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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 2024
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from to
Commission file number 001-35403
Verastem, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
27-3269467
(I.R.S. Employer
Identification No.)
117 Kendrick Street, Suite 500
Needham, Massachusetts
(Address of principal executive offices)
02494
(Zip Code)
Registrant’s telephone number, including area code: (781) 292-4200
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.0001 par value
VSTM
The Nasdaq Capital Market
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ⌧ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes ⌧ No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. ⌧ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit). ⌧ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an
emerging growth company. See definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of
the Exchange Act.
Large accelerated filer ☐
Accelerated filer ☐
Non-
accelerated filer ⌧
Smaller reporting company☒
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing
reflect the correction of an error to previously issues financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by
any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
Aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of June 28, 2024 was $79,628,327.
The number of shares outstanding of the registrant’s common stock as of March 19, 2025 was 51,486,705
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive proxy statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A relating to the Registrant’s
Annual General Meeting of Shareholders, to be held on May 22, 2025 will be incorporated by reference in this Form 10-K in response to Items 10, 11, 12, 13 and 14 of Part
III. The definitive proxy statement will be filed with the Securities and Exchange Commission not later than 120 days after the registrant’s fiscal year ended December 31,
2024.
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2
TABLE OF CONTENTS
PART I
Item 1.
Business
4
Item 1A.Risk Factors
37
Item 1B. Unresolved Staff Comments
80
Item 1C. Cybersecurity
80
Item 2.
Properties
81
Item 3.
Legal Proceedings
81
Item 4.
Mine Safety Disclosures
81
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuers Purchases of
Equity Securities
82
Item 6.
Reserved
83
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
84
Item 7A.Quantitative and Qualitative Disclosures About Market Risk
95
Item 8.
Consolidated Financial Statements and Supplementary Data
95
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
95
Item 9A.Controls and Procedures
95
Item 9B. Other Information
96
Item 9C. Disclosure Regarding Foreign Jurisdictions
96
PART III
Item 10. Directors, Executive Officers and Corporate Governance
97
Item 11. Executive Compensation
97
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
97
Item 13. Certain Relationships and Related Transactions, and Director Independence
97
Item 14. Principal Accountant Fees and Services
97
PART IV
Item 15. Exhibits and Financial Statement Schedules
98
Item 16. Form 10-K Summary
98
EXHIBIT INDEX
99
SIGNATURES
104
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3
FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements. These forward-looking statements
generally can be identified by the use of words such as “anticipate,” “expect,” “plan,” “could,” “may,” “believe,” “estimate,”
“forecast,” “goal,” “potentially,” “project,” and other words of similar meaning. All statements, other than statements related
to present facts or current conditions or historical facts, contained in this Annual Report on Form 10-K are forward-looking
statements, including statements regarding our strategy, future operations, future financial position, including our ability to
continue as a going concern through one year from the date of the audited financial statements for the year ended December
31, 2024, future revenues, projected costs, prospects, plans and objectives of management. Such statements relate to, among
other things, the development and activity of our programs and product candidates, avutometinib (rapidly accelerated
fibrosarcoma (“RAF”)/ mitogen-activated protein kinase kinase (“MEK”) program) and defactinib (focal adhesion kinase
(“FAK”) program), the timing and outcome of the U.S. Food & Drug Administration’s (the “FDA”) review of our New Drug
Application (“NDA”) submission for the avutometinib and defactinib combination for previously treated low-grade serous
ovarian cancer (“LGSOC”) with a KRAS mutation, the structure and potential clinical value of our completed, planned and
pending clinical trials, including the RAMP 201, RAMP 203, RAMP 205 and RAMP 301 trials; the timing of commencing
and completing trials, including topline data reports, our interactions with regulators; the timeline and indications for clinical
development, regulatory submissions and the potential for and timing of commercialization of our product candidates; the
potential for additional development programs involving the Company’s lead compound and the potential market
opportunities thereof; the expected outcome and benefits of our collaboration with GenFleet Therapeutics (Shanghai), Inc.
(“GenFleet”) and the estimated addressable markets for, and anticipated market opportunities of our drug candidates.
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 success in the development and potential commercialization of our product
candidates, including avutometinib in combination with other compounds, including defactinib, LUMAKRAS® and others;
the uncertainties inherent in research and development, such as negative or unexpected results of clinical trials; the
occurrence or timing of applications for our product candidates that may be filed with regulatory authorities in any
jurisdictions; whether and when regulatory authorities in any jurisdictions may approve any such applications that may be
filed for our product candidates and, if approved, whether our product candidates will be commercially successful in such
jurisdictions; our ability to obtain, maintain and enforce patent and other intellectual property protection for our product
candidates; the scope, timing, and outcome of any legal proceedings; decisions by regulatory authorities regarding trial
design, labeling and other matters that could affect the timing, availability or commercial potential of our product candidates;
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 the market opportunities of our drug candidates are based on internal and third-party estimates
which may prove to be incorrect; that third- party payors (including government agencies) may not reimburse; 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, which may delay our development programs, including delays in review by
the FDA of our NDA submission in recurrent Kirsten rat sarcoma viral oncogene homolog (“KRAS”) mutant LGSOC if
enrollment in our confirmatory trial is not well underway at the time of review, or that the FDA may require the Company to
have completed enrollment or to enroll additional patients in the Company’s ongoing RAMP-301 confirmatory Phase 3
clinical trial prior to the FDA taking action on our NDA seeking accelerated approval; risks associated with preliminary and
interim data, which may not be representative of more mature data, including with respect to interim duration of therapy
data; that our product candidates may cause adverse safety events and/or unexpected concerns may arise from additional data
or analysis, or result in unmanageable safety profiles as compared to their levels of efficacy; that we may be unable to
successfully validate, develop and obtain regulatory approval for companion diagnostic tests for our product candidates that
require or would commercially benefit from such tests, or experience significant delays in doing so; that the mature RAMP
201 data and associated discussions with the FDA may not support the scope of our NDA submission for the avutometinib
and defactinib combination in LGSOC including with respect to KRAS wild-type (“KRAS wt”) LGSOC; that our product
candidates may experience manufacturing or supply interruptions or failures; that any of our third party contract research
organizations, contract manufacturing organizations, clinical sites, or contractors, among others, who we rely on may fail to
fully perform; that we face substantial competition, which may result in others developing or commercializing products
before or more successfully than we do which could result in reduced market share or market potential for our product
candidates; that we may 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 may
take longer or cost more than planned, including as a result of conducting additional studies or our decisions regarding
execution of such commercialization; that we may not have sufficient cash to fund our contemplated operations, including
certain of our
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4
product development programs; that we may not attract and retain high quality personnel; that we or Chugai Pharmaceutical,
Co. Ltd. (“Chugai”) may fail to fully perform under the avutometinib license agreement; that we or Secura Bio, Inc.
(“Secura”) may fail to fully perform under the asset purchase agreement with Secura, including in relation to milestone
payments; that we may not see a return on investment on the payments we have and may continue to make pursuant to the
collaboration and option agreement with GenFleet or that GenFleet may fail to fully perform under the agreement; that we
may not be able to establish new or expand on existing collaborations or partnerships, including with respect to in-licensing
of our product candidates, on favorable terms, or at all; that we may be unable to obtain adequate financing in the future
through product licensing, co-promotional arrangements, public or private equity, debt financing or otherwise; that we may
not pursue or submit regulatory filings for our product candidates; 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 this Annual Report on Form 10-K, and in any
subsequent filings with the Securities and Exchange Commission (“SEC”).
As a result of these and other factors, we may not achieve the plans, intentions or expectations disclosed in our
forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-
looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or
investments we may make. The forward-looking statements contained in this Annual Report on Form 10-K reflect our views
as of the date hereof. We do not assume and specifically disclaim any obligation to update any forward-looking statements,
whether as a result of new information, future events or otherwise, except as required by law. Our business is subject to
substantial risks and uncertainties, including those referenced above. Investors, potential investors, and others should give
careful consideration to these risks and uncertainties.
PART I
Item 1. Business
OVERVIEW
We are a late-stage development biopharmaceutical company committed to the development and
commercialization of new medicines to improve the lives of patients diagnosed with ras sarcoma (“RAS”)/ mitogen
activated pathway kinase (“MAPK”) pathway-driven cancers. Our pipeline is focused on novel small molecule drugs
that inhibit critical signaling pathways in cancer that promote cancer cell survival and tumor growth, including
RAF/MEK inhibition, FAK inhibition and KRAS G12D inhibition.
Our most advanced product candidates, avutometinib and defactinib, are being investigated in both preclinical
and clinical studies for the treatment of various solid tumors, including, but not limited to LGSOC, non-small cell lung
cancer (“NSCLC”) and pancreatic cancer. We believe that avutometinib may be beneficial as a therapeutic, both as a
single agent or when used together in combination with defactinib, other agents, other pathway inhibitors, or other
current and emerging standard of care treatments in cancers that do not adequately respond to currently available
therapies.
Avutometinib is an oral RAF/MEK clamp that inhibits MEK1/2 kinase activities and induces inactive
complexes of MEK with A-Raf proto-oncogene, serine/threonine kinase (“ARAF”), B-Raf proto-oncogene
serine/threonine kinase (“BRAF”) and C-raf proto-oncogene serine/threonine kinase (“CRAF”), potentially creating a
more complete and durable anti-tumor response through maximal RAS/MAPK pathway inhibition. In contrast to
currently available MEK-only inhibitors, avutometinib blocks both MEK kinase activity and the ability of RAF to
phosphorylate MEK. We believe that this unique mechanism allows avutometinib to block MEK signaling without the
compensatory activation of MEK that appears to limit the response achieved with the MEK-only inhibitors.
Defactinib is an oral, selective inhibitor of FAK and proline-rich tyrosine kinase (“PYK2”), the two members
of the focal adhesion kinase family of non-receptor protein tyrosine kinases. FAK and PYK2 integrate signals from
integrin and growth factor receptors to regulate cell proliferation, survival, migration, and invasion. FAK activation has
been shown to mediate resistance to multiple anti-cancer agents, including RAF and MEK inhibitors.
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The combination of avutometinib and defactinib is clinically active in patients with KRAS mutant (“KRAS
mt”) and KRAS wt recurrent LGSOC and has received breakthrough designation from the FDA for the treatment of all
patients with recurrent LGSOC, regardless of KRAS status, after one or more prior lines of therapy including
platinum-based chemotherapy. Avutometinib, alone or in combination with defactinib, has received orphan drug
designation for the treatment of all patients with LGSOC in the United States. Defactinib has received orphan drug
designation in ovarian cancer in the United States, the European Union, and Australia. In addition, the FDA granted
orphan drug designation to avutometinib, in combination with defactinib, for the treatment of pancreatic cancer.
In the fourth quarter of 2020, we commenced a registration-directed trial investigating avutometinib in
combination with defactinib for the treatment of patients with recurrent LGSOC entitled RAMP 201 study. We use the
term “RAMP” to refer to our RAF and MEK Program. The RAMP 201 study is an adaptive two-part multicenter,
parallel cohort, randomized, open label trial evaluating the efficacy and safety of avutometinib alone and in
combination with defactinib in patients with recurrent LGSOC.
In October 2024, we announced updated results from the RAMP 201 study with a data cutoff of June 30,
2024, that was presented at the International Gynecologic Cancer Society (“IGCS”) 2024 Annual Meeting. The
primary analysis of the RAMP 201 study showed a confirmed overall response rate (“ORR”) by blinded independent
central review of 31% (34/109; 95% CI: 23-41) in all evaluable patients with measurable disease with approximately
12 months of follow up. Among patients with KRAS mt LGSOC, the confirmed ORR was 44% (25/57; 95% CI: 31-
58) and for patients with KRAS wt LGSOC the confirmed ORR was 17% (9/52; 95% CI: 8-30). The median duration
of response was 31.1 months (95% CI: 14.8-31.1) in all evaluable patients, with 31.1 months (95% CI: 14.8-31.1) in
the KRAS mt population and 9.2 months (95% CI: 5.5-NEi) in the KRAS wt population. The median progression-free
survival was 12.9 months (95% CI: 10.9-20.2) in all evaluable patients, with 22 months (95% CI: 11.1-36.6) in the
KRAS mt population and 12.8 months (95% CI: 7.4-18.4) in the KRAS wt population. The disease control rate at six
or more months was 61% in the total evaluable population, 70% in KRAS mt population and 50% in KRAS wt
population. The updated data continues to demonstrate avutometinib in combination with defactinib is generally well-
tolerated, with a 10% discontinuation rate due to adverse events and no new safety signals were identified. The most
common treatment-related adverse events (all grades, grade ≥3) for the combination were nausea (67.0%, 2.6%),
diarrhea (58.3%, 7.8%), and increased blood creatine phosphokinase levels (60.0%, 24.3%).
In December 2023, we announced initiation of a confirmatory Phase 3 trial to evaluate the combination of
avutometinib and defactinib for the treatment of patients with recurrent LGSOC entitled RAMP 301. RAMP 301 is a
randomized global confirmatory trial, which is evaluating the efficacy and safety of avutometinib and defactinib versus
standard of care chemotherapy or hormonal therapy in patients with recurrent LGSOC. RAMP 301 will serve as the
confirmatory study required by the FDA for the combination of avutometinib and defactinib for the initial indication of
recurrent KRAS mt LGSOC to potentially receive full approval and has the potential to support an expanded indication
regardless of KRAS mutation status. RAMP 301 is currently open and enrolling patients.
On October 31, 2024, we completed our rolling NDA submission to the FDA for avutometinib and defactinib
for treatment of adults with recurrent KRAS mt LGSOC who received at least one prior systemic therapy. On
December 30, 2024, the FDA accepted for review our NDA under the accelerated approval pathway and granted
priority review for avutometinib and defactinib for treatment of adult patients with recurrent KRAS mt LGSOC who
received at least one prior systemic therapy and designated June 30, 2025 as the Prescription Drug User Fee Act
(“PDUFA”) action date. In addition, at the time the FDA accepted our NDA for review, the FDA stated that it is not
planning to hold an advisory committee meeting to discuss the application. The NDA was based on the positive,
mature safety and efficacy data from the RAMP 201 trial as presented at the IGCS 2024 Annual Meeting. The NDA
also includes supportive data from the FRAME Phase 1 trial, the first study conducted with the combination therapy in
recurrent LGSOC. We intend to initiate discussions with other global regulatory authorities, including those in Europe
and Japan with the objective of ultimately seeking approval for the combination in additional regions.
We estimate the total annual incident addressable market opportunity in the United States for the
combination of avutometinib and defactinib to be approximately $300 million for KRAS mt. We estimate the total
prevalent addressable market opportunity to be approximately $1.7 billion for KRAS mt. Our estimates of the patient
population, pricing and revenue opportunities for our product candidates, including for KRAS mt patients with
recurrent LGSOC, are based on several internal and third-party estimates and assumptions, including, without
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limitation, internal forecasts, the median duration of treatment from initial interim clinical data and the assumed prices
at which we can commercialize our product candidates.
In September 2021, we entered into a clinical collaboration agreement with Amgen, Inc. (“Amgen”) to
evaluate the combination of avutometinib with Amgen’s KRAS G12C inhibitor LUMAKRAS® (sotorasib) in a Phase
1/2 study entitled RAMP 203. The Phase 1/2 trial began evaluating the safety, tolerability and efficacy of avutometinib
in combination with LUMAKRAS in patients with KRAS G12C NSCLC who have not been previously treated with a
KRAS G12C inhibitor, as well as in patients who have progressed on a KRAS G12C inhibitor. The trial built upon
initial preclinical data showing enhanced anti-tumor efficacy with the combination of LUMAKRAS (KRAS G12C
inhibition) and avutometinib (RAF/MEK inhibition) relative to either agent alone. In October 2023, we announced
initial safety and pharmacokinetics results, as well as preliminary efficacy results, from the RAMP 203 study which
were presented at the AACR-NCI-EORTC International Conference on Molecular Targets and Cancer Therapeutics in
October 2023. These preliminary results showed a confirmed ORR of 25% (3/12) across efficacy-evaluable patients
and seen in both KRAS G12C inhibitor resistant (14.3%; 1/7) and naïve (40%; 2/5) patients. In January 2024, the FDA
granted fast track designation for combination of avutometinib and LUMAKRAS for the treatment of patients with
KRAS G12C-mutant metastatic NSCLC who have received at least one prior systemic therapy and have not been
previously treated with a KRAS G12C inhibitor. The RAMP 203 study has progressed to the recommended Phase 2
dose of 4 mg avutometinib in combination with 960 mg of LUMAKRAS for the doublet of avutometinib and
LUMAKRAS. RAMP 203 is currently enrolling patients who have experienced disease progression on a KRAS G12C
inhibitor in the dose expansion phase (Part B) and is on track to complete by end of quarter 1 of 2025. Enrollment of
patients without prior G12C treatment to the initial doublet dose expansion phase has completed.
Based on emerging data demonstrating improved tumor regressions in KRAS G12C-mutant NSCLC
preclinical models when a FAK inhibitor is combined with a G12C inhibitor and avutometinib, defactinib was added to
the RAMP 203 study in new triplet cohorts in 2024. In December 2024, we announced three patients whose cancer
previously progressed on a G12C inhibitor have been treated with the triplet combination of sotorasib 960 mg
administered daily on a continuous schedule and avutometinib 3.2 mg twice-weekly plus defactinib 200 mg twice-
daily. Avutometinib and defactinib are administered on a three out of four weeks schedule. There were no dose limiting
toxicities (“DLTs”) observed in the first triplet combination cohort. We expect to present an interim update of both the
doublet and triplet data at a medical meeting in the second half of 2025.
In May 2022, we received the first “Therapeutic Accelerator Award” from Pancreatic Cancer Network
(“PanCAN”) for up to $3.8 million. The grant is supporting a Phase 1b/2 clinical trial of avutometinib in combination
with defactinib entitled RAMP 205. RAMP 205 is evaluating the safety, tolerability and efficacy of avutometinib and
defactinib in combination with GEMZAR
® (gemcitabine) and ABRAXANE
® (Nab-paclitaxel) in patients with
previously untreated metastatic adenocarcinoma of the pancreas. The RAMP 205 trial is evaluating whether combining
avutometinib (to target mutant KRAS which is mutated in more than 90% of pancreatic adenocarcinomas) and
defactinib (to reduce stromal density and adaptive resistance to avutometinib) to the standard GEMZAR/ABRAXANE
regimen improves outcomes for patients with pancreatic adenocarcinoma. In August 2022, PanCAN agreed to provide
us with an additional $0.5 million for the collection and translational analysis of patient samples. Combination dose
evaluation is ongoing.
As of a data cut of May 14, 2024, we reported patients receiving the combination of avutometinib and
defactinib with gemcitabine and Nab-paclitaxel in dose level 1 cohort achieved a confirmed ORR of 83% (5/6), one
dose-limiting toxicity was observed in the dose level 1 cohort, and the dose level was subsequently cleared after
additional patients were enrolled. The initial interim results were presented at the American Society of Clinical
Oncology (“ASCO”) Annual Meeting in June 2024.
A dose level “0” has been added to the RAMP 205 study protocol that evaluates 3.2 mg of avutometinib twice
a week, 200 mg of defactinib twice a day for three weeks out of every four weeks with 800 mg/m2 of gemcitabine and
100 mg/m2 of Nab-paclitaxel on a schedule of day 1, day 8, and day 15. All dose levels have been expanded to 12
patients each, including six additional patients recently enrolled to dose devel 1, where five out of six patients reported
an ORR at the ASCO 2024 Annual Meeting. In dose level 1, of the six additional patients, five remain on therapy and
continue to be monitored for response given the initial length of time to response. 59 of 60 patients have been treated
and enrollment is on track to be completed in quarter 1 of 2025. Based on the initial safety
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and efficacy data from these cohorts, dose level 1 or 0 is anticipated to be chosen for expansion. Adverse events across
all dose cohorts remained generally consistent with the previously announced safety and tolerability profile, and no
new safety signals have emerged. We expect to present data at a medical meeting in mid-year of 2025 and we expect to
choose a recommended Phase 2 dose for trial expansion in first half of 2025.
Furthermore, avutometinib and defactinib are currently being investigated in combination with
immunotherapeutic and other agents through investigator sponsored trials (“ISTs”) for the treatment of various solid
tumors, including, but not limited to, colorectal cancer (“CRC”), gynecological cancer with MAPK pathway
alterations, breast cancer, thyroid cancer and melanoma.
In August 2023, we entered into a collaboration and option agreement (the “GenFleet Agreement”) with
GenFleet pursuant to which GenFleet granted us options to obtain exclusive development and commercialization rights
worldwide outside of mainland China, Hong Kong, Macau, and Taiwan (the “Verastem Territory”) for up to three
oncology programs targeting RAS pathway driven cancers (the “GenFleet Options”). We may exercise our GenFleet
Options on a program-by-program basis. The collaboration builds on the strengths of both companies in oncology
small molecule drug development, enabling us to partner our clinical development and regulatory expertise with
GenFleet’s accomplished discovery capabilities. This synergistic collaboration includes our experience and established
network of collaborators, including scientific and clinical experts in RAS biology and RAS pathway-driven cancers
and GenFleet’s accomplishments with its KRAS G12C inhibitor program. In December 2023, we announced the
selection of an oral and selective KRAS G12D (ON/OFF) inhibitor entitled VS-7375 (known as GFH375 in China)
with a potential best-in-class profile as the lead program from our collaboration with GenFleet. An investigational new
drug (“IND”) application by GenFleet in China for VS-7375 was cleared in June 2024. In July 2024, GenFleet began
dosing several patients in a Phase 1/2 trial in China that is evaluating VS-7375 in patients with KRAS G12D-mutated
advanced solid tumors. The Phase 1/2 study is being conducted in approximately 20 hospitals in China. The Phase 1
study will be used to determine the recommended Phase 2 dose, and the Phase 2 study will further evaluate the
efficacy and safety of VS-7375 in patients with advanced solid tumors, such as pancreatic ductal adenocarcinoma,
CRC, and NSCLC.
On January 14, 2025, we announced the early exercise of the GenFleet Option with respect to VS-7375. As
previously announced by GenFleet, 26 patients have been treated with VS-7375 in a Phase 1 dose-escalation study
being conducted in China. Both confirmed and unconfirmed partial responses have been observed, including patients
with metastatic pancreatic cancer and advanced NSCLC. In addition, six dose cohorts have been cleared with no DLTs
observed. In the study, oral dosing of VS-7375 has achieved plasma levels in patients that correlate with efficacious
exposures that induced deep tumor regressions across all preclinical KRAS G12D tumor models as presented in
collaboration with GenFleet at the American Association for Cancer Research (“AACR”) 2024 annual meeting. We
filed an IND application in the United States for VS-7375 during the first quarter of 2025 and expect to initiate a Phase
1/2a study in middle of 2025 in the United States. GenFleet expects to share updated preclinical and clinical data from
the Phase 1 study of VS-7375 in China at upcoming medical meetings in the first half of 2025.
