Down to its last $100 million, Verastem Oncology has taken on debt to try to get its lead program over the finish line. The deal sees Verastem tap Oxford Finance for a $150 million credit facility to fund trials in ovarian cancer and non-small cell lung cancer (NSCLC) and extend its cash runway through to 2025.
Verastem ended 2021 with $100 million. With the sale of Copiktra to Secura Bio providing a source of income, Verastem predicted in November that its money would see it through to 2024. However, with its stock hovering just above the $1 mark, Verastem has acted early to extend its cash runway rather than let its money run down.
“We believe we have significant financial optionality to advance our current development and commercial objectives,” Rob Gagnon, Verastem’s chief business and financial officer, said in a statement. “The strengthened balance sheet will allow us to build on our breakthrough therapy designation for VS-6766 and defactinib in low-grade serous ovarian cancer and prepare for potential launches in both low-grade serous ovarian cancer and KRAS-mutant non-small cell lung cancer.”
Verastem has already drawn $25 million of the credit facility. The remaining $125 million is available in tranches. Verastem can access $75 million based on certain predetermined milestones, with the other $50 million available at the discretion of the lender.
The decision to take on debt comes as Verastem works to get RAF/MEK clamp VS-6766 and FAK inhibitor defactinib to market. Across two phase 2, registration-directed trials, Verastem is testing VS-6766 alone and with defactinib in patients with recurrent low-grade serous ovarian cancer and KRAS G12V-mutant NSCLC. Top-line results from the selection phase of the trials are due this year.
Verastem paid Roche subsidiary Chugai Pharmaceutical $3 million upfront for VS-6766 in 2020. Efficacy data in ovarian cancer presented later that year offered support for the bet, although Verastem’s stock dropped in the wake of the release. Toxicity stopped researchers from using the higher doses of VS-6766.