheets (in thousands)
		March 31,			December 31,
		2019			2018
Cash, cash equivalents and investments		$	211,659		$	249,653
Accounts receivable, net			558			306
Inventory			306			327
Prepaid expenses and other current assets			4,073			2,973
Property and equipment, net			1,256			1,369
Intangible assets, net			21,185			21,577
Other assets			4,328			1,031
Total assets		$	243,365		$	277,236
Current Liabilities		$	28,624		$	37,077
Long-term debt			24,814			19,506
Convertible senior notes			97,159			95,231
Other liabilities			4,308			1,123
Stockholders’ equity			88,460			124,299
Total liabilities and stockholders’ equity		$	243,365		$	277,236

Verastem, Inc. Unaudited Condensed Consolidated Statements of Operations (in thousands, except per share amounts)
		Three months ended March 31,
		2019			2018
Revenue:
Product revenue, net		$	1,671		$	—
Total revenue			1,671			—
Operating expenses:
Costs of revenues, excluding amortization of acquired intangible assets			158			—
Research and development			9,758			10,934
Selling, general and administrative			26,033			9,827
Amortization of acquired intangible assets			392			—
Total operating expenses			36,341			20,761
Loss from operations			(34,670)			(20,761)
Interest income			1,497			191
Interest expense			(4,929)			(480)
Net loss		$	(38,102)		$	(21,050)
Net loss per share—basic and diluted		$	(0.52)		$	(0.41)
Weighted average common shares outstanding used in computing net loss per share—basic and diluted			73,854			50,835

Contacts

Verastem Oncology:
John Doyle
Vice President, Investor
Relations & Finance
+1 781-469-1546
[email protected]

Investors:
Joseph Rayne
Argot Partners
+1
617-340-6075
[email protected]

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