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8
OUR FOCUS
We are focused on the development and commercialization of new medicines to improve the lives of patients
diagnosed with RAS/MAPK pathway-driven cancers. Our pipeline is focused on novel small molecule drugs that
inhibit critical signaling pathways in cancer that promote cancer cell survival and tumor growth, including RAF/MEK
inhibition, FAK inhibition and KRAS G12D inhibition. Cancer is a group of diseases characterized by the uncontrolled
growth and spread of abnormal cells. The American Cancer Society estimates that in the United States in 2025, over
2.0 million new cases of cancer will be diagnosed, and more than 618,000 people will die from the disease. RAS is the
most frequently mutated oncogene in human cancers. Approximately 30% of all human cancers are driven by
mutations of the RAS family of genes. These cancers are typically highly aggressive and recurrent, sending signaling
commands through the RAS pathway. Current treatments for cancer include surgery, radiation therapy, chemotherapy,
hormonal therapy, immunotherapy, cell therapy, and targeted therapy. Notwithstanding years of intensive research and
clinical use, these current treatments often fail to cure cancer and often cause side effects. For example, conventional
chemotherapy works by stopping tumor growth by disrupting the cell cycle leading to cell death. Chemotherapies are
effective at killing cancer cells because cancer cells generally grow more rapidly than normal cells. However,
chemotherapies also target fast-growing normal cells of the body, such as blood cells, hair follicles, and the cells lining
the mouth, stomach, and intestines. As a result, they have a range of side effects and although the treatments may
succeed at initially decreasing tumor burden, they ultimately fail to kill all the cancer cells and/or to effectively disrupt
the tumor microenvironment, potentially resulting in eventual disease progression.
Accordingly, 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. For example, the National Cancer Institute’s Surveillance,
Epidemiology, and End Results Program (“NCI”; “SEER”) reported that in 2024 there were approximately 19,680 new
cases of ovarian cancer, 234,580 new cases of lung cancer, and 66,440 new cases of pancreatic cancer in the United
States.
With the application of new technologies and key discoveries, we believe that we are now entering an era of
cancer research characterized by a more sophisticated understanding of the biology of cancer. We 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, present the opportunity to develop more effective cancer treatments.
We leverage our expertise in translational research and deep understanding of cancer treatment pathways as
well as strategic partnerships to identify, develop and deliver effective options to address unmet needs. We believe the
best way for us to help patients living with cancer is by advancing newly emerging mechanisms of the disease and
developing novel therapies that target these mechanisms.
Despite significant advances in the treatment of cancer, unmet needs persist. KRAS has long been one of the
most elusive cancer-causing proteins. KRAS mutant tumors are present in about 30% of all human cancers, have
historically presented a difficult treatment challenge, and are often associated with significantly worse prognosis. Since
the discovery of KRAS almost four decades ago, researchers have persistently tried to develop therapies that
effectively block the cancer-promoting effects of KRAS mutation. Sotorasib (LUMAKRAS) and adagrasib
(KRAZATI) are the first agents to directly target KRAS G12C and received FDA approval for patients with KRAS
G12C NSCLC in 2021 and 2022, respectively. Challenges associated with identifying new treatment options for these
types of cancers include resistance to single agents, identifying tolerable combination regimens with MEK inhibitors,
and new KRAS inhibitors in development addressing only a minority of all KRAS mutated cancers.
Low Grade Serous Ovarian Cancer (“LGSOC”)
LGSOC is a slow-growing cancer with a high mortality rate. It is estimated that approximately 70% of
LGSOC tumors are driven by mutations in MAPK pathway-associated genes, with approximately 30% of patients
harboring KRAS mutations with other mutations including NRAS, BRAF, NF1, and other RAS pathway-associated
gene mutations. There are an estimated 6,000 patients in the United States and 80,000 worldwide living with this
disease. LGSOC can be diagnosed early in adulthood impacting health, fertility, long-term quality of life, and survival.
LGSOC has a median survival rate of 10 years from time of diagnosis, with over 80% of patients experiencing
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recurrence and enduring severe pain and complications as the disease progresses. Recurrent LGSOC that is not
amenable to surgical management is currently treated with medicines listed on National Comprehensive Cancer
Network or other clinical guidelines because no available therapies are currently FDA approved for the specific
indication of recurrent LGSOC. The current standard of care treatments offers poor to moderate response rates
(6%-13%) and patients often cycle through multiple therapies. Most prior research has focused on high grade serous
ovarian cancer (“HGSOC”). However, LGSOC is clinically, histologically and molecularly unique from HGSOC with
limited treatments available.
Currently, avutometinib is being evaluated in combination with defactinib for the treatment of patients with
recurrent LGSOC (i) in a global Phase 3 trial entitled RAMP 301 which is the confirmatory trial required by the FDA
for the initial indication of recurrent KRAS mt LGSOC to potentially receive full approval and has the potential to
support an expanded indication regardless of KRAS mutation status with enrollment open in the United States,
Australia, Canada, Europe, United Kingdom, and Korea; and (ii) in a Phase 2 registration directed trial in Japan
entitled RAMP 201J. Avutometinib is also being investigated in combination with defactinib in ISTs to assess efficacy
in other gynecological cancers with MAPK pathway mutations (e.g. high-grade and mucinous ovarian cancers,
endometrial and cervical cancers).
Non-Small Cell Lung Cancer (“NSCLC”)
In 2024, the NCI estimated that lung cancer was the leading cause of cancer-related death in the United
States. According to the American Cancer Society, approximately 80% to 85% of lung cancers are NSCLC and 10% to
15% of lung cancers are small cell lung cancer. Adenocarcinoma is the most common subtype of NSCLC, accounting
for approximately 40% of NSCLC cases, with the remaining NSCLC cases being squamous cell carcinoma, large cell
carcinomas, mixed or rare histologies. Adenocarcinomas most frequently have molecular alterations that can be
targeted with oral therapies. The most frequent molecular alterations are mutations in the KRAS gene (approximately
25%-30% of non-squamous NSCLC) of which KRAS G12C is most common (approximately 10-13% of non-
squamous NSCLC) Several tyrosine kinase inhibitors are in development for patients with KRAS G12C NSCLC of
which the KRAS G12C inhibitors LUMAKRAS (sotorasib) and KRAZATI (adagrasib) are currently FDA approved.
LUMAKRAS and KRAZATI monotherapy have relatively low response rates and short times to progression and thus,
number of agents are being combined with these G12C inhibitors including LUMAKRAS in combination with
avutometinib + defactinib in RAMP 203 study.
Currently, avutometinib is being evaluated (i) in combination with Amgen’s KRAS-G12C inhibitor
LUMAKRAS +/- defactinib in a Phase 1/2 study in patients with KRAS G12C mutant NSCLC entitled RAMP 203,
and (ii) in combination with everolimus (mTORi) in patients with KRAS G12C mutant NSCLC in an IST.
Pancreatic Cancer
In 2024, the NCI estimated that pancreatic cancer was the tenth most common cancer diagnosed in the United
States and that the disease represented the third leading cause of cancer-related death in the United States. 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.
Pancreatic cancer is one of the few cancers where survival has not improved significantly during the past 40 years. The
NCI estimates that the number of new incidences of pancreatic cancer was 13.5 per 100,000 people per year based on
2017-2021 cases. Pancreatic cancer has a very high mortality rate with approximately 87% of patients dying within
five years of their initial diagnosis based on the five-year relative survival rate from 2014 to 2020. The median age for
diagnosis is 70 with the disease affecting males slightly more than females.
The prognosis for pancreatic cancer is extremely poor as shown by the survival rate, which indicates the need
for new treatments. 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.
Activating mutations in KRAS represent a key initiating event in pancreatic cancer. KRAS mutations occur in up to
95% of pancreatic cancer, with KRAS G12D, G12V and G12R occurring in approximately
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37%, 28% and 13% of patients, respectively. Furthermore, pancreatic cancer typically presents with high stromal
density, comprised of fibroblasts and dense extracellular matrix, which is thought to limit the penetration of cytotoxic
drugs and T cells into pancreatic tumors. Thus, there is a strong scientific rationale for combining avutometinib (to
target mutant KRAS) and defactinib (to reduce stromal density and adaptive resistance to avutometinib) to the standard
GEMZAR/ABRAXANE regimen with the objective of increasing response rate and survival. Currently, avutometinib
is being evaluated in combination with defactinib + gemcitabine/nab-paclitaxel for the treatment of patients with
advanced pancreatic cancer in a Phase 1b/2 clinical trial entitled RAMP 205.
OUR STRATEGY
With the combination of avutometinib and defactinib, we seek to utilize a multi-faceted approach to treat
cancer by directly targeting the cancer cells, enhancing anti-tumor immunity, modulating the local tumor
microenvironment, and overcoming mechanisms of adaptive resistance to MAPK pathway inhibition. Our 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 our strategy to achieve this goal are:
●
Obtain accelerated approval from the FDA for avutometinib plus defactinib in recurrent KRAS mt
LGSOC and continue to advance the regulatory pathway in Japan and Europe. On December 30, 2024,
the FDA accepted for review our NDA under the accelerated approval pathway for avutometinib in
combination with defactinib for treatment of patients with recurrent KRAS mt LGSOC with a PDUFA
action date of June 30, 2025.
●
Successfully build a commercial infrastructure in the United States for the potential launch of
avutometinib plus defactinib in recurrent KRAS mt LGSOC in the U.S. To further our position for a
potential mid-2025 launch in the United States, we previously announced a strategic collaboration with
IQVIA, Inc. (“IQVIA”) intended to leverage IQVIA’s infrastructure and commercialization solutions to
complement our launch strategy in recurrent KRAS mt LGSOC.
●
Execute on the confirmatory component of the RAMP 301 trial required by the FDA for the combination
of avutometinib and defactinib to potentially receive full approval for treatment of patients with recurrent
KRAS mt LGSOC. In addition, execute on the additional component of the RAMP 301 trial that has the
potential to support an expanded indication for avutometinib and defactinib regardless of KRAS
mutation status.
●
Expanding the indications in which avutometinib may be used alone and in combination with other
agents. We have entered into clinical collaboration agreements with Amgen to evaluate avutometinib +
defactinib in patients with KRAS G12C NSCLC in combination with Amgen’s KRAS G12C inhibitor
LUMAKRAS (sotorasib) in our RAMP 203 study. Further, avutometinib is being investigated in
combination with defactinib + GEMZAR/ABRAXANE in patients with frontline pancreatic cancer in a
trial entitled RAMP 205. Additionally, ISTs and preclinical studies are in progress to prioritize additional
cancer indications and approaches to expand the potential clinical development of our product
candidates. Avutometinib is being investigated in multiple ISTs including, but not limited to, in
combination with the anti-EGFR antibody cetuximab in KRAS mutant CRC, in combination with
abemacicilib and fulvestrant in breast cancer, in combination with everolimus (mTORi) in KRAS mt
NSCLC, and in combination with defactinib to assess efficacy in other gynecological cancers with
MAPK pathway mutations (e.g. high-grade and mucinous ovarian cancers, endometrial and cervical
cancers).
●
Assessing synergy of avutometinib and defactinib with other agents in preclinical models to prioritize for
clinical development. It is becoming well established that blockade of multiple nodes in the MAPK
pathway or co-targeting the MAPK pathway and relevant parallel pathways or resistance pathways may
be necessary for maximal depth and duration of anti-tumor response. We are assessing combinations of
avutometinib with (i) agents targeting other nodes in the MAPK pathway (e.g. KRAS G12C, KRAS
G12D, anti-EGFR and SOS1 inhibitors), (ii) agents targeting parallel pathways that may mediate
resistance to MAPK pathway inhibition (e.g. FAK, mTOR and CDK4/6 inhibitors), (iii)
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chemotherapy, and (iv) anti-PD-1. These studies may lead to discussions with other companies and
clinical investigators with the objective of assessing high priority combinations in the clinic.
●
Continue to advance three oncology discovery programs targeting RAS/MAPK pathway-driven cancers
with GenFleet including VS-7375, its potential best-in-class oral KRAS G12D (ON/OFF) inhibitor, to
create multiple opportunities to demonstrate transformative outcomes for people living with RAS/MAPK
pathway-driven cancers. In January 2025, we exercised the option to license from GenFleet VS-7375 in
the Verastem Territory. GenFleet’s IND for VS-7375/GFH375 was approved in China in June 2024, and
the first patient was dosed in a Phase 1/2 study in July 2024. We filed an IND for VS-7375 in the United
States in the first quarter of 2025 and plan to initiate a phase 1/2a trial in the United States in mid-2025.
●
Consider the acquisition or in-licensing of rights to additional agents. We may pursue the acquisition or
in-license of rights to additional agents from third parties that may supplement our internal programs and
allow us to initiate clinical development of a diverse pipeline of agents more quickly.
●
We may seek third-party collaborators for the eventual commercialization of our product candidates both
in the U.S. and around the world.
OUR PRODUCT CANDIDATES AND PIPELINE
Our pipeline product candidates currently consist of avutometinib in combination with defactinib and other
agents, and VS-7375 which continue to be evaluated in the clinic for the treatment of a variety of cancer types. The
following table represents the status of our pipeline:
1 FDA breakthrough therapy designation
2 FDA fast track designation
RAMP 301 Study = NCT06072781
RAMP 201 Study = NCT04625270
RAMP 203 Study = NCT05074810
RAMP 205 Study = NCT05669482
The status of our development programs in the table above represents the ongoing phase of development and
does not correspond to the completion of a particular phase. Drug development involves a high degree of risk and
investment, and the status, timing, and scope of our development programs are subject to change. Important
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factors that could adversely affect our drug development efforts are discussed in the “Risk Factors” section of this
Annual Report on Form 10-K.
Avutometinib and defactinib
Avutometinib is an orally available first-in-class, small molecule RAF/MEK clamp that inhibits
RAS/RAF/MEK, extracellular-signal-regulated-kinase (“ERK”) MAPK pathway which is involved in cell
proliferation, migration, transformation, and survival of tumor cells. In contrast to other MEK-only inhibitors,
avutometinib is a dual RAF/MEK clamp that blocks MEK kinase activity and induces the formation of dominant
negative RAF-MEK complexes preventing phosphorylation of MEK by ARAF, BRAF and CRAF. MEK-only
inhibitors (e.g. trametinib) may have limited efficacy because they induce MEK phosphorylation (“pMEK”) by
relieving ERK-dependent feedback inhibition of RAF. By inhibiting RAF-mediated phosphorylation of MEK,
avutometinib has the potential advantage of not inducing pMEK. This unique mechanism of avutometinib enables it to
inhibit ERK signaling more effectively and may confer enhanced therapeutic activity against MAPK pathway-driven
cancers.
Avutometinib inhibits MAPK pathway signaling and proliferation of tumor cell lines harboring MAPK
pathway alterations including KRAS, neuroblastoma rat sarcoma viral oncogene homolog (“NRAS”), and BRAF
mutations, among others. Avutometinib has demonstrated strong antitumor activity as monotherapy and in combination
with (i) agents targeting parallel pathways (e.g. inhibitors of FAK, CDK4/6 and mTOR), (ii) agents targeting other
nodes in the MAPK pathway (e.g. anti-EGFR, SOS1, KRAS G12C, and KRAS G12D inhibitors), (iii) chemotherapy,
and (iv) anti-PD-1.
Defactinib is an oral small molecule inhibitor of FAK and proline-rich tyrosine kinase (“PYK2”) that is
currently being evaluated as a potential combination therapy for various solid tumors. FAK and PYK2 are members of
the same family of nonreceptor protein tyrosine kinases that integrate signals from integrin and growth factor receptors
to regulate cell proliferation, survival, migration, and invasion. Defactinib disrupts malignant cells both directly and
through modulation of the tumor microenvironment. Preclinical research by our scientists and collaborators indicates
that FAK inhibition delays tumor progression in cancer models, which was associated with reduced stromal density
and immunosuppressive cell populations. Furthermore, activation of FAK is a putative adaptive resistance mechanism
to MAPK pathway inhibition, supporting the clinical evaluation of avutometinib in combination with defactinib for
treatment of cancers harboring MAPK pathway alterations.
The combination of avutometinib and defactinib is clinically active in patients with KRAS mt and KRAS wt
recurrent LGSOC and has received breakthrough designation from the FDA for the treatment of all patients with
recurrent LGSOC, regardless of KRAS status, after one or more prior lines of therapy including platinum-based
chemotherapy. Avutometinib, alone or in combination with defactinib, has received orphan drug designation for the
treatment of all patients with LGSOC in the United States. Defactinib has received orphan drug designation in ovarian
cancer in the United States, the European Union, and Australia. In addition, the FDA granted orphan drug designation
to avutometinib, in combination with defactinib, for the treatment of pancreatic cancer.
Phase 3 Study (known as RAMP (RAF and MEK Program) 301 Study) Confirmatory Trial of Avutometinib and
Defactinib in Recurrent LGSOC
The RAMP 301 study is an international collaboration between The GOG Foundation, Inc. and the European
Network of Gynaecological Oncological Trial groups. RAMP 301 is sponsored by Verastem and is the confirmatory
study required by the FDA for the combination of avutometinib and defactinib for the initial indication of recurrent
KRAS mt LGSOC to potentially receive full approval and has the potential to support an expanded indication
regardless of KRAS mutation status. In July 2023, we announced we finalized the design of the RAMP 301 trial and,
in December 2023, we initiated the RAMP 301 trial. The trial is expected to enroll 270 patients who will be
randomized to either the combination of avutometinib and defactinib or investigator’s choice chemotherapy (pegylated
liposomal doxorubicin or paclitaxel) or hormone therapy (letrozole or anastrozole). The primary endpoint is
progression free survival by blinded independent central review. Secondary endpoints include ORR, duration of
response, disease control rate, safety and tolerability, patient reported outcomes, and overall survival. RAMP 301 is a
global study with enrollment open in the United States, Australia, Canada, Europe United Kingdom, and Korea.
Enrollment is on track, and we are targeting full enrollment by the end of 2025.
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Phase 2 Study (known as RAMP (RAF and MEK Program) 201 Study) Registration-Directed Study of Avutometinib
and Defactinib in Recurrent LGSOC
The RAMP 201 study that was initiated in November 2020 is a registration-directed clinical study of
avutometinib and defactinib in patients with recurrent LGSOC.
RAMP 201 is an adaptive, three-part multicenter, parallel cohort, randomized, open-label trial to evaluate the
efficacy and safety of avutometinib alone and in combination with defactinib in patients with recurrent LGSOC. The
first part of the study (Part A) determined the selection of the go forward regimen, which was the combination of
avutometinib and defactinib versus avutometinib alone, based on overall response rates. The expansion phases of the
trial (Parts B and C) are evaluating the safety and efficacy of the go forward regimen of avutometinib 3.2 mg twice
weekly and defactinib 200 mg twice daily. The Part D portion of the trial is evaluating a low dose of avutometinib in
combination with defactinib.
In October 2024, the Japanese Gynecologic Oncology Group dosed the first patient in a Phase 2 trial called
RAMP 201J, evaluating the safety and efficacy of avutometinib in combination with defactinib in recurrent LGSOC in
Japan. We expect to report initial data from RAMP 201J in the second half of 2025.
Updated Phase 2 RAMP 201 Study Results in Patients with LGSOC (October 2024)
In October 2024, we announced updated results from the RAMP 201 study with a data cutoff of June 30,
2024 which were presented at the IGCS 2024 Annual Meeting in October 2024. The primary analysis of RAMP 201
study showed a confirmed ORR by blinded independent central review of 31% (34/109; 95% CI: 23-41) in all
evaluable patients with measurable disease with approximately 12 months of follow up. Among patients with KRAS
mt LGSOC, the confirmed ORR was 44% (25/57; 95% CI: 31-58) and for patients with KRAS wt LGSOC the
confirmed ORR was 17% (9/52; 95% CI: 8-30). The median duration of response was 31.1 months (95% CI: 14.8-
31.1) in all evaluable patients, with 31.1 months (95% CI: 14.8-31.1) in the KRAS mt population and 9.2 months (95%
CI: 5.5-NEi) in the KRAS wt population. The median progression-free survival was 12.9 months (95% CI: 10.9-20.2)
in all evaluable patients, with 22 months (95% CI: 11.1-36.6) in the KRAS mt population and 12.8 months (95% CI:
7.4-18.4) in the KRAS wt population. The disease control rate at six or more months was 61% in the total evaluable
population, 70% in KRAS mt population and 50% in KRAS wt population. The updated data continues to demonstrate
avutometinib in combination with defactinib is generally well-tolerated, with a 10% discontinuation rate due to
adverse events and no new safety signals were identified. The most common treatment-related adverse events (all
grades, grade ≥3) for the combination were nausea (67.0%, 2.6%), diarrhea (58.3%, 7.8%), and increased blood
creatine phosphokinase levels (60.0%, 24.3%).
Phase 1/2 Study (FRAME) Investigating the Combination of Avutometinib and Defactinib in Patients with KRAS
Mutant Cancers and Subsequent Analyses
The FRAME study is an open-label, investigator-initiated study that is designed to assess safety, dose
response and preliminary efficacy of the combination of avutometinib and defactinib in patients with KRAS mutant
solid tumors, including LGSOC (including KRAS mutant and KRAS wild-type), KRAS mutant NSCLC, KRAS G12V
NSCLC, KRAS mutant CRC, pancreatic cancer, and RAS/RAF mutant endometrial cancer. The FRAME study is
being led by Dr. Udai Banerji and is being conducted in the United Kingdom. In this study, avutometinib was
administered using a twice-weekly dose escalation schedule and was administered three out of every four weeks.
Defactinib was administered using a twice-daily dose escalation schedule, also three out of every four weeks. Dose
levels were assessed in three cohorts: cohort 1 (avutometinib 3.2 mg, defactinib 200 mg); cohort 2a (avutometinib 4
mg, defactinib 200 mg); and cohort 2b (avutometinib 3.2 mg, defactinib 400 mg). The recommended Phase 2 dose was
determined to be avutometinib 3.2 mg plus defactinib 200 mg.
Updated Phase 1/2 FRAME Study Results in Patients with LGSOC (September 2023)
In September 2023 we presented updated FRAME study efficacy data was presented at the 5th Annual RAS-
Target Development Summit in Boston Massachusetts (data cutoff July 2023) showing an ORR of 42% (11 of 26) in
evaluable patients with LGSOC. Among patients with KRAS mutant LGSOC (n=12), the ORR was 58% (7 of 12),
compared to patients with KRAS wild-type LGSOC (n=12), the ORR was 33% (4 of 12). Across all LGSOC
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patients, the median duration of response was 26.9 months (95% CI: 8.5-47.3) while median progression free survival
was 20.0 months (95% CI: 11.1-31.2). As of the July 2023 data cutoff date, 19% of patients (5 of 26) were still on
study treatment with a minimum follow-up of 17 months.
Phase 1/2 Trial (known as RAMP (RAF and MEK Program) 203 Study) of Avutometinib in Combination with Amgen’s
LUMAKRAS (sotorasib) in Patients with KRAS G12C NSCLC
In September 2021, we entered into a clinical collaboration agreement with Amgen to evaluate the
combination of avutometinib with Amgen’s KRAS G12C inhibitor LUMAKRAS in a Phase 1/2 study entitled RAMP
203. The Phase 1/2 trial began evaluating the safety, tolerability and efficacy of avutometinib in combination with
LUMAKRAS in patients with KRAS G12C NSCLC who have not been previously treated with a KRAS G12C
inhibitor, as well as in patients who have progressed on a KRAS G12C inhibitor. The trial built upon initial preclinical
data showing enhanced anti-tumor efficacy with the combination of LUMAKRAS (KRAS G12C inhibition) and
avutometinib (RAF/MEK inhibition) relative to either agent alone. In October 2023, we announced initial safety and
pharmacokinetics results, as well as preliminary efficacy results, from the RAMP 203 study which were presented at
the AACR-NCI-EORTC International Conference on Molecular Targets and Cancer Therapeutics in October 2023.
These preliminary results showed a confirmed ORR of 25% (3/12) across efficacy-evaluable patients and seen in both
KRAS G12C inhibitor resistant (14.3%; 1/7) and naïve (40%; 2/5) patients. In January 2024, the FDA granted fast
track designation for combination of avutometinib and LUMAKRAS for the treatment of patients with KRAS G12C-
mutant metastatic NSCLC who have received at least one prior systemic therapy and have not been previously treated
with a KRAS G12C inhibitor. The RAMP 203 study has progressed to the recommended Phase 2 dose of 4 mg
avutometinib in combination with 960 mg of LUMAKRAS for the doublet of avutometinib and LUMAKRAS. RAMP
203 is currently enrolling patients who have experienced disease progression on a KRAS G12C inhibitor in the dose
expansion phase (Part B) and is on track to complete by end of quarter 1 of 2025. Enrollment of patients without prior
G12C treatment to the initial doublet dose expansion phase has completed.
Based on emerging data demonstrating improved tumor regressions in KRAS G12C-mutant NSCLC
preclinical models when a FAK inhibitor is combined with a G12C inhibitor and avutometinib, defactinib was added to
the RAMP 203 study in new triplet cohorts in 2024. In December 2024, we announced the dose escalation cohort of
three patients completed the DLT evaluation period receiving the triplet combination of sotorasib 960 mg administered
daily on a continuous schedule and avutometinib 3.2 mg twice-weekly plus defactinib 200 mg twice-daily without
experiencing any DLTs. Avutometinib and defactinib are administered on a three out of four weeks schedule. We
expect to present an interim update of both the doublet and triplet data at a medical meeting in the second half of 2025.
Phase 1/2 Trial (known as RAMP (RAF and MEK Program) 205 Study) of Avutometinib Plus Defactinib in
Combination with Gemcitabine/Nab-Paclitaxel
In May 2022, we received the first “Therapeutic Accelerator Award” from PanCAN for up to $3.8 million.
The grant is supporting a Phase 1b/2 clinical trial of avutometinib in combination with defactinib entitled RAMP 205.
RAMP 205 is evaluating the safety, tolerability and efficacy of avutometinib and defactinib in combination with
GEMZAR
® (gemcitabine) and ABRAXANE
® (Nab-paclitaxel) in patients with previously untreated metastatic
adenocarcinoma of the pancreas. The RAMP 205 trial is evaluating whether combining avutometinib (to target mutant
KRAS which is mutated in more than 90% of pancreatic adenocarcinomas) and defactinib (to reduce stromal density
and adaptive resistance to avutometinib) to the standard GEMZAR/ABRAXANE regimen improves outcomes for
patients with pancreatic adenocarcinoma. In August 2022, PanCAN agreed to provide us with an additional $0.5
million for the collection and translational analysis of patient samples. The RAMP 205 trial is open and enrolling.
Combination dose evaluation is ongoing.
As of a data cut of May 14, 2024, we reported patients receiving the combination of avutometinib and
defactinib with gemcitabine and Nab-paclitaxel in dose level 1 cohort achieved a confirmed ORR of 83% (5/6), one
dose-limiting toxicity was observed in the dose level 1 cohort, and the dose level was subsequently cleared after
additional patients were enrolled. The initial interim results were presented at the American Society of Clinical
Oncology (“ASCO”) Annual Meeting in June 2024.
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A dose level “0” has been added to the RAMP 205 study protocol that evaluates 3.2 mg of avutometinib twice
a week, 200 mg of defactinib twice a day for three weeks out of every four weeks with 800 mg/m2 of gemcitabine and
100 mg/m2 of Nab-paclitaxel on a schedule of day 1, day 8, and day 15. All dose levels have been expanded to 12
patients each, including six additional patients recently enrolled to dose devel 1, where five out of six patients reported
an ORR at the ASCO 2024 Annual Meeting. In dose level 1, of the six additional patients, five remain on therapy and
continue to be monitored for response given the initial length of time to response. 59 of 60 patients have been treated
and enrollment is on track to be completed in quarter 1 of 2025. Based on the initial safety and efficacy data from these
cohorts, dose level 1 or 0 is anticipated to be chosen for expansion. Adverse events across all dose cohorts remained
generally consistent with the previously announced safety and tolerability profile, and no new safety signals have
emerged. We expect to present data at a medical meeting in mid-year of 2025 and we expect to choose a recommended
Phase 2 dose for trial expansion in first half of 2025.
INTELLECTUAL PROPERTY
We strive to protect the proprietary technology that we believe is important to our business, including seeking
and maintaining patents intended to cover our 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 our business. We also rely on trade secrets to protect aspects of our business that are not amenable to,
or that we do not consider appropriate for, patent protection.
We plan to continue to expand our intellectual property estate by filing patent applications directed to
compositions, methods of treatment and patient selection created or identified from our ongoing development of our
product candidates. Our success will depend on our ability to obtain and maintain patent and other proprietary
protection for commercially important technology, inventions and know-how related to our business, defend and
enforce our patents, preserve the confidentiality of our trade secrets and operate without infringing the valid and
enforceable patents and proprietary rights of third parties. We also rely on know-how, continuing technological
innovation and in-licensing opportunities to develop and maintain our proprietary position. We 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 us 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. We cannot predict whether the patent applications we are 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, we cannot be certain of the priority of inventions covered by pending patent
applications. Moreover, we 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
As of December 31, 2024, our patent portfolio includes issued and pending patent applications worldwide.
These patents and patent applications fall into three categories: (1) the RAF/MEK inhibition program; (2) the FAK
inhibition program and (3) KRAS inhibition program.
RAF/MEK inhibition program (avutometinib)
We have exclusively licensed a patent portfolio of four patent families that are owned or exclusively licensed
by Chugai or Chugai and therefore we have an exclusive option to exclusively license. The first patent family has
claims directed to the composition of matter of avutometinib, and includes granted patents in various jurisdictions,
such as the United States, Australia, Brazil, Canada, China, Europe (validated in several countries),
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Japan, Korea, Israel, and New Zealand that are expected to expire in February of 2027, without giving effect to any
potential patent term extensions and patent term adjustments and assuming payment of all appropriate maintenance,
renewal, annuity or other governmental fees. The second patent family has claims directed to methods of making
avutometinib and includes granted patents in Europe, Japan, and the United States that are expected to expire in
September of 2032, without giving effect to any potential patent term extensions and patent term adjustments and
assuming payment of all appropriate maintenance, renewal, annuity or other governmental fees. The third patent
family has claims directed to a dosing protocol of avutometinib, and includes a granted patent in the United States, that
is expected to expire in November of 2038, granted patents in Europe, Korea, and Taiwan, and pending patent
applications in various jurisdictions, such as the United States, Australia, Brazil, Canada, China, Europe, Hong Kong,
Japan, Mexico, and Singapore. Patents that issue in this family will have a statutory expiration date in May of 2038,
without giving effect to any potential patent term extensions and patent term adjustments and assuming payment of all
appropriate maintenance, renewal, annuity or other governmental fees. The fourth patent family covers a method of
using avutometinib in combination with a FAK inhibitor, such as defactinib, for treating a patient, and includes granted
patents in the United States and Taiwan that are expected to expire in September of 2040, without giving effect to any
potential patent term extensions and patent term adjustments and assuming payment of all appropriate maintenance,
renewal, annuity or other governmental fees, and pending patent applications in Australia, Brazil, Canada, China,
Eurasia, Europe, Hong Kong, Indonesia, Japan, Korea, Mexico, Malaysia, New Zealand, Singapore, and the United
States.
In addition to the issued and pending patent applications that are either exclusively licensed from Chugai or
which Chugai has an exclusive option to exclusively license, we own one patent family covering solid forms of
avutometinib, which includes one granted patent in the United States that is expected to expire in December of 2042
and a pending patent application in the United States, and pending foreign patent applications in various jurisdictions,
such as Australia, Canada, China, Europe, Japen, Korea, and Singapore, that if issued are expected to expire in May of
2043, without giving effect to any potential patent term extensions and patent term adjustments and assuming payment
of all appropriate maintenance, renewal, annuity or other governmental fees. We also own eight patent families and co-
own three patent families covering various methods of using a dual RAF/MEK inhibitor for treating a patient. Our
eight patent families have claims directed to using a dual RAF/MEK inhibitor in combination with various therapeutic
agents, such as a KRAS G12C inhibitors, KRAS G12D inhibitors, and immunotherapeutic agents for treating a patient,
and have patent applications pending in various jurisdictions, such as Australia, Canda, China, Europe, and the United
States, that if issued would expire between 2041 and 2043, without giving effect to any potential patent term
extensions and patent term adjustments and assuming payment of all appropriate maintenance, renewal, annuity or
other governmental fees. Our three co-owned patent families have claims directed to using a dual RAF/MEK inhibitor
in combination with other therapeutics and including a pending US provisional application and patent applications
pending in various jurisdictions, such as Australia, Canada, China, Europe, and the United States, that if issued are
expected to expire in 2042 to 2045, without giving effect to any potential patent term extensions and patent term
adjustments and assuming payment of all appropriate maintenance, renewal, annuity or other governmental fees.
FAK inhibition program (defactinib)
We have exclusively licensed a portfolio of patents owned by Pfizer, Inc. (“Pfizer”), which are directed to
FAK inhibitor compounds and methods of their use, for example in cancer. One patent family has claims directed to
the composition of matter of defactinib and has patents granted in various jurisdictions, such as Australia, Canada,
China, Europe (validated in various countries), Israel, Japan, Korea, Singapore, and the United States, that are
expected to expire in April of 2028, without giving effect to any potential patent term extensions and patent term
adjustments and assuming payment of all appropriate maintenance, renewal, annuity or other governmental fees. 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 and US
10,450,297 cover methods of making defactinib.
In addition to the issued patents exclusively licensed from Pfizer, we own or co-own three patent families
with claims directed to defactinib. One patent family is co-owned with Pfizer and has claims directed to compositions
(e.g., oral dosage forms) of defactinib and certain methods of use. This family contains granted patents in various
jurisdictions, such as Europe, Australia, Brazil, Hong Kong, Israel, Japan, Korea, Mexico, New Zealand,
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and South Africa and pending patent applications in the United States, Brazil, China, Europe, Israel, and Japan. The
patents and pending patent applications, if issued, are expected to expire in January of 2035, without giving effect to
any potential patent term extensions and patent term adjustments and assuming payment of all appropriate
maintenance, renewal, annuity or other governmental fees. We own a second patent family with claims directed to
methods of using a FAK inhibitor, such as defactinib, in combination with a MEK inhibitor for treating a patient.
Patents in this family have been granted in the United States, Japan, Hong Kong, and Europe, and are expected to
expire in February 2035, without giving effect to any potential patent term extensions and patent term adjustments and
assuming payment of all appropriate maintenance, renewal, annuity or other governmental fees. We own a third patent
family with claims directed to methods of using a FAK inhibitor, such as defactinib, in combination with an
immunotherapeutic agent. Patent applications in this family have been granted in the United States, Europe, Canada,
China, Israel, and Mexico, and are expected to expire in June 2036, without giving effect to any potential patent term
extensions and patent term adjustments and assuming payment of all appropriate maintenance, renewal, annuity or
other governmental fees. Patent applications in this family are also pending the United States, Australia, Canada,
China, Europe, Japan, and Singapore.
KRAS inhibition program (VS-7375)
We in-license a patent portfolio of KRAS inhibitors from GenFleet, which includes four patent families
directed to KRAS inhibitors. In regard to VS-7375, two patent families have claims directed to the composition of
matter of VS-7375. One patent family includes patent applications pending in various jurisdictions, such as the United
States, China, Europe, and Japan, that if issued would expire in March of 2042, without giving effect to any potential
patent term extensions and patent term adjustments and assuming payment of all appropriate maintenance, renewal,
annuity or other governmental fees. The other patent family includes a pending Patient Cooperation Treaty (“PCT”)
patent application, and patent applications claiming the benefit of this PCT application, if issued, are expected to
expire in September of 2043. We also co-own with GenFleet a priority patent application with claims directed to a
combination of a KRAS inhibitor and another therapeutic agent for treating a subject. Patent applications claiming the
benefit of this priority patent application, if issued, are expected to expire in November of 2046, without giving effect
to any potential patent term extensions and patent term adjustments and assuming payment of all appropriate
maintenance, renewal, annuity or other governmental fees.
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.
LICENSES AND COMMERCIAL AGREEMENTS
GenFleet Therapeutics Inc.
On August 24, 2023, we entered into the GenFleet Agreement, pursuant to which GenFleet granted us the
GenFleet Options. We may exercise our GenFleet Options on a program-by-program basis. In December 2023, we
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announced the lead oncology discovery program is VS-7375, a potential best-in-class oral and selective KRAS G12D
(ON/OFF) inhibitor.
In January 2025, we exercised our GenFleet Option with respect to VS-7375 and made a $6.0 million
payment to GenFleet. In January 2025, we entered into a supply agreement with GenFleet pursuant to which GenFleet
agreed to provide us with compound and licensed product for development use for programs we have exercised our
GenFleet Option.
We made an upfront payment of $2.0 million to GenFleet in September 2023 and will provide $1.5 million of
research support over the first three years of the GenFleet Agreement. In addition, pursuant to the GenFleet
Agreement, upon achievement of certain milestones, and upon the Company exercising its GenFleet Options, GenFleet
will be entitled to receive payments of up to $622.0 million, inclusive of (i) up to $154.0 million upon achievement of
certain development and commercialization milestones, (ii) up to $450.0 million upon achievement of certain sales
milestones, and (iii) up to $18.0 million upon exercise of all three GenFleet Options. We paid GenFleet a $3.0 million
milestone payment in the year ended December 31, 2024, upon GenFleet achieving a development milestone. We have
also agreed to pay GenFleet royalties on net sales of licensed products in the Verastem Territory ranging from the mid
to high single digits.
We may terminate the GenFleet Agreement in its entirety or on a program-by-program basis by
providing 90 days written notice to GenFleet. Either party may terminate the GenFleet Agreement in its entirety or on
a program-by-program and country-by-country basis, with 60 days’ written notice for the other party’s material breach
if such party fails to cure the breach. Either party may also terminate the GenFleet Agreement in its entirety upon
certain insolvency events involving the other party.
Secura Bio, Inc.
On August 10, 2020, we and Secura signed an Asset Purchase Agreement (the “Secura APA”) and on
September 30, 2020, the transaction closed.
Pursuant to the Secura APA, we sold to Secura our exclusive worldwide license for the research,
development, commercialization, and manufacture in oncology indications of products containing duvelisib. The sale
included certain intellectual property related to duvelisib in oncology indications, certain existing duvelisib inventory,
claims and rights under certain contracts pertaining to duvelisib. Pursuant to the Secura APA, Secura assumed all
operational and financial responsibility for activities that were part of the duvelisib oncology program, including all
commercialization efforts related to duvelisib in the United States and Europe, as well as our ongoing duvelisib clinical
trials. Further, Secura assumed all obligations with existing collaboration partners developing and commercializing
duvelisib, which include Yakult Honsha Co., Ltd. (“Yakult”), CSPC Pharmaceutical Group Limited (“CSPC”), and
Sanofi. Additionally, Secura assumed all royalty payment obligations due under the amended and restated license
agreement with Infinity Pharmaceuticals, Inc. (“Infinity”).
Pursuant to the terms of the Secura APA, Secura paid us an up-front payment of $70.0 million, and has agreed
to pay us (i) regulatory milestone payments up to $45.0 million, consisting of a payment of $35.0 million upon receipt
of regulatory approval of COPIKTRA in the United States for the treatment of peripheral T-cell lymphoma (“PTCL”)
and a payment of $10.0 million upon receipt of the first regulatory approval for the commercial sale of COPIKTRA in
the European Union for the treatment of PTCL, (ii) sales milestone payments of up to $50.0 million, consisting of
$10.0 million when total worldwide net sales of COPIKTRA exceed $100.0 million, $15.0 million when total
worldwide net sales of COPIKTRA exceed $200.0 million and $25.0 million when total worldwide net sales of
COPIKTRA exceed $300.0 million, (iii) low double-digit royalties on the annual aggregate net sales above $100.0
million in the United States, European Union, and the United Kingdom of Great Britain and Northern Ireland and
(iv) 50% of all royalty, milestone and sublicense revenue payments payable to Secura under our existing license
agreements with Sanofi, Yakult, and CSPC, and 50% of all royalty, and royalty payments payable to Secura under any
license or sublicense agreement entered into by Secura in certain jurisdictions. In the year ended December 31, 2024,
Secura achieved $100.0 million of total worldwide net sales of COPIKTRA which triggered a $10.0 million milestone
payment to us, which we received in July 2024.
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Secura’s royalty obligations remain in effect on a country-by-country basis upon the last to occur (a) 10
years from the first commercial sale of product containing duvelisib in such country or (b) the expiration of all valid
patent claims covering products containing duvelisib in such country.
In December 2021, Secura announced it had voluntarily withdrawn COPIKTRA (duvelisib) from the U.S. for
treatment of patients with relapsed or refractory follicular lymphoma after at least two prior systemic therapies. On
June 30, 2022, the FDA issued a drug safety communication warning that resulted from a clinical trial showing a
possible increased risk of death with COPIKTRA compared to another medicine to treat chronic blood cancer called
leukemia and lymphoma. The clinical trial also found that COPIKTRA was associated with a higher risk of serious
side effects, including infections, diarrhea, inflammation of the intestines and lungs, skin reactions, and high liver
enzyme levels in the blood. In September 2022, the FDA’s Oncologic Drug Advisory Committee (“ODAC”) voted
eight to four against COPIKTRA’s use in patients with relapsed or refractory chronic lymphocytic leukemia/ small
lymphocytic lymphoma after at least two prior therapies citing an unfavorable risk/benefit profile. In September 2022,
Secura’s sublicensee, Yakult, announced it had withdrawn its NDA for duvelisib in Japan.
Chugai Pharmaceutical Co., Ltd.
On January 7, 2020, we entered into a license agreement with Chugai (the “Chugai Agreement”) whereby
Chugai granted us an exclusive worldwide license for the development, commercialization, and manufacture of
products containing avutometinib.
Under the terms of the Chugai Agreement, we received an exclusive right to develop and commercialize
products containing avutometinib at our own cost and expense. In February 2020, we paid Chugai a non-refundable
payment of $3.0 million. We are further obligated to pay Chugai double-digit royalties on net sales of products
containing avutometinib, subject to reduction in certain circumstances. Chugai also obtained opt back rights to develop
and commercialize avutometinib (a) in the European Union, and (b) in Japan and Taiwan. Chugai has communicated
their intention not to exercise their opt back rights for Japan, Taiwan, or the European Union. Chugai and we have
made customary representations and warranties and have agreed to certain customary covenants, including
confidentiality and indemnification.
Unless earlier terminated, the Chugai Agreement will expire upon the fulfillment of our royalty obligations to
Chugai for the sale of any products containing the avutometinib, which royalty obligations expire on a product-by-
product and country-by-country basis, upon the last to occur, in each specific country, of (a) expiration of valid
licensed patent claims covering such product or (b) 12 years from the first commercial sale of such product in such
country.
We may terminate the Chugai Agreement upon 180 days’ written notice. Subject to certain limitations,
Chugai may terminate the Chugai Agreement upon written notice if we challenge any patent licensed by Chugai to us
under the Chugai Agreement. Either party may terminate the license agreement in its entirety with 120 days’ written
notice for the other party’s material breach if such party fails to cure the breach. Either party may also terminate the
Chugai Agreement in its entirety upon certain insolvency events involving the other party.
Pfizer Inc.
On July 11, 2012, we entered into a license agreement (the “Pfizer Agreement”) with Pfizer under which
Pfizer granted us 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. We have the right to grant sublicenses under the foregoing licensed rights, subject to certain
restrictions. We are solely responsible, at our own expense, for the clinical development of these products, which is to
be conducted in accordance with an agreed-upon development plan. We are also responsible for all manufacturing and
commercialization activities at our own expense. Pfizer provided us with an initial quantity of clinical supplies of one
of the products for an agreed upon price.
Upon entering into the Pfizer Agreement, we made a one-time cash payment to Pfizer in the amount of
$1.5 million and issued 16,001 shares of our common stock, adjusted for our Reverse Stock Split (defined herein).
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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. Our 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 us that covers
the product in that country.
The Pfizer Agreement will remain in effect until the expiration of all our royalty obligations to Pfizer,
determined on a product-by-product and country-by-country basis. So long as we are not in breach of the Pfizer
Agreement, we have 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 Pfizer
Agreement in connection with an insolvency event involving the other party or a material breach of the Pfizer
Agreement by the other party that remains uncured for a specified period of time. If the Pfizer 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 we believe that our technology, development
experience and scientific knowledge provide us with competitive advantages, we 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 we
successfully develop and commercialize will compete with existing therapies and new therapies that may become
available in the future.
Many of our 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 we do. Mergers and acquisitions in the pharmaceutical, biotechnology, and
diagnostic industries may result in even more resources being concentrated among a smaller number of our
competitors. These competitors also compete with us 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, our 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 our product candidates, if approved, are likely to be
their efficacy, safety, side effects, convenience, price, the level of generic competition, and the availability of
reimbursement from government and other third-party payors.
Our commercial opportunity could be reduced or eliminated if our 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 we may develop. Our competitors also may obtain FDA or other regulatory approval
for their products more rapidly than we may obtain approval for ours, which could result in our competitors
establishing a strong market position before we are able to enter the market. In addition, our 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 we are pursuing, and additional products are
expected to become available on a generic basis over the coming years. If our therapeutic product candidates are
approved, we 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, immunotherapy, 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. To the
extent our product candidates are ultimately used in combination with or as an adjunct to existing drug or other
therapies, our product candidates will not be competitive with them. Some of the currently approved
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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 our product candidates for which we obtain market approval.
RAF/MEK inhibition program
There are other companies with approved RAF and/or MEK inhibitors with FDA approval in the market and
companies working to develop RAF and/or MEK inhibitor. We believe the following companies have an approved
RAF and/or MEK inhibitor:
●
Novartis AG, which has received FDA approval for Taflinar
® (dabrafenib), a RAF inhibitor, in
combination with Mekinist
® (trametinib), a MEK inhibitor, for treatment of patients with unresectable or
metastatic melanoma with BRAF V600E or V600K mutations, adjuvant treatment for melanoma with
BRAF V600E or V600K mutations and involvement of lymph nodes following complete resection,
metastatic NSCLC with BRAF V600E or V600K mutations and locally advanced or metastatic
anaplastic thyroid cancer with BRAF V600E mutation;
●
Pfizer, through its acquisition of Array BioPharma, Inc, has received FDA approval for Braftovi
®
(encorafenib), a RAF inhibitor, in combination with Mektovi
® (binimetinib), a MEK inhibitor, for
treatment of patients with unresectable or metastatic melanoma with a BRAF V600E or V600K
mutation. In addition, the FDA has granted approval for Braftovi
® (encorafenib) in combination with
Erbitux
® (cetuximab), an anti-EGFR antibody for treatment of adult patients with metastatic CRC with a
BRAF V600E mutation;
●
Genentech, Inc. a member of the Roche Company, which has received FDA approval for Zelboraf
®
(vemurafenib), a RAF inhibitor, in combination with Cotellic
® (cobimetinib), a MEK inhibitor, to treat
patients with unresectable or metastatic melanoma with a BRAF V600E or V600K mutation;
●
AstraZeneca and Merck & Co., Inc. has received FDA approval for Koselugo
® (selumetinib), a MEK
inhibitor, for the treatment of pediatric patients two years of age and older with neurofibromatosis type 1
(NF1) who have symptomatic inoperable plexiform neurofibromas; and
●
Bristol Myers Squibb Company (“BMS”) through its acquisition of Mirati Therapeutics, Inc. has
received FDA approval for OjemdaTM (tovorafenib), a RAF kinase inhibitor, for patients six months of
age and older with relapsed or refractory pediatric low-grade glioma harboring a BRAF fusion or
rearrangement, or a BRAF V600 mutation.
FAK inhibition program
We understand that InxMed, a clinical-stage biotech company, is developing a FAK small molecule inhibitor
program. We believe InxMed is conducting Phase 1 and Phase 2 clinical trials of their product candidate IN10018.
KRAS Inhibitors
We understand that there are currently two companies with KRAS inhibitors with FDA approval in the
market. Amgen has received FDA approval for LUMAKRAS (sotorasib) for the treatment of adult patients with
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KRAS G12C locally advanced or metastatic NSCLC, who have received at least one prior systemic therapy and in
combination with panitumumab for adult patients with KRAS G12C-mutated metastatic colorectal cancer (mCRC), as
determined by an FDA-approved test, who have received prior fluoropyrimidine-, oxaliplatin-, and irinotecan-based
chemotherapy. BMS has received FDA approval for KRAZATI (adagrasib) for treatment of adult patients with KRAS
G12C locally advanced or metastatic NSCLC, who have received at least one prior systemic therapy and in
combination with cetuximab for adults with KRAS G12C-mutated locally advanced or metastatic colorectal cancer, as
determined by an FDA-approved test, who have received prior treatment with fluoropyrimidine-, oxaliplatin-, and
irinotecan-based chemotherapy. We are also aware of other companies in clinical trials developing compounds
targeting KRAS inhibition. Such companies include but are not limited to Amgen, BMS, Revolution Medicines, Inc.,
Quanta Therapeutics, Inc. BeiGene Ltd., Erasca, Inc. and Eli Lilly and Company.
Oncology
In addition, we are aware of companies that have inhibitors addressing our targets of interest some of which
have received FDA approval. For example, we understand that AbbVie Inc. has received FDA approval for Elahere for
treatment of adult patients with folate receptor alpha positive, platinum-resistant epithelial ovarian, fallopian tube, or
primary peritoneal cancer, who have received one to three prior systemic treatment regimens. Our competition also
includes hundreds of private and publicly traded companies that operate in the area of oncology but have therapeutics
with different mechanisms of action. The oncology market in general is highly competitive, with over 1,000 molecules
currently in clinical development.
MANUFACTURING
We contract with third parties for the manufacture of our product candidates for preclinical studies and
clinical trials, and commercial requirements we intend to continue to do so in the future. We currently work with one
contract manufacturing organization (“CMO”) for the manufacture of avutometinib drug product, one CMO for the
production of avutometinib drug substance, and one CMO for avutometinib drug packaging/labeling. For defactinib,
we currently have one CMO for the manufacture of drug product, one CMO for the production of drug substance, and
one CMO for drug packaging /labeling. We have supply agreements in place with these CMOs and we obtain drug
substance, drug product and packaging/labeling services from these CMOs on a purchase order basis. We may elect to
pursue relationships with other CMOs for manufacturing of drug product, drug substance, and packaging/labeling for
later-stage clinical trials, commercialization or for risk management. We are party to a supply agreement with GenFleet
pursuant to which we expect to obtain VS-7375 finished product from GenFleet. We do not own or operate, and
currently have no plans to establish, any manufacturing facilities. We have personnel with pharmaceutical development
and manufacturing experience who are responsible for the relationships with our CMOs.
All of our drug candidates are organic compounds of low molecular weight, generally called small
molecules. We select compounds not only on the basis of their potential efficacy and safety, but also for their ease of
synthesis and the reasonable cost of their starting materials. We expect to continue to develop drug candidates that can
be produced cost-effectively at third-party CMOs.
APPLICABLE LAWS AND GOVERNMENT REGULATION
Government authorities in the United States, at the federal, state and local level, and in other countries
extensively regulate, among other things, the research, development, testing, manufacture, including any
manufacturing changes, packaging, storage, recordkeeping, labeling, advertising, promotion, distribution, marketing,
post-approval monitoring and reporting, import and export of pharmaceutical products, such as those we are
developing.
United States drug approval process
In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act (“FDCA”)
and implementing regulations. The process of obtaining regulatory approvals and the subsequent compliance with
appropriate federal, state, local, and foreign statutes and regulations requires the expenditure of substantial time and
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financial resources. Failure to comply with the applicable United States requirements at any time during the product
development process, approval process or after approval, may subject an applicant to a variety of administrative or
judicial sanctions, such as the FDA’s refusal to approve pending applications, withdrawal of an approval, imposition of
a clinical hold, issuance of warning letters, product recalls, product seizures, total or partial suspension of production
or distribution injunctions, fines, refusals of government contracts, restitution, disgorgement of profits, or civil or
criminal penalties.
The process required by the FDA before a drug may be marketed in the United States generally involves the
following:
●
completion of preclinical laboratory tests, animal studies, and formulation studies in compliance with the
FDA’s good laboratory practice regulations and applicable requirements for the humane use of laboratory
animals or other applicable requirements;
●
submission to the FDA of an IND application, which must become effective before human clinical trials
may begin;
●
approval by an independent institutional review board (“IRB”) at each clinical site before each trial may
be initiated;
●
performance of adequate and well-controlled human clinical trials in accordance with good clinical
practices (“GCP”) and other clinical-trial related regulations to establish the safety and efficacy of the
proposed drug for each indication;
●
submission to the FDA of an NDA and payment of user fees for FDA review of NDA;
●
satisfactory completion of an FDA advisory committee review, if applicable;
●
satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at
which the product is produced to assess compliance with current good manufacturing practices
(“cGMP”) requirements and to assure that the facilities, methods, and controls are adequate to preserve
the drug’s identity, strength, quality and purity; and
●
FDA review and approval of the NDA.
The U.S. Supreme Court’s June 28, 2024 decision in Loper Bright Enterprises v. Raimondo overturned the
longstanding Chevron doctrine under which administrative agencies, including the FDA, were entitled to deference in
the interpretation of “ambiguous” federal statutes. The full impact of the Loper decision is not yet known, but it could
lead to significant changes in FDA regulation of our business and the pharmaceutical industry.
Preclinical studies
Before testing any product candidate in humans, the product candidate must undergo rigorous preclinical
testing. Preclinical studies include laboratory evaluation of product chemistry and formulation, as well as in vitro and
animal studies to assess the potential for adverse events and in some cases to establish a rationale for therapeutic use.
The conduct of preclinical studies is subject to federal regulations and requirements. An IND sponsor must submit the
results of the preclinical tests, together with manufacturing information, analytical data, any available clinical data or
literature and plans for clinical studies, among other things, to the FDA as part of an IND. Some long-term preclinical
testing, such as animal tests of reproductive adverse events and carcinogenicity, may continue after the IND is
submitted. An IND automatically becomes effective thirty days after receipt by the FDA, unless before that time the
FDA raises concerns or questions related to one or more proposed clinical trials and places the trial on clinical hold. In
such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin.
As a result, submission of an IND may not result in the FDA allowing clinical trials to commence.
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Clinical trials
Clinical trials involve the administration of the investigational new drug to human subjects under the
supervision of qualified investigators in accordance with GCP requirements, which include, among other things, the
requirement that all research subjects provide their informed consent in writing before their participation in any
clinical trial. Clinical trials are conducted under written study protocols detailing, among other things, the objectives of
the study, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated. A protocol for
each clinical trial and any subsequent protocol amendments must be submitted to the FDA as part of the IND. In
addition, an IRB at each institution participating in the clinical trial must review and approve the plan for any clinical
trial before it commences at that institution, and the IRB must conduct continuing review. The IRB must review and
approve, among other things, the study protocol and informed consent information to be provided to study subjects. An
IRB must operate in compliance with FDA regulations. Information about certain clinical trials must be submitted
within specific timeframes to the National Institutes of Health for public dissemination on their ClinicalTrials.gov
website.
Human clinical trials are typically conducted in three sequential phases, which may overlap or be combined:
●
Phase 1: The drug is initially introduced into healthy human subjects or patients with the target disease
or condition and tested for safety, dosage tolerance, absorption, metabolism, distribution, excretion and,
if possible, to gain an early indication of its effectiveness.
●
Phase 2: The drug is administered to a limited patient population to identify possible adverse effects and
safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to
determine dosage tolerance and optimal dosage.
●
Phase 3: The drug is administered to an expanded patient population in adequate and well-controlled
clinical trials to generate sufficient data to statistically confirm the efficacy and safety of the product for
approval, to establish the overall risk-benefit profile of the product and to provide adequate information
for the labeling of the product.
Post-approval trials, sometimes referred to as Phase 4 clinical trials, may be conducted after initial marketing
approval. These trials are used to gain additional experience from the treatment of patients in the intended therapeutic
indication and are commonly intended to generate additional safety data regarding use of the product in a clinical
setting. In certain instances, the FDA may mandate the performance of Phase 4 clinical trials as a condition of approval
of a NDA or, in certain circumstances, post-approval, such as in the case of drugs approved under the accelerated
approval pathway.
Progress reports detailing the results of the clinical trials must be submitted at least annually to the FDA and
more frequently if serious adverse events occur. Phase 1, Phase 2 and Phase 3 clinical trials may not be completed
successfully within any specified period, or at all. Furthermore, the FDA or the sponsor may suspend or terminate a
clinical trial at any time on various grounds, including a finding that the research subjects are being exposed to an
unacceptable health risk. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the
clinical trial is not being conducted in accordance with the IRB’s requirements or if the drug has been associated with
unexpected serious harm to patients.
Marketing approval
Assuming successful completion of the required clinical testing, the results of the preclinical and clinical
studies, together with detailed information relating to the product’s chemistry, manufacture, controls and proposed
labeling, among other things, are submitted to the FDA as part of an NDA requesting approval to market the product
for one or more indications. Under federal law, the submission of most NDAs is additionally subject to a substantial
application user fee, scheduled in 2025 to exceed $4.3 million, and the sponsor of an approved NDA is also subject to
annual program fees, based on the number of approved products. These fees are typically adjusted annually. User fee
statutory authority expires every five years. The Prescription Drug User Fee Act was re-authorized for an
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additional five years in 2022 until 2027. Fee waivers are available in certain circumstances, including a waiver of the
application fee for an orphan drug application.
The FDA conducts a preliminary review of all NDAs within the first 60 days after submission before
accepting them for filing to determine whether they are sufficiently complete to permit substantive review. The FDA
may request additional information rather than accept an NDA for filing. In this event, the application must be
resubmitted with the additional information. The resubmitted application is also subject to review before the FDA
accepts it for filing. Once the submission is accepted for filing, the FDA begins an in-depth substantive review. The
FDA has agreed to specified performance goals in the review of NDAs. Under these goals, the FDA has committed to
review most such applications for non-priority products within 10 months after accepting the application for filing, and
most applications for priority review products, that is, drugs that the FDA determines represent a significant
improvement over existing therapy, within six months after accepting the application for filing. The review process
may be extended by the FDA for three additional months to consider certain information or clarification regarding
information already provided in the submission. The FDA may also refer applications for novel drugs or products that
present difficult questions of safety or efficacy to an advisory committee, typically a panel that includes clinicians and
other experts, for review, evaluation and a recommendation as to whether the application should be approved. The
FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully
when making decisions.
Under the Pediatric Research Equity Act of 2003, as amended and reauthorized by the Food and Drug
Administration Amendments Act of 2007 (“FDAAA”), an NDA or supplement to an NDA must contain data that are
adequate to assess the safety and effectiveness of the drug for the claimed indications in all relevant pediatric
subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe
and effective. The FDA may, on its own initiative or at the request of the applicant, grant deferrals for submission of
some or all pediatric data until after approval of the product for use in adults, or full or partial waivers from the
pediatric data requirements. Unless otherwise required by regulation, the pediatric data requirements do not apply to
products with orphan drug designation.
Before approving an NDA, the FDA typically will inspect the facility or facilities where the product is
manufactured. The FDA will not approve an application unless it determines that the manufacturing processes and
facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product
within required specifications. In addition, before approving an NDA, the FDA will typically inspect one or more
clinical sites to assure compliance with GCP and integrity of the clinical data submitted.
The testing and approval process requires substantial time, effort and financial resources, and each may take
many years to complete. Data obtained from clinical activities are not always conclusive and may be susceptible to
varying interpretations, which could delay, limit or prevent regulatory approval. The FDA may not grant approval on a
timely basis, or at all. We may encounter difficulties or unanticipated costs in our efforts to develop our product
candidates and secure necessary governmental approvals, which could delay or preclude us from marketing our
products.
After the FDA’s evaluation of the NDA and inspection of the manufacturing facilities, the FDA may issue an
approval letter or a complete response letter. An approval letter authorizes commercial marketing of the drug with
specific prescribing information for specific indications. A complete response letter generally outlines the deficiencies
in the submission and may require substantial additional testing or information in order for the FDA to reconsider the
application. If the FDA issues a complete response letter, the applicant may either resubmit the NDA, addressing all of
the deficiencies identified in the letter, or withdraw the application If and when those deficiencies have been addressed
to the FDA’s satisfaction in a resubmission of the NDA, the FDA will issue an approval letter. The FDA has committed
to reviewing such resubmissions in two or six months depending on the type of information included. Even with
submission of this additional information, the FDA ultimately may decide that the application does not satisfy the
regulatory criteria for approval and refuse to approve the NDA.
Even if the FDA approves a product, it may limit the approved indications for use for the product, require that
contraindications, warnings or precautions be included in the product labeling, require that post-approval studies,
including Phase 4 clinical trials, be conducted to further assess a drug’s safety after approval, require testing and
surveillance programs to monitor the product after commercialization, or impose other conditions, including
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distribution restrictions or other risk management mechanisms, which can materially affect the potential market and
profitability of the product. The FDA may prevent or limit further marketing of a product based on the results of post-
market studies or surveillance programs. After approval, some types of changes to the approved product, such as
adding new indications, manufacturing changes and additional labeling claims, are subject to further testing
requirements and FDA review and approval.
Expedited Development and Review Programs
The FDA has various programs, including fast track designation, breakthrough therapy designation, priority
review and accelerated approval, which are designed to expedite or facilitate the process for the development and FDA
review of drugs and biologics that are intended for the treatment of serious or life threatening diseases or conditions
and demonstrate the potential to address unmet medical needs. The purpose of these programs is to provide important
new drugs and biologics to patients earlier than under standard FDA review procedures.
Fast Track Designation. To be eligible for a fast track designation, the FDA must determine, based on the
request of a sponsor, that the product is intended for the treatment of a serious or life-threatening condition for which
there is no effective treatment, and demonstrates the potential to address unmet medical needs for the condition. Under
the fast track program, the sponsor of a new drug candidate may request the FDA to designate the product for a
specific indication as a fast track product concurrent with or after the filing of the IND for the product candidate. The
FDA must determine if the product candidate qualifies for fast track designation within 60 days after receipt of the
sponsor’s request.
In addition to other benefits, such as the ability to use surrogate endpoints and have greater interactions with
the FDA, the FDA may initiate review of sections of a fast track product’s NDA before the application is complete.
This rolling review is available if the applicant provides and the FDA approves a schedule for the submission of the
remaining information and the applicant pays applicable user fees. However, the FDA’s time period goal for reviewing
a fast track application does not begin until the last section of the NDA is submitted. In addition, the fast track
designation may be withdrawn by the FDA if the FDA believes that the designation is no longer supported by data
emerging in the clinical trial process.
Breakthrough Designation. A drug may be designated as a breakthrough therapy if the drug is intended to
treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the drug may
demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints. The
breakthrough therapy designation provides all the benefits of the fast track program, including the eligibility for rolling
review. The FDA may take certain administrative actions with respect to breakthrough therapies, including holding
meetings with the sponsor throughout the development process, providing timely advice to the product sponsor
regarding development and approval, involving more senior staff in the review process, assigning a cross-disciplinary
project lead for the review team and taking other steps to aid sponsors in designing the clinical trials. Although
breakthrough designation does not affect the regulatory standards for approval, the frequent interactions with the FDA
may facilitate a more efficient development program. In addition, the breakthrough designation may be withdrawn by
the FDA if the FDA believes that the drug no longer meets the conditions for qualification.
Priority Review. Under FDA policies, a product candidate may be eligible for priority review, or review
within a six-month time frame, compared to the ten-month time frame for a standard review, from the time a complete
application is accepted for filing. Products regulated by the FDA’s Center for Drug Evaluation and Research (CDER)
are eligible for priority review if they provide a significant improvement compared to marketed products in the
treatment, diagnosis or prevention of a disease.
Accelerated Approval. Under the FDA’s accelerated approval regulations, the FDA may approve a drug for a
serious or life-threatening illness that provides meaningful therapeutic benefit to patients over existing treatments
based upon a surrogate endpoint that is reasonably likely to predict clinical benefit. In clinical trials, a surrogate
endpoint is a measurement of laboratory or clinical signs of a disease or condition that substitutes for a direct
measurement of how a patient feels, functions or survives. Surrogate endpoints can often be measured more easily or
more rapidly than clinical endpoints. A product candidate approved on this basis is subject to rigorous post-marketing
compliance requirements, including the completion of one or more Phase 4 or post-approval clinical trials to confirm
the effect on the clinical endpoint. Failure to conduct required post-approval studies or confirm a
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clinical benefit during post-marketing studies, would allow the FDA to withdraw the drug from the market on an
expedited basis. The Food and Drug Omnibus Reform Act of 2022 (“FDORA”) signed by President Biden on
December 29, 2022 as part of the Consolidated Appropriations Act, 2023 (H.R. 2617) includes numerous reforms to
the accelerated approval process for drugs and biologics and enables FDA to require, as appropriate, that a post-
approval study be underway prior to granting accelerated approval. FDORA also expands the expedited withdrawal
procedures available to FDA to allow the agency to use expedited procedures if a sponsor fails to conduct any required
post-approval study of the product with due diligence.” FDORA also adds the failure of a sponsor of a product
approved under accelerated approval to conduct with due diligence any required post-approval study with respect to
such product or to submit timely reports with respect to such product to the list of prohibited acts in the Food, Drug,
and Cosmetic Act. All promotional materials for drug candidates approved under accelerated regulations are subject to
prior review by the FDA.
Orphan drugs
Under the Orphan Drug Act, the FDA may grant orphan drug designation to drugs intended to treat a rare
disease or condition, which is generally defined as a disease or condition that affects fewer than 200,000 individuals in
the United States. Orphan drug designation must be requested before submitting an NDA. After the FDA grants orphan
drug designation, the generic identity of the drug and its potential orphan use are disclosed publicly by the FDA.
Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and
approval process. The first NDA applicant to receive FDA approval for a particular active ingredient to treat a
particular disease with FDA orphan drug designation is entitled to a seven-year exclusive marketing period in the
United States for that product, for that indication. During the seven-year exclusivity period, the FDA may not approve
any other applications to market the same drug for the same orphan indication, except in limited circumstances, such
as a showing of clinical superiority to the product with orphan drug exclusivity in that it is shown to be safer, more
effective or makes a major contribution to patient care. Orphan drug exclusivity does not prevent the FDA from
approving a different drug for the same disease or condition, or the same drug for a different disease or condition. The
FDA has historically taken the position that the scope of orphan exclusivity aligns with the approved indication or use
of a product, rather than the disease or condition for which the product received orphan designation. However, on
September 30, 2021, the U.S. Court of Appeals for the 11th Circuit issued a decision in Catalyst Pharms., Inc. v.
Becerra holding that the scope of orphan drug exclusivity must align with the disease or condition for which the
product received orphan designation, even if the product’s approval was for a narrower use or indication. It remains to
be seen how this decision affects orphan drug exclusivity going forward. Among the other benefits of orphan drug
designation are tax credits for certain research and a waiver of the NDA application user fee.
The Hatch Waxman Act
Abbreviated New Drug Applications
In seeking approval for a drug through an NDA, applicants are required to list with the FDA each patent with
claims that cover the applicant’s product or a method of using the product. Upon approval of a drug, each of the
patents listed in the application for the drug is then published in the FDA’s Approved Drug Products with Therapeutic
Equivalence Evaluations, commonly known as the Orange Book. Drugs listed in the Orange Book can, in turn, be cited
by potential competitors in support of approval of an abbreviated New Drug Application (“ANDA”). Generally, an
ANDA provides for marketing of a drug product that has the same active ingredients in the same strengths, dosage
form and route of administration as the listed drug and has been shown to be bioequivalent through in vitro or in vivo
testing or otherwise to the listed drug. ANDA applicants are not required to conduct or submit results of preclinical or
clinical tests to prove the safety or effectiveness of their drug product, other than the requirement for bioequivalence
testing. Drugs approved in this way are commonly referred to as “generic equivalents” to the listed drug and can often
be substituted by pharmacists under prescriptions written for the original listed drug.
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The ANDA applicant is required to certify to the FDA concerning any patents listed for the approved product
in the FDA’s Orange Book, except for patents covering methods of use for which the ANDA applicant is not seeking
approval. Specifically, the applicant must certify with respect to each patent that:
●
the required patent information has not been filed;
●
the listed patent has expired;
●
the listed patent has not expired, but will expire on a particular date and approval is sought after patent
expiration; or
●
the listed patent is invalid, unenforceable or will not be infringed by the new product.
A certification that the new product will not infringe the already approved product’s listed patents or that such
patents are invalid or unenforceable is called a Paragraph IV certification. If the applicant does not challenge the listed
patents or indicate that it is not seeking approval of a patented method of use, the ANDA application will not be
approved until all the listed patents claiming the referenced product have expired.
If the ANDA applicant has provided a Paragraph IV certification to the FDA, the applicant must also send
notice of the Paragraph IV certification to the NDA and patent holders once the ANDA has been accepted for filing by
the FDA. The NDA and patent holders may then initiate a patent infringement lawsuit in response to the notice of the
Paragraph IV certification. The filing of a patent infringement lawsuit within 45 days after the receipt of a
Paragraph IV certification automatically prevents the FDA from approving the ANDA until the earlier of 30 months
after the NDA or patent holder’s receipt of the Paragraph IV certification, expiration of the patent, settlement of the
lawsuit or a decision in the infringement case that is favorable to the ANDA applicant.
The ANDA also will not be approved until any applicable non-patent exclusivity period, such as exclusivity
for obtaining approval of a new chemical entity, for the referenced product has expired. Federal law provides a period
of five years following approval of a drug containing no previously approved active moiety during which ANDAs for
generic versions of those drugs cannot be submitted unless the submission contains a Paragraph IV challenge to a
listed patent, in which case the submission may be made four years following the original product approval. Federal
law provides for a period of three years of exclusivity during which the FDA cannot grant effective approval of an
ANDA for the conditions of use covered by the exclusivity, but FDA requires as a condition of approval new clinical
trials conducted by or for the sponsor. This three-year exclusivity period often protects changes to a previously
approved drug product, such as a new dosage form, route of administration, combination or indication. Under the Best
Pharmaceuticals for Children Act, federal law also provides that periods of patent and non-patent marketing
exclusivity listed in the Orange Book for a drug may be extended by six months if the NDA sponsor conducts pediatric
studies identified by the FDA in a written request. For written requests issued by the FDA after September 27, 2007,
the date of enactment of the FDAAA, the FDA must grant pediatric exclusivity no later than nine months prior to the
date of expiration of patent or non-patent exclusivity in order for the six-month pediatric extension to apply to that
exclusivity period.
Combination Therapy
Combination therapy is a treatment modality that involves the use of two or more drugs to be used in
combination to treat a disease or condition. If those drugs are combined in one dosage form, such as one pill, that is
known as a fixed dose combination product and it is reviewed pursuant to the FDA’s Combination Rule at 21 CFR
300.50. The Rule provides that two or more drugs may be combined in a single dosage form when each component
contributes to the claimed effects and the dosage of each component (amount, frequency, duration) is such that the
combination is safe and effective for a significant patient population requiring such concurrent therapy as defined in
the labeling for the drug.
But not all combination therapy falls under the category of a fixed dose combination. For example, the FDA
recognizes that two drugs in separate dosage forms and in separate packaging, that otherwise might be administered as
monotherapy for an indication, also may be used in combination for the same indication. In 2013, the FDA issued
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guidance to assist sponsors that were developing the range of combination therapies that fall outside the category of
fixed dose combinations. That guidance provides recommendations and advice on such topics as: (1) assessment at the
outset whether two or more therapies are appropriate for use in combination; (2) guiding principles for nonclinical and
clinical development of the combination; (3) options for regulatory pathways to seek marketing approval of the
combination; and (4) post-marketing safety monitoring and reporting obligations. Given the wide range of potential
combination therapy variations, the FDA indicated it intends to assess each potential combination on a case-by case
basis and encouraged sponsors to engage in early and regular consultation with the relevant review division at the
agency throughout the development process for its proposed combination.
Combination products
The FDA regulates combinations of products that cross FDA centers, such as drug, biologic or medical device
components that are physically, chemically or otherwise combined into a single entity, as a combination product. The
FDA center with primary jurisdiction for the combination product will take the lead in the premarket review of the
product, with the other center consulting or collaborating with the lead center.
The FDA’s Office of Combination Products (“OCP”) determines which center will have primary jurisdiction
for the combination product based on the combination product’s “primary mode of action.” A mode of action is the
means by which a product achieves an intended therapeutic effect or action. The primary mode of action is the mode of
action that provides the most important therapeutic action of the combination product, or the mode of action expected
to make the greatest contribution to the overall intended therapeutic effects of the combination product.
Often it is difficult for the OCP to determine with reasonable certainty the most important therapeutic action
of the combination product. In those difficult cases, the OCP will consider consistency with other combination
products raising similar types of safety and effectiveness questions, or which center has the most expertise to evaluate
the most significant safety and effectiveness questions raised by the combination product.
A sponsor may use a voluntary formal process, known as a Request for Designation, when the product
classification is unclear or in dispute, to obtain a binding decision as to which center will regulate the combination
product. If the sponsor objects to that decision, it may request that the agency reconsider that decision.
Other regulatory requirements
Any drug manufactured or distributed by us pursuant to FDA approvals would be subject to extensive and
continuing regulation by the FDA, including, among other things, requirements relating to recordkeeping, periodic
reporting, product sampling and distribution, advertising and promotion and reporting of adverse experiences with the
product. After approval, most changes to the approved product, such as adding new indications or other labeling
claims are subject to prior FDA review and approval.
The FDA may impose a number of post-approval requirements as a condition of approval of an NDA. For
example, the FDA may require post-marketing testing, including Phase 4 clinical trials, and surveillance to further
assess and monitor the product’s safety and effectiveness after commercialization. Regulatory approval of oncology
products often requires that patients in clinical trials be followed for long periods to determine the overall survival
benefit of the drug.
In addition, drug manufacturers and other entities involved in the manufacture and distribution of approved
drugs are required to register their establishments with the FDA and state agencies and are subject to periodic
unannounced inspections by the FDA and these state agencies for compliance with cGMP requirements. Changes to
the manufacturing process are strictly regulated and often require prior FDA approval before being implemented. FDA
regulations also require investigation and correction of any deviations from cGMP and impose reporting and
documentation requirements upon us and any third-party manufacturers that we may decide to use. Accordingly,
manufacturers must continue to expend time, money and effort in the areas of production and quality control to
maintain cGMP compliance.
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Once an approval is granted, the FDA may withdraw the approval if compliance with regulatory requirements
and standards is not maintained or if problems occur after the product reaches the market. Later discovery of
previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with
manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved
labeling to add new safety information, imposition of post-market studies or clinical trials to assess new safety risks or
imposition of distribution or other restrictions under a Risk Evaluation and Mitigation Strategy program. Other
potential consequences include, among other things:
●
restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from
the market or product recalls;
●
fines, warning letters or holds on post-approval clinical trials;
●
refusal of the FDA to approve pending applications or supplements to approved applications, or
suspension or revocation of product license approvals;
●
product seizure or detention, or refusal to permit the import or export of products; or
●
consent decrees, corporate integrity agreements, injunctions or the imposition of civil or criminal
penalties.
The FDA strictly regulates marketing, labeling, advertising and promotion of products that are placed on the
market. Drugs may be promoted only for the approved indications and in accordance with the provisions of the
approved label. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off
label uses, and a company that is found to have improperly promoted off label uses may be subject to significant
liability.
Additional provisions
Physician drug samples
As part of the sales and marketing process, pharmaceutical companies frequently provide samples of
approved drugs to physicians. The Prescription Drug Marketing Act (“PDMA”) imposes requirements and limitations
upon the provision of drug samples to physicians, as well as prohibits states from licensing distributors of prescription
drugs unless the state licensing program meets certain federal guidelines that include minimum standards for storage,
handling and record keeping. In addition, the PDMA sets forth civil and criminal penalties for violations.
Other Healthcare Laws
In the United States, pharmaceutical manufacturers are subject to numerous other federal, state and local laws
designed to, for example, prevent fraud and abuse; prevent the causing of false claims to be submitted to government
healthcare programs; promote transparency in interactions with others in the healthcare industry; regulate pricing of
drugs; require reporting of drug prices and payment of rebates or offering of discounts to certain government programs
and public and private payors; and protect the privacy of individual information, some of which may apply only if and
when we have marketed products. These laws are enforced by various federal and state enforcement authorities,
including but not limited to, the U.S. Department of Justice, and individual U.S. Attorney offices within the
Department of Justice, the U.S. Department of Health and Human Services, or HHS, HHS’ various divisions,
including but not limited to, the Centers for Medicare & Medicaid Services, or CMS, and the Office of Inspector
General, and state boards of pharmacy.
We may be subject to various federal and state laws pertaining to health care “fraud and abuse,” including
anti-kickback laws and false claims laws, for activities related to past and future sales of any products reimbursable by
third party payors such as federal health care programs (including Medicare and Medicaid) or, in some cases,
commercial health plans. Anti-kickback laws generally prohibit a pharmaceutical manufacturer from soliciting,
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offering, receiving, or paying anything of value to generate business, including the purchase, prescription or use of a
particular drug. False claims laws generally prohibit anyone from knowingly and willingly presenting, or causing to be
presented, any claims for payment for reimbursed drugs or services to third-party payors that are false or fraudulent.
Laws and regulations have also been enacted by the federal government and various states to regulate the
sales and marketing practices of pharmaceutical manufacturers with marketed products. The laws and regulations
generally limit financial interactions between manufacturers and health care providers; require manufacturers to adopt
certain compliance standards; require disclosure to the government and public of financial interactions; require
disclosure of marketing expenditures or pricing information, regulate drug pricing and/or require the registration of
pharmaceutical sales representatives. Many of these laws and regulations contain ambiguous requirements or require
administrative guidance for implementation. Given the lack of clarity in laws and their implementation, any future
activities (if we obtain approval and/or reimbursement from federal healthcare programs for our product candidates)
could be subject to challenge.
The distribution of drugs and biological products is subject to additional requirements and regulations,
including extensive record-keeping, licensing, storage and security requirements intended to prevent the unauthorized
sale of pharmaceutical products.
Federal and state consumer protection and unfair competition laws and regulations broadly regulate
marketplace activities and that potentially harm consumers and could apply to the activities of pharmaceutical
manufacturers.
We may be subject to data privacy and security laws in the various jurisdictions in which we operate, obtain
or store personally identifiable information. Numerous U.S. federal and state laws govern the collection, use,
disclosure and storage of personal information. Various foreign countries also have, or are developing, laws governing
the collection, use, disclosure and storage of personal information. Globally, there has been an increasing focus on
privacy and data protection issues that may affect our business.
Efforts to ensure that our activities comply with applicable healthcare laws and regulations will involve
substantial costs. Given the breadth of the laws and regulations, limited guidance for certain laws and regulations and
evolving government interpretations of the laws and regulations, governmental authorities may possibly conclude that
our business practices may not comply with such laws. If our operations are found to be in violation of any of these
laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and
administrative penalties, damages, fines, exclusion from government funded healthcare programs, such as Medicare
and Medicaid, and the curtailment or restructuring of our operations. Further, defending against any such actions can
be costly, time-consuming and may require significant personnel resources. Therefore, even if we are successful in
defending against any such actions that may be brought against us, our business may be impaired.
Foreign regulation
In order to market any product outside of the United States, we would need to comply with numerous and
varying regulatory requirements of other countries regarding safety and efficacy and governing, among other things,
clinical trials, marketing authorization, commercial sales and distribution of our products. Regardless of our current
FDA approval or any future FDA approvals we may obtain for a product, we would need to obtain the necessary
approvals by the comparable regulatory authorities of foreign countries before we can commence clinical trials or
marketing of the product in those countries. The approval process varies from country to country and can involve
additional product testing and additional administrative review periods. The time required to obtain approval in other
countries might differ from and be longer than that required to obtain FDA approval. Regulatory approval in one
country does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one
country may negatively impact the regulatory process in others.
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Pharmaceutical coverage, pricing and reimbursement
Significant uncertainty exists as to the coverage and reimbursement status of new drug products. Sales of our
product candidates, if approved, will depend, in part, on the extent to which the costs of the products will be covered
by third-party payors, including government health programs such as Medicare and Medicaid, commercial health
insurers and managed care organizations. The process for determining whether a payor will provide coverage for a
drug product may be separate from the process for setting the price or reimbursement rate that the payor will pay for
the drug product once coverage is approved. Third-party payors may limit coverage to specific drug products on an
approved list, or formulary, which might not include all of the approved drugs for a particular indication.
In order to secure coverage and reimbursement for any product that might be approved for sale, we may need
to conduct expensive pharmacoeconomic studies in order to demonstrate the medical necessity and cost effectiveness
of the product, in addition to the costs required to obtain FDA or other comparable regulatory approvals. We may also
need to provide discounts to purchasers, private health plans or government healthcare programs. Our product
candidates may not be considered medically necessary or cost effective. Even if covered, third-party payors may seek
to control utilization of our products through various mechanisms (e.g., requiring a prescriber to obtain prior
authorization from a health plan before the product will be covered by the health plan or establishing patient copays
and deductibles that encourage use of other products over our products). A payor’s decision to provide coverage for a
drug product does not imply that an adequate reimbursement rate will be approved. Third-party reimbursement may
not be sufficient to enable us to maintain price levels high enough to realize an appropriate return on our investment in
product development. Additionally, coverage and reimbursement for drug products can differ significantly from payor
to payor. One third-party payor’s decision to cover a particular drug product or service does not ensure that other
payors will also provide coverage for the drug product or will provide coverage at an adequate reimbursement rate.
Within the United States, FDA-approved drugs could potentially be covered by various government health
benefit programs as well as purchased by government agencies. The participation in such programs or the sale of
products to such agencies is subject to regulation. The marketability of any of our approved products may suffer if the
government and third-party payors fail to provide adequate coverage and reimbursement.
Medicaid is a joint federal and state program that is administered by the states for low income and disabled
beneficiaries. Under the Medicaid Drug Rebate Program, participating manufacturers are required to pay a rebate for
each unit of product reimbursed by the state Medicaid programs. The amount of the rebate for each product is set by
law and may be subject to an additional discount if certain pricing increases more than inflation.
Medicare is a federal program that is administered by the federal government that covers individuals aged 65
and over as well as those with certain disabilities. Oral drugs may be covered under Medicare Part D. Medicare Part D
provides coverage to enrolled Medicare patients for self-administered drugs (i.e., drugs that do not need to be injected
or otherwise administered by a physician). Medicare Part D is administered by private prescription drug plans
approved by the U.S. government and each drug plan establishes its own Medicare Part D formulary for prescription
drug coverage and pricing, which the drug plan may modify from time-to-time. The prescription drug plans negotiate
pricing with manufacturers and may condition formulary placement on the availability of manufacturer discounts.
Manufacturers with marketed brand name drugs have been required to provide discounts on brand name prescription
drugs utilized by Medicare Part D beneficiaries. Under a new manufacturer discount drug program effective January 1,
2025, manufacturers pay 10% of the allowed cost of the drug after a Medicare beneficiary has met the standard
deductible until the beneficiary reaches the annual out-of-pocket cap ($2,000) and then 20% of the allowed cost of the
drug.
Drug products are subject to discounted pricing when purchased by federal agencies via the Federal Supply
Schedule (“FSS”). FSS participation is required for a drug product to be covered and reimbursed by certain federal
agencies and for coverage under Medicaid, Medicare Part B and the Public Health Service (“PHS”) pharmaceutical
pricing program. FSS pricing is negotiated periodically with the Department of Veterans Affairs. FSS pricing is
intended not to exceed the price that a manufacturer charges its most-favored non-federal customer for its product. In
addition, prices for drugs purchased by the Veterans Administration, Department of Defense (including drugs
purchased by military personnel and dependents through the TRICARE retail pharmacy program), Coast Guard, and
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PHS are subject to a cap on pricing (known as the “federal ceiling price”) and may be subject to an additional discount
if pricing increases more than the rate of inflation.
To maintain coverage of drugs under the Medicaid Drug Rebate Program, manufacturers are required to
extend discounts to certain purchasers under the PHS pharmaceutical pricing program. Purchasers eligible for
discounts include hospitals that serve a disproportionate share of financially needy patients, community health clinics
and other entities that receive health services grants from the PHS.
The containment of healthcare costs has become a priority of federal, state and foreign governments, and the
prices of drugs have been a focus in this effort. Third party payors are increasingly challenging the prices charged for
medical products and services and examining the medical necessity and cost effectiveness of medical products and
services, in addition to their safety and efficacy. If these third party payors do not consider our products to be cost
effective compared to other available therapies, they may not cover our products after approval as a benefit under their
plans or, if they do, the level of payment may not be sufficient to allow us to sell our products at a profit. The U.S.
government, state legislatures and foreign governments have shown significant interest in implementing cost
containment programs to limit the growth of government paid healthcare costs, including price controls, restrictions on
reimbursement and requirements for substitution of generic products for branded prescription drugs. Adoption of such
controls and measures, and tightening of existing controls and measures, could limit payments for pharmaceuticals
such as the drug candidates that we are developing and could adversely affect our net revenue and results.
Pricing and reimbursement schemes vary widely from country to country. Some countries provide that drug
products may be marketed only after a reimbursement price has been agreed. Some countries may require the
completion of additional studies that compare the cost effectiveness of a particular product candidate to currently
available therapies. For example, the European Union provides options for its member states to restrict the range of
drug products for which their national health insurance systems provide reimbursement and to control the prices of
medicinal products for human use. European Union member states may approve a specific price for a drug product or
may instead adopt a system of direct or indirect controls on the profitability of the company placing the drug product
on the market. Other member states allow companies to fix their own prices for drug products but monitor and control
company profits. The downward pressure on healthcare costs in general, particularly prescription drugs, has become
very intense. As a result, increasingly high barriers are being erected to the entry of new products. In addition, in some
countries, cross border imports from low-priced markets exert competitive pressure that may reduce pricing within a
country. There can be no assurance that any country that has price controls or reimbursement limitations for drug
products will allow favorable reimbursement and pricing arrangements for any of our products.
The marketability of products for which we may receive regulatory approval for commercial sale may suffer
if the government and private third-party payors fail to provide adequate coverage and reimbursement, seek to control
utilization, or create pressure to provide price concessions, coverage policies, third-party reimbursement rates and drug
pricing regulation may change at any time. Even if favorable coverage and reimbursement status is attained for a
product, less favorable coverage policies and reimbursement rates may be implemented in the future.
New legislation and regulations
From time to time, legislation is drafted, introduced and passed in the United States Congress that could
significantly change the statutory provisions governing the testing, approval, manufacturing and marketing of
pharmaceutical products. For example, in 2016, Congress enacted and President Obama signed into law the 21st
Century Cures Act that amends a number of sections of the FDCA. Additionally, in December 2022, President Biden
signed into law the Consolidated Appropriations Act, 2023 (H.R. 2617) that contains important reforms relevant to the
FDA, including the FDORA and the Prepare for and Respond to Existing Viruses, Emerging New Threats, and
Pandemics Act. In addition to new legislation, FDA regulations and policies are often revised or interpreted by the
agency in ways that may significantly affect our business and our products. It is impossible to predict whether further
legislative changes will be enacted or whether FDA regulations, guidance, policies or interpretations changed or what
the effect of such changes, if any, may be.
Additionally, in the United States, federal and state governments continue to propose and pass legislation
designed to reform delivery of, or payment for, healthcare, which include initiatives to reduce the cost of healthcare
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generally and drugs specifically. For example, in March 2010, the United States Congress enacted the Patient
Protection and Affordable Care Act (“ACA”) and the Healthcare and Education Reconciliation Act, or the Healthcare
Reform Act, which expanded healthcare coverage through Medicaid expansion and the implementation of the
individual mandate for health insurance coverage and which included changes to the coverage and reimbursement of
drug products under government healthcare programs as well as the imposition of annual fees on manufacturers of
branded pharmaceuticals.
Beyond the ACA, there are ongoing and widespread healthcare reform efforts, a number of which have
focused on regulation of prices or payment for drug products. Drug pricing and payment reform has been an ongoing
focus. For example, federal legislation eliminated a statutory cap on Medicaid drug rebate program rebates effective
January 1, 2024. As another example, the Inflation Reduction Act ("IRA") of 2022 includes several changes intended
to address rising prescription drug prices in Medicare Parts B and D, with varying implementation dates. These
changes include caps on Medicare Part D out-of-pocket costs, Medicare Part B and Part D drug price inflation rebates,
a new Medicare Part D manufacturer discount drug program (replacing the ACA Medicare Part D coverage gap
discount program) and a drug price negotiation program for certain high spend Medicare Part B and D drugs. The IRA
is anticipated to have a significant impact on the pharmaceutical industry. Subsequent to the enactment of the IRA, in
2024, the Biden Administration announced its commitment to expanding certain IRA reforms. There have been
significant and wide-ranging reforms to federal policy and the federal government under the new Trump
Administration. The focus on drug pricing and payment reform is likely to continue. Other potential healthcare reform
efforts under the Trump Administration could affect access to healthcare coverage or the funding of health care
benefits. There is significant uncertainty regarding the nature or impact of any such reform implemented by the Trump
Administration through executive action or by Congress.
Healthcare reform efforts have been and may continue to be subject to scrutiny and legal challenge. For
example, with respect to the ACA, tax reform legislation was enacted that eliminated the tax penalty established for
individuals who do not maintain mandated health insurance coverage beginning in 2019 and, in 2021, the U.S.
Supreme Court dismissed the latest judicial challenge to the ACA brought by several states without specifically ruling
on the constitutionality of the ACA. As another example, revisions to regulations under the federal anti-kickback
statute would remove protection for traditional Medicare Part D discounts offered by pharmaceutical manufacturers to
pharmacy benefit managers and health plans. Pursuant to court order, the removal was delayed, and recent legislation
imposed a moratorium on implementation of the rule until January 1, 2032. As further example, the IRA drug price
negotiation program has been challenged in litigation filed by various pharmaceutical manufacturers and industry
groups.
Recently, there has been considerable public and government scrutiny of pharmaceutical pricing and
proposals to address the perceived high cost of pharmaceuticals. Individual states in the United States have also
become increasingly active in passing legislation and implementing regulations designed to control pharmaceutical
product pricing, including price constraints, restrictions on copayment assistance by pharmaceutical manufacturers,
marketing cost disclosure and transparency measures, and, in some cases, measures designed to encourage importation
from other countries and bulk purchasing. We expect continued scrutiny on drug pricing and government price
reporting from Congress, agencies, and other bodies.
Adoption of new legislation at the federal or state level could affect demand for, or pricing of, our product
candidates if approved for sale. We cannot predict the ultimate content, timing or effect of any changes to the ACA or
other federal and state reform efforts. There is no assurance that federal or state healthcare reform will not adversely
affect our future business and financial results.
HUMAN CAPITAL RESOURCES
We believe our employees are among the most important assets to our company and are key to achieving our
goals and expectations. Accordingly, we focus significant attention on attracting and retaining talented individuals. To
support these objectives, our human resources programs reflect our commitment to our core values (Purposeful,
Unwavering, Influential, Insightful and Symbiotic) and are designed to prioritize our employees’ well-being, support
their career goals, offer competitive wages and benefits, and enhance our culture through efforts aimed at making the
workplace more satisfying, engaging and inclusive.
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In order to attract qualified applicants to Verastem and retain such employees, we offer a total rewards package
consisting of base salary and cash target bonus, a comprehensive benefit package and equity compensation for every
employee. Bonus opportunity and equity compensation increase as a percentage of total compensation based on level
of responsibility. Actual bonus payout is based on our achievement of corporate goals and individual performance. In
addition, many of our employees are stockholders of the company through participation in our Employee Stock
Purchase Plan, which aligns the interests of our employees with our stockholders by providing stock ownership on a
tax-deferred basis. We also provide for employer matching contributions equal to 100% of employee deferral
contributions up to a deferral rate of 6% of eligible compensation to our Section 401(k) retirement savings plan.
As of December 31, 2024, we had 78 full-time equivalent employees, including a total of 15 employees with
M.D. or Ph.D. degrees, and two part-time employees. Of the full-time equivalent employees, 42 employees were
engaged in research and development activities. We consider the intellectual capital of our employees to be an essential
driver of our business and key to our success.
None of our employees are represented by a labor union or covered by a collective bargaining agreement. We
consider our relationship with our employees to be good.
BUSINESS—EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth the name, age and position of each of our executive officers as of February 28,
2025.
Name
Age
Position
Executive Officers:
Daniel W. Paterson
63
President, Chief Executive Officer
Matthew E. Ros
58
Chief Operating Officer
Daniel Calkins
37
Chief Financial Officer
Daniel W. Paterson, age 63, has served as our Chief Executive Officer since August 2023 and as our
President since June 2019, in addition to serving as our Chief Operating Officer from December 2014 to July 2023, our
Chief Business Officer from July 2013 to December 2014 and as our Vice President, Head of Corporate Development
and Diagnostics from March 2012 until July 2013. Prior to joining us in March 2012, Mr. Paterson was a consultant in
2011. From 2009 through 2010, Mr. Paterson was the Chief Operating Officer of On-Q-ity. Mr. Paterson was the
President and Chief Executive Officer of The DNA Repair Company from 2006 until 2009, when it was acquired by
On-Q-ity. Previously, he held senior level positions at IMS Health, CareTools, OnCare, and Axion. Mr. Paterson holds
a B.A. in Biology from Boston University and attended the Northeastern University Graduate Pharmacology program.
Matthew E. Ros, age 58, has served as our Chief Operating Officer since January 2025. Mr. Ros has more
than 35 years of experience in global pharmaceutical and early-stage biotechnology companies. Mr. Ros served as the
Chief Executive Officer and board member at FORE Biotherapeutics, a privately held clinical-stage precision
oncology company, from April 2022 to August 2023. Prior to this, Mr. Ros served at Epizyme, Inc., a publicly traded
biopharmaceutical company, as Chief Operating Officer between May 2016 and November 2018 and then as Executive
Vice President, Chief Strategy and Business Officer from October 2018 to November 2021. Mr. Ros has served as a
board member at Cogent Biosciences, Inc. since 2019. He received a B.S. from the State University of New York,
College at Plattsburgh and completed the Executive Education Program in Finance and Accounting for the Non-
Financial Manager at Wharton School of the University of Pennsylvania.
Daniel Calkins, age 37, has served as our Chief Financial Officer since October 2023, prior to which Mr.
Calkins served as our Vice President, Finance from September 2022 to October 2023, our Corporate Controller from
March 2020 to September 2022, our Assistant Controller from May 2019 to March 2020, and our Associate Director,
SEC Reporting and Technical Accounting from December 2018 to May 2019. Prior to joining us in December 2018,
Mr. Calkins held various positions of increasing responsibility at CFGI from May 2013 to
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December 2018. Prior to CFGI, Mr. Calkins began his career at PwC LLP in the assurance practice. Mr. Calkins holds
a B.S. in Accounting from Bryant University and M.S. in Accounting from Northeastern University.
OUR CORPORATE INFORMATION
We were incorporated under the laws of the State of Delaware in August 2010. Our principal executive
offices are located at 117 Kendrick Street, Suite 500, Needham, Massachusetts 02494 and our telephone number is
(781) 292-4200.
ADDITIONAL INFORMATION
We maintain a website at www.verastem.com. We make available, free of charge on our website, our annual
reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those
reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) as soon as reasonably practicable after we electronically file those reports with, or furnish them to,
the SEC. We also make available, free of charge on our website, the reports filed with the SEC by our executive
officers, directors and 10% stockholders pursuant to Section 16 under the Exchange Act as soon as reasonably
practicable after copies of those filings are provided to us by those persons. The information contained on, or that can
be accessed through, our website is not a part of or incorporated by reference in this Annual Report on Form 10-K.
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ITEM 1A. Risk Factors
Investment in our Common Stock involves a high degree of risk. You should carefully consider the risks that are
summarized below and discussed in greater detail in the following pages before making an investment decision. If any
of the following risks and uncertainties actually occur, our business, financial condition, and results of operations
could be negatively impacted, and you could lose all or part of your investment.
Summary of Risk Factors
●
Preclinical testing and clinical trials of our product candidates may not be successful. If our NDA for the
combination of avutometinib and defactinib is not approved by the FDA, we are unable to obtain
marketing approval for or successfully commercialize avutometinib and defactinib, or any of our other
product candidates, or if we experience significant delays in doing so, our business will be materially
harmed.
●
Even if avutometinib and defactinib, or any of our other product candidates, receives marketing
approval, such product candidates may fail to achieve the degree of market acceptance by physicians,
patients, healthcare payors and others in the medical community necessary for commercial success.
●
The market opportunities for our product candidates, if approved, may be smaller than we estimate, and
the FDA and other comparable foreign regulatory authorities may approve our product candidates for a
more limited patient population than we anticipate.
●
The approval of our product candidates as single agents or part of a combination therapy for the
treatment of certain cancers may be more costly than our prior clinical trials, may take longer to achieve
regulatory approval, may be associated with new, more severe or serious and unanticipated adverse
events, and may have a smaller market opportunity.
●
If we are not able to obtain, or if there are delays in obtaining, required regulatory approvals for our
product candidates, we will not be able to commercialize such candidates, and our ability to generate
revenue will be materially impaired.
●
If clinical trials of our product candidates fail to demonstrate safety and efficacy to the satisfaction of
regulatory authorities or do not otherwise produce positive results, we may incur additional costs or
experience delays in completing, or ultimately be unable to complete, the development and
commercialization of our product candidates.
●
If serious adverse or unexpected side effects are identified during the development of our product
candidates, we may need to abandon or limit our development of some of our product candidates.
●
If we experience delays or difficulties in the enrollment of patients in clinical trials, our receipt of
necessary regulatory approvals could be delayed or prevented.
●
We have incurred significant losses since our inception. We may incur losses for the foreseeable future
and may never achieve or maintain profitability.
●
We will need additional funding. If we are unable to raise capital if needed, we would be forced to delay,
reduce, or eliminate our product development programs or commercialization efforts, including for
avutometinib and defactinib.
●
Raising additional capital or entering into certain licensing arrangements may cause dilution to our
stockholders, restrict our operations or require us to relinquish rights to our product candidates.
●
We face substantial competition, which may result in others developing or commercializing products
before or more successfully than we do.
●
We rely in part on third parties to conduct our clinical trials and preclinical testing, and if they do not
properly and successfully perform their obligations to us, we may not be able to obtain regulatory
approvals for and commercialize any of our other product candidates.
●
We contract with third parties for the manufacture of our product candidates and for compound
formulation research, and these third parties may not perform satisfactorily.
●
If we are unable to obtain and maintain patent protection for our products, or if our licensors are unable
to obtain and maintain patent protection for the products that we license from them, or if the scope of the
patent protection obtained is not sufficiently broad, our competitors could develop and
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commercialize products similar or identical to ours, and our ability to successfully commercialize our
products may be adversely affected.
●
We may not be successful in obtaining or maintaining necessary rights to product components and
processes for our development pipeline through acquisitions and in-licenses.
●
Issued patents covering our products could be found invalid or unenforceable if challenged in court or
the U.S. Patent and Trademark Office (“USPTO”)
●
We depend on Secura for the achievement and payment of the contingent consideration under the asset
purchase agreement between us and Secura pursuant to which we sold the COPIKTRA assets to Secura.
If Secura is unsuccessful in developing and commercializing COPIKTRA, we may not receive such
payments or otherwise capitalize on the market potential of COPIKTRA.
●
We depend on GenFleet to fully perform under the GenFleet Agreement inclusive of our supply
agreement with GenFleet
Risk Factors
Risks Related to the Development of Our Product Candidates and Commercialization of our Product
Candidates
Preclinical testing and clinical trials of our product candidates may not be successful. If our NDA for the
combination of avutometinib and defactinib is not approved by the FDA, we are unable to obtain marketing
approval for or successfully commercialize avutometinib and defactinib, or any of our other product candidates, or
if we experience significant delays in doing so, our business will be materially harmed.
We have invested a significant portion of our efforts and financial resources in the research and development
of our product candidates, including avutometinib and defactinib, for which the FDA has accepted for review our NDA
under the accelerated approval pathway for the treatment of adult patients with recurrent LGSOC, who received at
least one prior systemic therapy and have a KRAS mutation. Our ability to generate product revenues will depend
heavily on the successful commercialization and development of our product candidates. The success of our product
candidates will depend on several factors, including the following:
●
initiation and successful enrollment and completion of our clinical trials;
●
receipt of marketing approvals from the FDA and other regulatory authorities for our current and future
product candidates, including pricing approvals where required;
●
establishing and maintaining commercial manufacturing capabilities or making arrangements with third-
party manufacturers;
●
obtaining and maintaining patent and trade secret protection and regulatory exclusivity for our product
candidates;
●
establishing and maintaining commercial capabilities, including hiring and training a sales force, and
launching commercial sales of the products, if and when approved, whether alone or in collaboration
with others;
●
acceptance of the products, if and when approved, by patients, the medical community, and third-party
payors;
●
securing and maintaining coverage and adequate reimbursement for our products from third party
payors;
●
effectively competing with other therapies; and
●
a continued acceptable safety and efficacy profile of the products following approval.
Many of these factors are beyond our control, including clinical development, the regulatory submission
process, potential threats to our intellectual property rights and the manufacturing, marketing and sales efforts of any
collaborator. If we do not achieve one or more of these factors in a timely manner or at all, we could experience
significant delays or an inability to successfully commercialize our product candidates, which would materially harm
our business.
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Even if avutometinib and defactinib, or any of our other product candidates, receives marketing approval, such
product candidates may fail to achieve the degree of market acceptance by physicians, patients, healthcare payors
and others in the medical community necessary for commercial success.
If avutometinib and defactinib, or any of our other product candidates, receives marketing approval, such
product candidates may nonetheless fail to gain sufficient market acceptance by physicians, patients, healthcare payors
and others in the medical community. If avutometinib and defactinib does not achieve an adequate level of acceptance,
or if we are unable to increase market acceptance of avutometinib and defactinib as compared to existing or
competitive products, we may not generate significant product revenues and we may not become profitable. The
degree of market acceptance of avutometinib and defactinib, or any of our other product candidates, if approved for
commercial sale, will depend on a number of factors, including:
●
efficacy and potential advantages compared to alternative treatments;
●
convenience and ease of administration compared to alternative treatments;
●
the ability to offer our product candidates for sale at competitive prices;
●
the willingness of the target patient population to try new therapies and of physicians to prescribe our
product candidates;
●
the line of therapy for our product candidates is designated under physician treatment guidelines;
●
changes in the standard of care for the targeted indications for product candidates;
●
limitations or warnings, including distribution or use restrictions, contained in the approved labeling for
our product candidates;
●
the strength of marketing and distribution support;
●
sufficient third-party coverage and reimbursement;
●
the ability of the medical community to appropriately recognize and manage side effects;
●
safety concerns with similar products marketed by others; and
●
the prevalence and severity of any side effects as a result of treatment with product candidates.
If clinical trials of our product candidates fail to demonstrate safety and efficacy to the satisfaction of regulatory
authorities or do not otherwise produce positive results, we may incur additional costs or experience delays in
completing, or ultimately be unable to complete, the development and commercialization of our product candidates.
Before obtaining marketing approval from regulatory authorities for the sale of our product candidates, we
must complete extensive clinical trials to demonstrate the safety and efficacy of our product candidates in humans.
Clinical testing is expensive, difficult to design and implement, can take many years to complete, and is uncertain as to
outcome. A failure of one or more clinical trials can occur at any stage of testing. The outcome of preclinical testing
and early clinical trials may not be predictive of the success of later clinical trials, and interim results of a clinical trial
do not necessarily predict final results. For example, a further review and analysis of this data may change the
conclusions drawn from this unaudited data indicating less promising results than we currently anticipate.
In some instances, there can be significant variability in safety and/or efficacy results between different trials
of the same product candidate due to numerous factors, including changes in trial protocols, differences in size and
type of the patient populations, adherence to the dosing regimen and other trial protocols, and the rate of dropout
among clinical trial participants. There also may be significant variability in the safety results obtained through the
long-term follow-up of patients from ongoing studies. We do not know whether any clinical trial we may conduct or
follow-up data we collect will demonstrate consistent or adequate efficacy and/or safety sufficient to obtain regulatory
approval to market our product candidates.
In addition, the design of a clinical trial may determine whether its results will support approval of a product
and flaws in the design of a clinical trial may not become apparent until the clinical trial is well advanced. Moreover,
preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that
have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have
nonetheless failed to obtain marketing approval of their products.
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A failure of one or more clinical trials could indicate a higher likelihood that subsequent clinical trials of the
same product candidate in the same or other indications or subsequent clinical trials of other related product candidates
will be unsuccessful for the same reasons as the unsuccessful clinical trials.
We may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or
prevent our ability to receive marketing approval or commercialize our product candidates, including:
●
regulators or institutional review boards may not authorize us or our investigators to commence a clinical
trial or conduct a clinical trial at a prospective trial site;
●
we may have delays in reaching or fail to reach agreement on clinical trial contracts or clinical trial
protocols with prospective trial sites;
●
clinical trials of our product candidates may produce negative or inconclusive results, and we may
decide, or regulators may require us, to conduct additional clinical trials or abandon product
development programs;
●
the number of patients required for clinical trials of our product candidates may be larger than we
anticipate, enrollment in these clinical trials may be slower than we anticipate or our participants may
drop out of these clinical trials at a higher rate than we anticipate;
●
our third-party contractors may fail to comply with regulatory requirements or meet their contractual
obligations to us in a timely manner, or at all;
●
regulators or institutional review boards may require that we or our investigators suspend or terminate
clinical trials for various reasons, including noncompliance with regulatory requirements or a finding
that the participants are being exposed to unacceptable health risks;
●
our product candidates may have undesirable side effects or other unexpected characteristics, causing us
or our investigators, regulators or institutional review boards to suspend or terminate the trials; or
●
significant changes to the policies or regulations of the FDA or foreign regulatory authorities regarding
the development, approval, and marketing of pharmaceutical products, including but not limited to as a
result of the 2024 United States presidential election.
If we are required to conduct additional clinical trials or other testing of our product candidates beyond those
that we currently contemplate, if we are unable to successfully complete clinical trials of our product candidates or
other testing, if the results of these trials or tests are not positive or are only modestly positive or if there are safety
concerns, we may:
●
be delayed in obtaining or not obtain marketing approval for our product candidates;
●
obtain approval for indications or patient populations that are not as broad as intended or desired;
●
obtain approval with labeling that includes significant use or distribution restrictions including
imposition of a Risk Evaluation and Mitigation Strategy (REMS), or safety warnings, including boxed
warnings;
●
be subject to additional post marketing testing requirements; or
●
have the product removed from the market after obtaining marketing approval.
The FDA and foreign regulatory authorities may determine that the results from our ongoing and future trials
do not support regulatory approval and may require us to conduct an additional clinical trial or trials. If these agencies
take such a position, the costs of development of our product candidates could increase materially and their potential
market introduction could be delayed or abandoned. The regulatory agencies could also require that we conduct
additional clinical, nonclinical or manufacturing validation studies and submit that data before it will consider an
NDA. Our product development costs will also increase if we experience delays in clinical testing or marketing
approvals. We do not know whether any clinical trials will begin as planned, will need to be restructured or will be
completed on schedule, or at all. Significant clinical trial delays also could shorten any periods during which we may
have the exclusive right to commercialize our product candidates or allow our competitors to bring products to market
before we do and impair our ability to successfully commercialize our product candidates and may harm our business
and results of operations.
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If we experience delays or difficulties in the enrollment of patients in clinical trials, our receipt of necessary
regulatory approvals could be delayed or prevented.
We may not be able to initiate or continue clinical trials for our product candidates if we are unable to locate
and enroll a sufficient number of eligible patients to participate in these trials as required by the FDA or foreign
regulatory authorities. In addition, there are a number of ongoing clinical trials being conducted by other companies
for product candidates treating cancer. Patients who would otherwise be eligible for our clinical trials may instead
enroll in clinical trials of our competitors' product candidates, particularly if they view such treatments to be more
conventional and established.
Patient enrollment is affected by other factors including:
●
the size and nature of the patient population;
●
severity of the disease under investigation;
●
eligibility criteria for the study in question;
●
perceived risks and benefits of the product candidate under study in relation to other available treatments
including any new treatments that may be approved for the indications we are investigating;
●
efforts to facilitate timely enrollment in clinical trials;
●
patient referral practices of physicians;
●
the ability to monitor patients adequately during and after treatment;
●
proximity and availability of clinical trial sites for prospective patients; and
●
constraints on the healthcare system such as a pandemic.
Furthermore, enrolled patients may drop out of a clinical trial, which could impair the validity or statistical
significance of the clinical trial. A number of factors can influence the patient discontinuation rate, including, but not
limited to:
●
the inclusion of a placebo arm in a trial;
●
possible inactivity or low activity of the product candidate being tested at one or more of the dose levels
being tested;
●
the occurrence of adverse side effects, whether or not related to the product candidate; and
●
the availability of numerous alternative treatment options, including clinical trials evaluating competing
product candidates, that may induce patients to discontinue their participation in the trial.
Our inability to enroll a sufficient number of patients for our clinical trials would result in significant delays
or may require us to abandon one or more clinical trials altogether. Enrollment delays in our clinical trials may result in
increased development costs for our product candidates, which would cause the value of our company to decline and
limit our ability to obtain additional financing.
Preclinical studies and preliminary, initial “top-line” and interim data from clinical trials of our product
candidates, or statistical analyses and projections based thereon, are not necessarily predictive of the results or
success of ongoing or later clinical trials of our product candidates. If we cannot replicate the results from our
preclinical studies and clinical trials of our product candidates, we may be unable to successfully develop, obtain
regulatory approval for, and commercialize our product candidates.
Preclinical studies and any positive preliminary, initial “top-line,” and interim data from our clinical trials of
our product candidates may not necessarily be predictive of the results of ongoing or later clinical trials. Even if we are
able to complete our planned clinical trials of our product candidates according to our current development timeline,
the positive results from clinical trials of our product candidates may not be replicated in subsequent clinical trial
results. Also, our later stage clinical trials could differ in significant ways from earlier stage clinical trials, which could
cause the outcome of the later stage trials to differ from our earlier stage clinical trials. For example, these differences
may include changes to inclusion and exclusion criteria, efficacy endpoints and statistical design. Many companies in
the pharmaceutical and biotechnology industries, including us, have suffered significant setbacks in late stage clinical
trials after achieving positive results in an earlier stage of development. If we fail to
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produce positive results in our planned clinical trials of any of our product candidates, the development timeline and
regulatory approval and commercialization prospects for our product candidates, and, correspondingly, our business
and financial prospects, would be materially adversely affected.
Our approach to the treatment of cancer through cell death, inhibition of tumor growth, and disruption of the
tumor microenvironment is relatively unproven, and we do not know whether we will be able to develop any
products of significant commercial value.
We are developing product candidates to treat cancer by using targeted agents to cause cell death, inhibition
of tumor growth, and disruption of the tumor microenvironment, and thereby thwart the growth and proliferation of
cancer cells.
Research on the use of small molecules to cause cell death, inhibition of tumor growth, and disruption of the
tumor microenvironment is an emerging field and, consequently, there is still uncertainty about whether defactinib and
avutometinib are effective in improving outcomes for patients with cancer.
Any products that we develop may not effectively cause cell death, inhibition of tumor growth, and disruption
of the tumor microenvironment. While we are currently conducting clinical trials for product candidates that we
believe will cause cell death, inhibition of tumor growth, and disruption of the tumor microenvironment, we may not
ultimately be successful in demonstrating their efficacy, alone or in combination with other treatments.
The market opportunities for our product candidates, if approved, may be smaller than we estimate, and the FDA
and other comparable foreign regulatory authorities may approve our product candidates for a more limited patient
population than we anticipate.
The potential market opportunity for our product candidates is difficult to estimate precisely. For example, the
number of patients suffering from each of recurrent KRAS mutant LGSOC and recurrent KRAS wild-type LGSOC
populations we are targeting near term (for KRAS mutant LGSOC) and longer term (for KRAS wild type LGSOC) is
small and has not been established with precision. Due to the rarity of our target indications, there is no comprehensive
patient registry or other method of establishing with precision the actual number of patients with KRAS mutant
LGSOC and KRAS wild-type LGSOC. As a result, we have had to rely on other available sources to derive clinical
prevalence estimates for our target indications. We make estimates regarding the incidence and prevalence of target
patient populations, the rate of recurrence and the median survival for particular diseases, including with respect to
LGSOC, based on various third-party sources and internally generated analysis and use such estimates in making
decisions regarding our drug development strategy determining indications on which to focus in preclinical or clinical
trials.
Our estimates of the patient population, pricing and revenue opportunities for our product candidates,
including for KRAS mutant patients with recurrent LGSOC, are based on a number of internal and third-party
estimates, including, without limitation, internal forecasts of potential market penetration, the median duration of
treatment from initial interim clinical data and the assumed prices at which we can commercialize our product
candidates. These estimates may be inaccurate or based on imprecise data. If approved by the FDA, the market
opportunity of our product candidates will depend on, among other things, acceptance by the medical community,
patient access, drug pricing and reimbursement. The number of patients in the addressable market may turn out to be
lower than we estimate, patients may not be otherwise amenable to treatment with our drugs, or new patients may
become increasingly difficult to identify or gain access to, all of which may significantly harm our business, financial
condition, results of operations, and prospects.
In addition, even if we obtain approval for any of our product candidates, such approvals may be for more
limited patient populations than we had anticipated, the potential market for our product candidates will be smaller
than our current estimates. Obtaining approval for only a smaller patient population of our target indications for which
we anticipate seeking approval would have a materially adverse effect on our ability to achieve commercialization and
generate revenues.
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The approval of our product candidates as single agents or part of a combination therapy for the treatment of
certain cancers may be more costly than our prior clinical trials, may take longer to achieve regulatory approval,
may be associated with new, more severe or serious and unanticipated adverse events, and may have a smaller
market opportunity.
Part of our current business model involves conducting clinical trials to study the effects of combining our
product candidates with other approved and investigational targeted therapies, chemotherapies, and immunotherapies
to treat patients with cancer. Regulatory approval for a combination treatment generally requires clinical trials to
evaluate the activity of each component of the combination treatment. As a result, it may be more difficult and costly
to obtain regulatory approval of our product candidates for use as part of a combination treatment than obtaining
regulatory approval of our product candidates alone. In addition, we also risk losing the supply of any approved or
investigational product being combined with our product candidate in these clinical trials. Furthermore, the potential
market opportunity for our product candidates is difficult to estimate precisely. For instance, if one of our product
candidates receives regulatory approval from a combination study, it may be approved solely for use in combination
with the approved or investigational product in a particular indication and the market opportunity our product
candidate would be dependent upon the continued use and availability of the approved or investigational product. In
addition, because physicians, patients, and third-party payors may be sensitive to the addition of the cost of our product
candidates to the cost of treatment with the other products, we may experience downward pressure on the price that we
can charge for our product candidates if they receive regulatory approval. Further, we cannot be sure that physicians
will view our product candidates, if approved as part of a combination treatment, as sufficiently superior to a treatment
regimen consisting of only the approved or investigational product. Additionally, the adverse side effects of our
product candidates may be enhanced when combined with other products. If such adverse side effects are experienced,
we could be required to conduct additional pre-clinical and clinical studies, and if such adverse side effects are severe,
we may not be able to continue the clinical trials of the combination therapy because the risks may outweigh the
therapeutic benefit of the combination.
We face substantial competition, which may result in others developing or commercializing products before or more
successfully than we do.
The development and commercialization of new drug products is highly competitive. We face competition
with respect to our current product candidates and will face competition with respect to any product candidates that we
may seek to develop or commercialize in the future, from major pharmaceutical companies, specialty pharmaceutical
companies and biotechnology companies worldwide. There are a number of large pharmaceutical and biotechnology
companies that currently market and sell products or are pursuing the development of products for the treatment of the
disease indications for which we are developing our product candidates, including Novartis AG, Pfizer, Genentech,
Inc., AstraZeneca PLC, BMS, Amgen, Revolution Medicines, Inc., BeiGene Ltd., Quanta Therapeutics, Inc., Erasca,
Inc., Roche Holding AG, Incyte Corporation and Eli Lilly and Company and others. Some of these competitive
products and therapies are based on scientific approaches that are the same as or similar to our approach, and others are
based on entirely different approaches. Potential competitors also include academic institutions, government agencies,
and other public and private research organizations that conduct research, seek patent protection, and establish
collaborative arrangements for research, development, manufacturing, and commercialization.
We are developing our product candidates for the treatment of cancer. There are a variety of available
therapies marketed for cancer. In many cases, these drugs are administered in combination to enhance efficacy. Some
of these drugs 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.
Insurers and other third-party payors may also encourage the use of generic products. We expect that our product
candidates, if approved, will be priced at a significant premium over competitive generic products.
Many of our competitors have significantly greater financial resources and expertise than we do in research
and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and
marketing approved products. Mergers and acquisitions in the pharmaceutical and biotechnology industries may result
in even more resources being concentrated among a smaller number of our competitors. Smaller and other early-stage
companies may also prove to be significant competitors, particularly through collaborative arrangements
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with large and established companies. These third parties compete with us in recruiting and retaining qualified
scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well
as in acquiring technologies complementary to, or necessary for, our programs. Additionally, new developments,
including the development of other drug technologies and methods of preventing the incidence of disease, occur in the
pharmaceutical and medical technology industries at a rapid pace. These developments may render our product
candidates obsolete or noncompetitive.
In addition, to the extent that products or product candidates of our competitors demonstrate serious adverse
side effects or are determined to be ineffective in clinical trials, the commercialization and the development of our
product candidates could be negatively impacted.
If we fail to obtain regulatory approval in jurisdictions outside the United States, we will not be able to market our
products in those jurisdictions.
We intend to seek regulatory approval for our product candidates in countries outside of the United States and
expect that these countries will be important markets for our products, if approved. Marketing our products in these
countries will require separate regulatory approvals in each market and compliance with numerous and varying
regulatory requirements. The regulations that apply to the conduct of clinical trials and approval procedures vary from
country to country and may require additional testing. Moreover, the time required to obtain approval may differ from
that required to obtain FDA approval. In addition, in many countries outside the United States, a drug must be
approved for reimbursement before it can be approved for sale in that country. Approval by the FDA does not ensure
approval by regulatory authorities in other countries or jurisdictions, and approval by one foreign regulatory authority
does not ensure approval by regulatory authorities in other foreign countries or by the FDA. Failure to obtain
regulatory approval in one country may have a negative effect on the regulatory approval process in others. Further, we
and our collaboration partners are currently conducting clinical trials, and may in the future conduct additional clinical
trials, outside the United States, including the Phase 1/2 clinical trial evaluating VS-7375 by GenFleet in China.
Although the FDA may accept data from clinical trials conducted outside the United States, acceptance of these data is
subject to conditions imposed by the FDA. For example, the FDA will generally not approve the application unless the
data are applicable to the United States population and United States medical practice and the FDA is able to validate
the data through an on-site inspection or other appropriate means. The FDA or any comparable foreign regulatory
authority may not accept data from trials conducted outside of the United States or the applicable jurisdiction, which
may result in the need for additional trials that could be costly and time consuming and could result in the product
candidate not receiving approval for commercialization in the applicable jurisdiction. The foreign regulatory approval
process may include all of the risks associated with obtaining FDA approval. We may not obtain foreign regulatory
approvals on a timely basis, if at all. We may not be able to file for regulatory approvals and may not receive necessary
approvals to commercialize our products in any foreign market.
If serious adverse or unexpected side effects are identified during the development of our product candidates, we
may need to abandon or limit our development of some of our product candidates.
Our product candidates are in various stages of clinical development, and their risk of failure is high. It is
impossible to predict when or if our other product candidates will prove effective or safe in humans or will receive
marketing approval. If our product candidates are associated with undesirable side effects or have characteristics that
are unexpected, we may need to abandon their development or limit development to certain uses or subpopulations in
which the undesirable side effects or other characteristics are less prevalent, less severe, or more acceptable from a risk
benefit perspective. Patients in our clinical trials have experienced serious adverse events, deemed by us and the
clinical investigator to be related to our product candidates. Serious adverse events generally refer to adverse events,
that result in death, are life threatening, require hospitalization or prolonging of hospitalization, or cause a significant
and permanent disruption of normal life functions, congenital anomalies or birth defects, or require intervention to
prevent such outcomes.
Avutometinib and defactinib are being administered and studied in our Phase 1, Phase 2, and Phase 3 clinical
trials, and the development program continues to progress. For both avutometinib and defactinib, the toxicities
reported to date have been predictable and appear to be manageable.
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As a result of adverse events observed to date, or further safety or toxicity issues that we may experience in
our clinical trials in the future, we may not receive approval to market any product candidates, which could prevent us
from ever generating revenue from the sale of products or achieving profitability. Results of our trials could reveal an
unacceptably high severity and prevalence of side effects. In such an event, our trials could be suspended or
terminated, and the FDA or comparable foreign regulatory authorities could order us to cease further development of
or deny approval of our products candidates for any or all targeted indications. Many compounds that initially showed
promise in early stage testing for treating cancer have later been found to cause side effects that prevented further
development of the compound. In addition, while we and our clinical trial investigators currently determine if serious
adverse or unacceptable side effects are drug related, the FDA or other non-U.S. regulatory authorities may disagree
with our or our clinical trial investigators’ interpretation of data from clinical trials and the conclusion that a serious
adverse effect or unacceptable side effect was not drug related.
We may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize
on product candidates or indications that may be more profitable or for which there is a greater likelihood of
success.
Because we have limited financial and managerial resources, we focus on research programs and product
candidates that we identify for specific indications. As a result, we may forego or delay pursuit of opportunities with
other product candidates or for other indications that later prove to have greater commercial potential. Our resource
allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market
opportunities. Our spending on current and future research and development programs and product candidates for
specific indications may not yield any commercially viable products.
Any future product candidates that we commercialize may become subject to unfavorable pricing regulations or
third-party coverage and reimbursement policies, which would harm our business.
In both domestic and foreign markets, any product candidates that may receive marketing approval in the
future will depend, in part, on favorable pricing as well as the availability of coverage and amount of reimbursement
by third party payors, including governments and private health plans. Substantial uncertainty exists regarding
coverage and reimbursement by third party payors of newly approved health care products.
Outside the United States, some countries require approval of the sale price of a drug before the product can
be marketed. In many such countries, the pricing review period begins after marketing or product licensing approval is
granted. In some foreign markets, prescription pharmaceutical pricing remains subject to continuing governmental
control even after initial approval is granted. As a result, we might obtain marketing approval for a product in a
particular country, but then be subject to price regulations that delay our commercial launch of the product, possibly
for lengthy time periods, and negatively impact the revenues we are able to generate from the sale of the product in
that country. Adverse pricing limitations may hinder our ability to recoup our investment in product candidates, even if
those product candidates obtain marketing approval.
Cost containment is a key trend in the United States and elsewhere. Third-party payors have attempted to
control costs by limiting coverage and the amount of reimbursement for particular medications. Increasingly, third-
party payors are requiring that drug companies provide them with predetermined discounts from list prices and are
challenging the prices charged for medical products. We cannot be sure that coverage and reimbursement will be
available for any product that we commercialize and, if reimbursement is available, the level of reimbursement.
Coverage and reimbursement may impact the demand for, or the price of, any product candidate for which we obtain
marketing approval. If coverage and reimbursement are not available or reimbursement is available only to limited
levels, we may not be able to successfully commercialize the product candidates for which we may obtain marketing
approval.
Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of
any products that we may develop.
We face an inherent risk of product liability exposure related to the testing of our product candidates in human
clinical trials and will face an even greater risk if we commercially sell any other products we may develop.
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If we cannot successfully defend ourselves against claims that our product candidates or products caused injuries, we
will incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:
●
decreased demand for any product candidates or products that we may develop;
●
injury to our reputation and significant negative media attention;
●
withdrawal of clinical trial participants;
●
significant costs to defend the related litigation;
●
substantial monetary awards to trial participants or patients;
●
loss of revenue; and
●
the inability to commercialize any products that we may develop.
We currently hold $10.0 million in product liability insurance coverage in the aggregate, with a per incident
limit of $10.0 million, which may not be adequate to cover all liabilities that we may incur. We may need to increase
our insurance coverage as we commercialize any future product candidates or if we initiate additional clinical trials in
the United States and around the world. Insurance coverage is increasingly expensive. We may not be able to maintain
insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise.
A pandemic, epidemic, or outbreak of an infectious disease, such as COVID-19, has and may in the future
adversely affect our business.
Broad-based business or economic disruptions could adversely affect our ongoing or planned research and
development activities, our financial condition and our results of operations. For example, United States residents and
businesses in major urban centers have been hit especially hard by the global spread of COVID-19, which has resulted
in certain disruptions to our business and may in the future result in additional disruptions to our business. Examples of
both include:
●
Shortages of personnel at clinical trial sites and delay in startup activities. Clinics and hospitals in
Europe and United States continue to cause delays in startup and on-going activities due to the ongoing
staff shortages since the onset of the COVID-19 pandemic.
●
Work-from-home limitations. Since 2020, a material portion of our workforce works remotely and we
expect this to continue, which could impact our ability to effectively plan, execute, communicate, and
maintain our corporate culture.
●
Capital markets volatility. Equity and debt markets have experienced significant volatility in recent
years, which makes it more difficult to raise capital at a reasonable valuation or at all.
●
Business interruptions or disruptions. There may be interruptions or disruptions that directly or indirectly
adversely affect our or our current or potential collaboration partners’ organizations, which may delay or
disrupt our business plans or impact a collaboration partner’s ability to fully perform under our
agreements with them.
Each of these factors could have a material adverse effect on our business and results of operations.
Risks Related to Our Commercial Agreements
We depend on Secura for the achievement and payment of the contingent consideration under the asset purchase
agreement between us and Secura pursuant to which we sold the COPIKTRA assets to Secura. If Secura is
unsuccessful in developing and commercializing COPIKTRA, we may not receive such payments or otherwise
capitalize on the market potential of COPIKTRA.
On September 30, 2020, we completed the disposition of our rights, title, and interest in and to COPIKTRA to
Secura. Under the terms of the asset purchase agreement with Secura, we are entitled to contingent consideration,
including milestone payments and royalties, dependent upon the further development and commercial success of
COPIKTRA. Accordingly, our ability to receive the contingent consideration will depend on Secura’s ability to
successfully develop and commercialize COPIKTRA.
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Secura’s ability to develop and commercialize COPIKTRA is subject to a number of risks and uncertainties,
including the following:
●
Secura has significant discretion in determining how to develop further and commercialize COPIKTRA,
including through potential collaborators and partners;
●
Secura may not commit sufficient resources to development, marketing or distribution of COPIKTRA;
●
even if diligently pursued, Secura’s efforts to develop and commercialize COPIKTRA may not be
successful;
●
Secura may not properly maintain or defend its intellectual property rights or may use its proprietary
information in such a way as to invite litigation that could jeopardize or invalidate the intellectual
property of COPIKTRA;
●
Secura may fail to maintain compliance with ongoing FDA labeling, packaging, storage, advertising,
promotion, recordkeeping, safety and other post-market requirements;
●
Secura may not be able to obtain regulatory approval in United States for certain oncology indications or
obtain approval in jurisdictions outside of the United States and as a result, will not be able to market
COPIKTRA for those indications or in those jurisdictions; and
●
disputes may arise between Secura and us that result in the delay of payments or in costly litigation that
diverts management attention and resources.
Our ability to receive future contingent consideration, including milestone payments and royalties, from the sale of
our rights, title, and interest in COPIKTRA to Secura may be adversely affected by lower than expected COPIKTRA
sales and Secura’s ability to achieve other developmental and regulatory milestones.
On June 30, 2022, the FDA issued a drug safety communication warning that resulted from a clinical trial
showing a possible increased risk of death with COPIKTRA compared to another medicine to treat chronic blood
cancer called leukemia and lymphoma. The aforementioned clinical trial also found that COPIKTRA was associated
with a higher risk of serious side effects, including infections, diarrhea, inflammation of the intestines and lungs, skin
reactions, and high liver enzyme levels in the blood. In September 2022, the FDA’s ODAC voted eight to four against
COPIKTRA’s use in patients with relapsed or refractory chronic lymphocytic leukemia/ small lymphocytic lymphoma
after at least two prior therapies citing an unfavorable risk/benefit profile. The FDA drug safety communication
warning, the FDA’s ODAC vote, future actions by the FDA, and any safety concerns associated with COPIKTRA,
perceived or real, may materially and adversely affect Secura’s development and commercialization success of
COPIKTRA and, consequently, our ability to receive future contingent consideration from our sale of our right, title,
and interest in COPIKTRA to Secura.
If we do not realize the anticipated benefits of our license agreements with Pfizer for the FAK program and Chugai
for the dual RAF/MEK candidate program, or from the GenFleet Agreement, our business could be adversely
affected.
Our license agreements with Pfizer for defactinib, Chugai for avutometinib, and the GenFleet Agreement for
up to three oncology programs, may fail to further our business strategy as anticipated or to achieve anticipated
benefits and success. We may make or have made assumptions relating to the impact of the acquisition of defactinib
and avutometinib or entering into the GenFleet Agreement on our financial results relating to numerous matters,
including:
●
the cost of development and commercialization of defactinib and avutometinib;
●
the cost of development and commercialization of any of the three oncology programs; and
●
other financial and strategic risks related to the agreements with Pfizer, Chugai and GenFleet.
Further, we may incur higher than expected operating and transaction costs, and we may encounter general
economic and business conditions that adversely affect us relating to our agreements with Pfizer, Chugai or GenFleet.
If one or more of these assumptions are incorrect, it could have an adverse effect on our business and operating results,
and the benefits from our license agreements with Pfizer for defactinib and Chugai for avutometinib and the GenFleet
Agreement may not be realized or be of the magnitude expected.
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We depend on GenFleet to fully perform under the GenFleet Agreement inclusive of our supply agreement with
GenFleet.
On August 24, 2023, we entered into the GenFleet Agreement pursuant to which we obtained three GenFleet
Options that may be exercised on a program-by-program basis. In December 2023, we announced the selection of a
potential best-in class oral and selective KRAS G12D (ON/OFF) inhibitor VS-7375 as the lead program. GenFleet is
currently conducting a Phase 1/2 trial in China evaluating VS-7375 in patients with KRAS G12D-mutated advanced
solid tumors. In January 2025, we exercised early the GenFleet Option for the lead compound VS-7375 and expect to
initiate a Phase 1/2a study in middle of 2025 in the United States.
Pursuant to the GenFleet Agreement, we are reliant on GenFleet to fulfil their responsibilities including
ongoing discovery and lead optimization for the second and third programs and execution of the Phase 1 clinical trials
for the second and third programs. Accordingly, our ability to realize the anticipated benefits and success of the
GenFleet Agreement is dependent upon GenFleet fulfilling their obligations. Furthermore, we have entered into a
supply agreement with GenFleet pursuant to which we expect to obtain VS-7375 finished product from GenFleet for
use in our planned clinical trial in the United States. If GenFleet does not perform under the supply agreement, our
ability to obtain VS-7375 and consequently our planned clinical trial in the United States investigating VS-7375 will
be materially adversely impacted. If GenFleet does not successfully carry out their responsibilities, the benefits of the
GenFleet Agreement and our collaboration with GenFleet may not be realized.
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Risks Related to Our Financial Position and Need for Additional Capital
We have incurred significant losses since our inception. We may incur losses for the foreseeable future and may
never achieve or maintain profitability.
Since inception, we have incurred significant operating losses. As of December 31, 2024, we had an
accumulated deficit of $955.5 million. To date, we have generated minimal product revenues and have financed our
operations primarily through public and private offerings of our common stock, preferred stock, warrants and pre-
funded warrants, offerings of convertible notes, sales of our common stock pursuant to our at-the-market equity
offering programs, our Note Purchase Agreement (the “Note Purchase Agreement”) with RGCM SA LLC, as
purchaser agent, Oberland Capital Management LLC (“Oberland”) and certain funds managed by Oberland, as
purchasers, (together with the other purchasers party thereto referred to as the “Note Purchase Agreement Purchasers”)
our former loan and security agreement (the “Loan Agreement”) with Oxford Finance LLC (“Oxford”), our loan and
security agreement, as amended, with Hercules Capital Inc. (“Hercules”), upfront payments under our license and
collaboration agreements with Yakult, CSPC, and Sanofi, and the upfront payment and milestone payments under the
Secura APA. We have devoted substantially all of our efforts to research and development. We expect to continue to
incur significant expenses and may incur operating losses for the foreseeable future. The net losses we incur may
fluctuate significantly from quarter to quarter. We anticipate that our expenses will increase substantially if and as we:
●
prepare for the anticipated commercialization of avutometinib and defactinib;
●
continue our ongoing clinical trials with our product candidates, including with defactinib and
avutometinib;
●
initiate additional clinical trials for our product candidates;
●
maintain, expand, and protect our intellectual property portfolio;
●
acquire or in-license other products and technologies;
●
hire additional clinical, development, and scientific personnel; and
●
establish and maintain a sales, marketing and distribution infrastructure to commercialize any products
for which we obtain marketing approval.
To become and remain profitable, we must develop and eventually commercialize a product or products with
significant market potential. This will require us to be successful in a range of challenging activities, including
completing preclinical testing and clinical trials of our product candidates, obtaining marketing approval for these
product candidates, and manufacturing, marketing, and selling those products for which we may obtain marketing
approval. We may never succeed in these activities and, even if we do, may never generate revenues that are
significant or large enough to achieve profitability. If we do achieve profitability, we may not be able to sustain or
increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would decrease the
value of the company and could impair our ability to raise capital, maintain our research and development efforts,
expand our business or continue our operations. A decline in the value of our company could also cause you to lose all
or part of your investment.
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We will need additional funding. If we are unable to raise capital if needed, we would be forced to delay, reduce, or
eliminate our product development programs or commercialization efforts, including for avutometinib and
defactinib.
We expect our expenses to increase in connection with our ongoing activities, particularly in connection with
our planned commercialization of avutometinib and defactinib and the continued clinical development of our product
candidates. We expect our cash, cash equivalents and investments at December 31, 2024 will not be sufficient to fund
our current operating plan and capital expenditure requirements for the next 12 months from the issuance of these
financial statements. We may need to obtain additional funding in connection with our continuing operations,
including for our clinical development programs. Our future capital requirements will depend on many factors,
including:
●
the costs and timing of activities in anticipation of potential commercialization for avutometinib and
defactinib and product candidates for which we expect to receive marketing approval;
●
the scope, progress, and results of our ongoing and potential future clinical trials;
●
the extent to which we acquire or in-license other product candidates and technologies;
●
the costs, timing, and outcome of regulatory review of our product candidates (including our efforts to
seek approval and fund the preparation and filing of regulatory submissions);
●
revenue, if any, received from commercial sales of our product candidates, including avutometinib and
defactinib, should any of our product candidates receive marketing approval;
●
the costs of preparing, filing, and prosecuting patent applications, maintaining and enforcing our
intellectual property rights, and defending intellectual property related claims; and
●
our ability to establish collaborations or partnerships on favorable terms, if at all.
●
receipt of milestone payments and royalties pursuant to the Secura APA including timing of such receipt.
Conducting clinical trials is a time consuming, expensive and uncertain process that takes years to complete,
and we may never generate the necessary data or results required to obtain marketing approval of any of our product
candidates. Although the FDA has accepted for review our NDA under the accelerated approval pathway for
avutometinib in combination with defactinib for the treatment of adult patients with recurrent LGSOC who received at
least one prior systemic therapy and have a KRAS mutation, the NDA may not be approved by the FDA and, even if
approved, avutometinib and defactinib may not achieve commercial success. We expect that our commercial revenues
will be derived from sales of products. Even if our product candidates gain approval, it may take several years to
achieve a significant level of sales, and as a result we may need to continue to rely on additional financing to further
our clinical development objectives. Adequate additional financing may not be available to us on acceptable terms, or
at all.
We will require additional financing to execute our operating plan and continue to operate as a going concern.
As required under Accounting Standards Update 2014-15, Presentation of Financial Statements-Going
Concern (ASC 205-40), we have the responsibility to evaluate whether conditions and/or events raise substantial doubt
about our ability to meet our future financial obligations as they become due within one year after the date the
consolidated financial statements are issued. The Company believes that it may have sufficient funds to meet its
obligations within the next 12 months from the issuance of these financial statements. However, this belief relies on
the achievement of certain mitigation efforts. The analysis under ASC 205-40, initially cannot take into consideration
the potential mitigating effects of plans that have not been fully implemented as of the date the financial statements are
issued. Accordingly, these uncertainties and risk factors meet the ASC 205-40 standard for raising substantial doubt
about our ability to continue as a going concern within one year of the issuance date of our consolidated financial
statements. Lack of necessary funds may require us, among other things, to delay, scale back, or eliminate some or all
of our planned clinical trials. Because we continue to experience net operating losses (“NOL”), our ability to continue
as a going concern is subject to our ability to obtain necessary capital from outside sources, including obtaining
additional capital from the sale of our securities or assets, achieving milestones for additional drawdowns under our
Loan Agreement or obtain loans from financial institutions, or entering into additional partnership arrangements. There
can be no assurances that we will be able to obtain such capital on
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favorable terms or at all. If we are unable to raise capital when needed, we may be forced to delay, reduce or eliminate
our research and development activities for our product candidates, or ultimately not be able to continue as a going
concern.
Unfavorable economic conditions could have a material adverse effect on our business, financial condition, results
of operations, or cash flows.
Unfavorable macroeconomic conditions and other adverse macroeconomic factors have resulted, among other
matters, in tightening in the debt and equity markets, and high levels of inflation. Similarly, changes in U.S. federal
policy that affect the geopolitical landscape could give rise to circumstances outside our control that could have
negative impacts on our business operations. For example, on March 4, 2025, the U.S. imposed a 25% tariff on imports
from Canada and Mexico that do not satisfy the U.S.-Mexico-Canada Agreement rules of origin with certain
exemptions and a 20% additional tariff on imports from China. Historically, tariffs have led to increased trade and
political tensions. In response to tariffs, other countries have implemented retaliatory tariffs on U.S. goods. Political
tensions resulting from trade policies could reduce trade volume, investment, technological exchange and other
economic activities between major international economies, resulting in a material adverse effect on global economic
conditions and the stability of global financial markets. Tightening of the equity markets makes it more difficult to
raise capital at a reasonable valuation or at all. Any changes in political, trade, regulatory, and economic conditions,
including U.S. trade policies, could have a material adverse effect on our financial condition or results of operations.
In addition, the U.S. Bureau of Labor Statistics has reported for the period from December 2023 to December
2024, the Consumer Price Index for All Urban Consumers rose 2.9% which remains above the U.S. Federal Reserve’s
inflation target of 2%. If inflationary pressures increase or continue for a prolonged period, it may continue to result in
increased costs of labor, cost of clinical trials, and costs of manufacturing which could adversely affect our results of
operations.
Our ability to use our net operating loss carryforwards may be limited.
As of December 31, 2024, we had U.S. federal and state NOL carryforwards of approximately $370.6 million
and $56.7 million, respectively. As of December 31, 2024, we also had federal and state tax credits of $2.6 million and
$0.2 million, respectively, which may be used to offset future tax liabilities. The NOL and tax credit carryforwards will
expire at various dates through 2044, except for $333.4 million of federal NOL carryforwards which may be carried
forward indefinitely. Sections 382 and 383 of the Internal Revenue Code (“IRC”) and similar provisions under state
law limits the annual use of NOL carry-forwards and tax credit carryforwards, respectively, following an ownership
change pursuant to section 382 of the IRC and similar state provisions. In general, an ownership change occurs for
purposes of Section 382 if there are certain cumulative changes in the ownership interest of significant stockholders
over a three-year period in excess of 50%.
During 2024, we believe we triggered ownership changes under Section 382 of the IRC and similar
provisions under state law. As a result, we believe that our federal NOL carryforwards, state NOL carryforwards,
research and development credits, and orphan drug credits are limited by Section 382 and similar provisions under
state law as of December 31, 2024. A portion of federal NOL carryforwards and state NOL carryforwards that we
expect we will not be able to utilize were written off. Similarly, we wrote off all federal and state research and
development credits, and federal orphan drug credits we determined we will not be able to utilize due to limitation and
expiration periods. We have approximately $346.4 million of federal NOLs generated prior to such ownership changes
inclusive of $309.3 million of federal NOLs which may be carried forward indefinitely. Since the $309.3 million of
federal NOLs may be carried forward indefinitely these have not been written off as of December 31, 2024, but due to
the limitations under Section 382, generally we can only use $1.6 million per year against taxable income in the future.
Future changes in our stock ownership, some of which are outside of our control, could result in further ownership
changes under section 382 of the IRC. We may not be able to use some or all of our NOL and tax credit carryforwards,
even if we attain profitability.
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Risks Related to Our Indebtedness
Our level of indebtedness and debt service obligations could adversely affect our financial condition and may make
it more difficult for us to fund our operations.
On January 13, 2025 (the “Note Purchase Agreement Closing Date”), we entered into the Note Purchase
Agreement pursuant to which we may sell to the Note Purchase Agreement Purchasers, and the Note Purchase
Agreement Purchasers may buy from us notes (the “Notes”) in an aggregate principal amount not to exceed $150.0
million, consisting of the following:
●
an initial sale of $75.0 million principal amount of Notes;
●
at our option, a second sale (the “Second Sale”) of $25.0 million principal amount of Notes, at any time prior
to December 31, 2025, upon the FDA approval sufficient for the promotion and sale of avutometinib and
defactinib for the treatment of LGSOC and subject to certain other customary conditions precedent; and
●
at our option, a third sale (the “Third Sale”) of up to $50.0 million principal amount of Notes, at any time
prior to December 31, 2026, provided that trailing six-month worldwide net sales of avutometinib and
defactinib are at least $55.0 million and subject to certain other customary conditions precedent.
The outstanding principal amount of the Notes bear interest at a rate per annum equal to the sum of (i) the
greater of the Term SOFR (as defined in the Note Purchase Agreement) and 4.29%, and (ii) 3.71%, subject to
adjustment in certain circumstances set forth in the Note Purchase Agreement and an overall cap of 9.75%, payable
quarterly in arrears until the seventh anniversary of the Note Purchase Agreement Closing Date or the date on which
all amounts owing to the Note Purchase Agreement Purchasers under the Note Purchase Agreement have been paid in
full (the “Note Purchase Agreement Maturity Date”). For the first eight (8) quarters following the Note Purchase
Agreement Closing Date, at our option, up to 50% of the interest due may be paid-in-kind and added to the then-
outstanding principal balance of the Notes. Upon the occurrence and during the continuance of an Event of Default (as
defined in the Note Purchase Agreement) under the Note Purchase Agreement, the then-applicable interest rate on all
outstanding obligations may be increased by an additional 5.00%.
The Note Purchase Agreement Purchasers will receive 1.00% (the “Revenue Participation Percentage”) of the
first $100.0 million of net sales of each Included Product (as defined in the Note Purchase Agreement) by us or our
licensees in each calendar year, payable quarterly. “Included Products” is defined in the Note Purchase Agreement to
include (a) avutometinib and defactinib, including any product that contains either one of the foregoing in combination
with any other active ingredient(s), and (b) all other compounds, chemical entities or pharmaceutical products being
designed, developed, licensed, manufactured or commercialized by us or our subsidiaries from time to time. The
Revenue Participation Percentage will increase pro rata immediately upon the occurrence of the Second Sale and the
Third Sale, such that the Revenue Participation Percentage shall increase to a maximum of 2.00% in the event that
$150.0 million in aggregate principal amount of Notes has been purchased pursuant to the Note Purchase Agreement
following the Third Sale. The outstanding principal amount of the Notes, interest accrued thereon and any other
amounts owing to the Note Purchase Agreement Purchasers under the Note Purchase Agreement will be due in two
equal installments on (a) the sixth anniversary of the Note Purchase Agreement Closing Date, and (b) the Note
Purchase Agreement Maturity Date.
The Note Purchase Agreement contains no financial covenants. Our obligations under the Note Purchase
Agreement are subject to customary covenants, including limitations on our ability to dispose of assets, undergo a
change of control, merge with or acquire other entities, incur debt, incur liens, pay dividends or other distributions to
holders of our capital stock, repurchase stock and make investments, in each case subject to certain exceptions. Our
obligations under the Note Purchase Agreement are secured by a security interest on substantially all of our and our
subsidiaries’ assets, including our intellectual property related to avutometinib and defactinib, and a negative pledge on
intellectual property related to the Company’s collaboration and option agreement with GenFleet, subject to certain
exceptions relating to our development of our intellectual property.
This indebtedness may create additional financing risk for us, particularly if our business or prevailing
financial market conditions are not conducive to paying off or refinancing our outstanding debt obligations at
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maturity. This indebtedness could also have other important negative consequences, including we will need to repay
our indebtedness by making payments of interest and principal, which will reduce the amount of money available to
finance our operations, our research and development efforts and other general corporate activities. Further, our
agreement to pay Oberland the Revenue Participation Percentage with respect to potential future sales of certain of our
product candidates may limit future revenue, if any, received from commercial sales of our product candidates, should
any of our product candidates receive marketing approval, as well as our ability to generate revenues that are
significant or large enough to achieve profitability. In addition, we may be delayed in satisfying the criteria required
under the Note Purchase Agreement to exercise the Second Sale and Third Sale, or may never satisfy such criteria,
which may require us to find other sources of funding to finance our operations.
To the extent additional debt is added to our current debt levels, the risks described above could increase.
We may not have cash available in an amount sufficient to enable us to make interest or principal payments on our
indebtedness when due.
Failure to satisfy our current and future debt obligations under the Note Purchase Agreement or breaching any
covenants under the Note Purchase Agreement, subject to specified cure periods with respect to certain breaches, could
result in an event of default and, as a result, could accelerate all of the amounts due. In the event of an acceleration of
amounts due under the Note Purchase Agreement, we may not have enough available cash or be able to raise
additional funds through equity or debt financings to repay such indebtedness at the time of such acceleration. In that
case, we may be required to delay, limit, reduce or terminate our product candidate development or grant to others the
rights to develop and market our product candidates that we would otherwise prefer to develop and market internally.
The Note Purchase Agreement Purchasers could also exercise their rights as collateral agent to take possession and
dispose of the collateral securing the Notes for their benefit, which collateral includes substantially all of our property
other than our intellectual property. Our business, financial condition and results of operations could be materially
adversely affected as a result of any of these events.
Risks Related to Our Dependence on Third Parties
We rely in part on third parties to conduct our clinical trials and preclinical testing, and if they do not properly and
successfully perform their obligations to us, we may not be able to obtain regulatory approvals for and
commercialize any of our other product candidates.
We rely on third parties, such as contract research organizations (“CROs”), clinical data management
organizations, medical institutions, and clinical investigators, to conduct, provide monitors for, and manage data from
all of our clinical trials. We compete with many other companies for the resources of these third parties.
Any of these third parties may terminate their engagements with us at any time. If we need to enter into
alternative arrangements, it would delay our product development activities and ultimately the commercialization of
our product candidates.
Our reliance on these third parties for research and development activities will reduce our control over these
activities but will not relieve us of our responsibilities. For example, we will remain responsible for ensuring that each
of our clinical trials is conducted in accordance with the general investigational plan and protocols for the trial.
Moreover, the FDA and other regulatory agencies require us to comply with standards, commonly referred to as Good
Clinical Practices (“GCP”) for conducting, recording, and reporting the results of clinical trials to assure that data and
reported results are credible and accurate and that the rights, integrity and confidentiality of trial participants are
protected. Regulatory authorities enforce these GCP requirements through periodic inspections of trial sponsors,
principal investigators, and trial sites. If we or any of our CROs fail to comply with applicable GCP requirements, the
clinical data generated in our clinical trials may be deemed unreliable, and the FDA or other regulatory authorities may
require us to perform additional clinical trials before approving our marketing applications. We cannot assure you that
upon inspection by a given regulatory authority, such regulatory authority will determine that any of our clinical trials
comply with GCP requirements. We also are required to register ongoing clinical trials and post the results of
completed clinical trials on government-sponsored databases, such as ClinicalTrials.gov, within certain timeframes.
Failure to do so can result in fines, adverse publicity, and civil and criminal sanctions.
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If these third parties do not successfully carry out their contractual duties, meet expected deadlines, or
conduct our clinical trials in accordance with regulatory requirements or our stated protocols, we will not be able to
obtain, or may be delayed in obtaining, marketing approvals for some of our product candidates and will not be able to,
or may be delayed in our efforts to, successfully commercialize our product candidates.
We rely on third parties to conduct investigator-sponsored clinical trials of our product candidates. Any failure by a
third party to meet its obligations with respect to the clinical development of our product candidates may delay or
impair our ability to obtain regulatory approval for our product candidates.
We rely on academic and private non-academic institutions to conduct and sponsor clinical trials relating to
our product candidates. We will not control the design or conduct of the investigator sponsored trials, and it is possible
that the FDA or non-U.S. regulatory authorities will not view these investigator-sponsored trials as providing adequate
support for future clinical trials, whether controlled by us or third parties, for any one or more reasons, including
elements of the design or execution of the trials or safety concerns or other trial results.
Such arrangements will provide us certain information rights with respect to the investigator sponsored trials,
including access to and the ability to use and reference the data, including for our own regulatory filings, resulting
from the investigator-sponsored trials. However, we do not have control over the timing and reporting of the data from
investigator-sponsored trials, nor do we own the data from the investigator-sponsored trials. If we are unable to
confirm or replicate the results from the investigator sponsored trials or if negative results are obtained, we would
likely be further delayed or prevented from advancing further clinical development of our product candidates. Further,
if investigators or institutions breach their obligations with respect to the clinical development of our product
candidates, or if the data proves to be inadequate compared to the firsthand knowledge we might have gained had the
investigator-sponsored trials been sponsored and conducted by us, then our ability to design and conduct any future
clinical trials ourselves may be adversely affected.
Additionally, the FDA or non-U.S. regulatory authorities may disagree with the sufficiency of our right of
reference to the preclinical, manufacturing, or clinical data generated by these investigator-sponsored trials, or our
interpretation of preclinical, manufacturing, or clinical data from these investigator-sponsored trials. If so, the FDA or
other non-U.S. regulatory authorities may require us to obtain and submit additional preclinical, manufacturing, or
clinical data before we may initiate our planned trials and/or may not accept such additional data as adequate to initiate
our planned trials.
We contract with third parties for the manufacture of our product candidates and for compound formulation
research, and these third parties may not perform satisfactorily.
We do not have any manufacturing facilities or personnel. We currently obtain all of our supply of our product
candidates for clinical development and commercial requirements from third-party manufacturers or third-party
collaborators, and we expect to continue to rely on third parties for the manufacture of clinical and commercial
quantities of our product candidates. In addition, we currently rely on third parties for the development of various
formulations of our product candidates. This reliance on third parties increases the risk that we will not have sufficient
quantities of our product candidates or such quantities at an acceptable cost or quality, which could delay, prevent, or
impair our development or commercialization efforts.
We do not currently have arrangements in place for redundant supply or a second source throughout our
supply chain. Even though we have supply agreements in place with our third-party manufacturers, reliance on third-
party manufacturers entails additional risks, including:
●
reliance on the third party for regulatory compliance and quality assurance;
●
the possible breach of the manufacturing agreement by the third party, including the misappropriation of
our proprietary information, trade secrets, and know-how;
●
the possible termination or nonrenewal of the agreement by the third party at a time that is costly or
inconvenient for us; and
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●
disruptions to the operations of our manufacturers or suppliers caused by conditions unrelated to our
business or operations, including the bankruptcy of the manufacturer or supplier or a catastrophic event
affecting our manufacturers or suppliers.
Third-party manufacturers may not be able to comply with cGMP regulations or similar regulatory
requirements outside the United States. Our failure, or the failure of our third-party manufacturers, to comply with
applicable regulations could result in sanctions being imposed on us, including fines, injunctions, civil penalties,
delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates or
products, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect
supplies of our products and harm our business and results of operations.
Any products that we may develop may compete with other product candidates and products for access to
manufacturing facilities. There are a limited number of manufacturers that operate under cGMP regulations and that
might be capable of manufacturing for us. Any interruption of the development or operation of the manufacturing
facilities due to, among other reasons, events such as order delays for equipment or materials, equipment malfunction,
quality control, and quality assurance issues, regulatory delays and possible negative effects of such delays on supply
chains and expected timelines for product availability, production yield issues, shortages of qualified personnel,
discontinuation of a facility or business, failure, or damage to a facility by natural disasters or public health crises, such
as the COVID-19 pandemic, could result in the cancellation of shipments, loss of product in the manufacturing
process, or a shortfall in available product candidates or materials.
If our current contract manufacturers cannot perform as agreed or these parties cease to provide quality
manufacturing and related services to us, we may be required to replace that manufacturer. If we are not able to engage
appropriate replacements in a timely manner, our ability to manufacture our product candidates in sufficient quality
and quantity required for planned pre-clinical testing, clinical trials and potential commercial use of our product
candidates would be adversely affected. Although we believe that there are several potential alternative manufacturers
who could manufacture our product candidates, we may incur added costs and delays in identifying and qualifying any
such replacement, as well as producing the drug product and obtaining regulatory approvals for the new manufacturer.
In addition, we have to enter into technical transfer agreements and share our know-how with the third-party
manufacturers, which can be time-consuming and may result in delays. In light of the lead time needed to manufacture
our product candidates, and the availability of underlying materials, we may not be able to, in a timely manner or at all,
establish or maintain sufficient commercial manufacturing arrangements on commercially reasonable terms necessary
to provide adequate supply of our product candidates to meet demands that exceed our clinical assumptions.
Furthermore, we may not be able to obtain the significant financial capital that may be required in connection with
such arrangements. Even after successfully engaging third parties to execute the manufacturing process for our product
candidates, such parties may not comply with the terms and timelines they have agreed to for various reasons, some of
which may be out of their or our control, which could impact our ability to execute our business plans on expected or
required timelines in connection with the commercialization of and the continued development of our product
candidates. We may also be required to enter into long-term manufacturing agreements that contain exclusivity
provisions and/or substantial termination penalties, which could have a material adverse effect on our business prior to
and after commercialization.
Our current and anticipated future dependence upon others for the manufacture of our other product
candidates or products may adversely affect our future profit margins and our ability to commercialize any products
that receive marketing approval on a timely and competitive basis.
If we are not able to establish additional collaborations, we may have to alter our development and
commercialization plans.
Our drug development programs and the potential commercialization of our product candidates will require
additional cash to fund expenses. For some of our product candidates, we may decide to collaborate with
pharmaceutical and biotechnology companies for the development and potential commercialization of those product
candidates.
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We face significant competition in seeking appropriate collaborators. Whether we reach definitive agreements
for a collaboration will depend, among other things, upon our assessment of the collaborator’s resources and expertise,
the terms and conditions of the proposed collaboration, and the proposed collaborator’s evaluation of a number of
factors. Those factors may include the design or results of clinical trials, the likelihood of approval by the FDA or
foreign regulatory authorities, the potential market for the subject product candidate, the costs and complexities of
manufacturing and delivering such product candidate to patients, the potential of competing products, and the
existence of uncertainty with respect to our ownership of technology, which can exist if there is a challenge to such
ownership without regard to the merits of the challenge and industry and market conditions generally. The collaborator
may also consider alternative product candidates or technologies for similar indications that may be available to
collaborate on and whether such a collaboration could be more attractive than the one with us for our product
candidate. Collaborations are complex and time consuming to negotiate and document. In addition, there have been a
significant number of recent business combinations among large pharmaceutical companies that have resulted in a
reduced number of potential future collaborators.
We may not be able to negotiate collaborations on a timely basis, on acceptable terms, or at all. If we are
unable to do so, we may have to curtail the development of certain product candidates, reduce or delay our
development programs, delay potential commercialization or reduce the scope of any sales or marketing activities, or
increase our expenditures and undertake development or commercialization activities at our own expense. If we elect
to increase our expenditures to fund development or commercialization activities on our own, we may need to obtain
additional capital, which may not be available to us on acceptable terms or at all. If we do not have sufficient funds, we
may not be able to further develop our product candidates or bring them to market and generate product revenue.
We may not realize the benefits of our current or future collaborations or licensing arrangements with third parties
for the development and commercialization of our product candidates and may be unsuccessful in consummating
future partnerships or capitalizing on the market potential of our product candidates.
Our current or future collaborations or licensing arrangements may not be successful. Additionally, we have
partnered, and intend to further partner, with third parties with respect to the clinical development and
commercialization, if approved, of certain of our programs, and we may not be successful in identifying, negotiating
and executing partnerships. Our likely future collaborators for any collaboration arrangements include large and mid-
size pharmaceutical companies, regional and national pharmaceutical companies, and biotechnology companies. Any
such arrangements with any third parties may result in us having limited control over the amount and timing of
resources that our collaborators dedicate to the development or commercialization of our product candidates. Our
ability to generate revenues from these arrangements will depend on our collaborators’ abilities to successfully
perform the functions assigned to them in these arrangements. For example, we have engaged in a strategic
collaboration with IQVIA, pursuant to which we intend to leverage IQVIA’s expertise and resources for the
commercialization and launch of the investigational combination of avutometinib plus defactinib for the treatment of
recurrent KRAS mutant LGSOC. Accordingly, we will depend on IQVIA and their performance under the strategic
collaboration arrangements for the successful commercialization and launch of avutometinib and defactinib for the
treatment of recurrent KRAS mutant LGSOC. If IQVIA does not successfully carry out their responsibilities under the
collaboration agreements or does not perform to the standard or level we anticipate, the benefits of the strategic
collaboration with IQVIA may not be realized and our commercialization efforts will be harmed.
Collaborations involving our product candidates are subject to numerous risks, which may include that:
●
collaborators have significant discretion in determining the efforts and resources that they will apply to
these collaborations;
●
collaborators may not pursue development and commercialization of our product candidates or may elect
not to continue or renew development or commercialization programs based on clinical trial results,
changes in the collaborator's strategic focus or available funding, or external factors such as an
acquisition that diverts resources or creates competing priorities;
●
collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a
clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new
formulation of a product candidate for clinical testing; collaborators could independently develop, or
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develop with third parties, products that compete directly or indirectly with our products or product
candidates if the collaborators believe that competitive products are more likely to be successfully
developed or can be commercialized under terms that are more economically attractive than ours;
●
agreements with collaborators may not provide exclusive rights to use their intellectual property and
technology in all relevant fields of use and in all territories in which we may wish to develop or
commercialize our technology and product candidates in the future;
●
collaborators could independently develop, or develop with third parties, products that compete directly
or indirectly with our product candidates;
●
a collaborator with marketing, manufacturing or distribution rights to one or more products may not
commit sufficient resources to the marketing and distribution of such product or products or otherwise
not perform satisfactorily in carrying out these activities;
●
collaborators may not properly maintain or defend our intellectual property rights or may use our
proprietary information in such a way as to invite litigation that could jeopardize or invalidate our
proprietary information or expose us to potential litigation;
●
disputes may arise between the collaborators and us that result in the delay or termination of the
research, development or commercialization of our products or product candidates or that result in costly
litigation or arbitration that diverts management attention and resources; and
●
collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue
further development or commercialization of the applicable product candidates.
Collaboration agreements may not lead to development or commercialization of product candidates in the
most efficient manner or at all.
Our operations in foreign jurisdictions, and those of third parties for which we rely on, may be impacted by
economic, political and social conditions in such jurisdictions.
Our business could be adversely affected by conditions the adverse geopolitical and macroeconomic
developments, including the military conflict between Ukraine and Russia, the ongoing military conflict in the Middle
East, and any related sanctions. While we do not currently have clinical trials in Ukraine, Russia, or the Middle East,
we have clinical trial sites in Europe. We also source clinical supply for our product candidates from third party
contract manufacturing organizations in Europe. Additionally, GenFleet is conducting a Phase 1/2 clinical trial
evaluating GFH375/VS-7375 in China. For such activities conducted in China, we are exposed to the possibility of
product supply disruption and increased costs in the event of changes in the policies of the U.S. or Chinese
governments, political unrest or unstable economic conditions including sanctions on China or any of our China-based
counterparties. Furthermore, the conflicts between Ukraine and Russia, the ongoing military conflict in the Middle
East, and the associated measures taken or that may be taken by the United States, North Atlantic Treaty Organization
(“NATO”) and others create global security concerns, including the possibility of expanded regional or global conflict,
and are likely to have short-term and likely longer-term negative impacts on regional and global economies, any or all
of which could disrupt our supply chain, and adversely affect our ability to conduct ongoing and future clinical trials of
our product candidates.
Risks Related to Our Intellectual Property
If we fail to comply with our obligations under our intellectual property licenses with third parties, we could lose
license rights that are important to our business.
We are a party to a number of intellectual property license agreements with third parties, including Pfizer and
Chugai, and expect to enter into additional license agreements in the future. Our existing license agreements impose,
and we expect that future license agreements will impose, various diligence, milestone payment, royalty, insurance,
and other obligations on us. For example, under our license agreements with Pfizer and Chugai, we are required to use
diligent or commercially reasonable efforts to develop and commercialize licensed products under the agreement and
to satisfy other specified obligations. If we fail to comply with our obligations under these licenses, our licensors may
have the right to terminate these license agreements, in which event we might not be able to market any product that is
covered by these agreements, or to convert the exclusive licenses to non-exclusive
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licenses, which could materially adversely affect the value of the product candidate being developed under these
license agreements. Termination of these license agreements or reduction or elimination of our licensed rights may
result in our having to negotiate new or reinstated licenses with less favorable terms, which may not be possible. If
Pfizer were to terminate its license agreement with us for any reason, we would lose our rights to defactinib. If Chugai
were to terminate its license agreement with us for any reason, we could lose our rights to avutometinib.
In addition, we rely on certain of our licensors to prosecute patent applications and maintain patents and
otherwise protect the intellectual property we license from them and may continue to do so in the future. We have
limited control over these activities or any other intellectual property that may be related to our in-licensed intellectual
property. For example, we cannot be certain that such activities by these licensors have been or will be conducted in
compliance with applicable laws and regulations or will result in valid and enforceable patents and other intellectual
property rights. We have limited control over the manner in which our licensors initiate an infringement proceeding
against a third-party infringer of the intellectual property rights or defend certain of the intellectual property that is
licensed to us. It is possible that any licensors’ infringement proceeding, or defense activities may be less vigorous
than had we conducted them ourselves.
If we are unable to obtain and maintain patent protection for our products, or if our licensors are unable to obtain
and maintain patent protection for the products that we license from them, or if the scope of the patent protection
obtained is not sufficiently broad, our competitors could develop and commercialize products similar or identical to
ours, and our ability to successfully commercialize our products may be adversely affected.
Our success depends in large part on our and our licensors’ ability to obtain and maintain patent protection in
the United States and other countries with respect to our products, their respective components, formulations,
combination therapies, methods used to manufacture them and methods of treatment and development that are
important to our business. If we or our licensors do not adequately protect our or our licensors’ intellectual property
rights, competitors may be able to erode or negate any competitive advantage we may have, which could harm our
business and ability to achieve profitability. We and our licensors seek to protect our proprietary position by filing
patent applications in the United States and abroad related to our products that are important to our business. We may
in the future also license or purchase patent applications filed by others. If we or our licensors are unable to secure or
maintain patent protection with respect to our products and any proprietary products and technology we develop, our
business, financial condition, results of operations, and prospects could be materially harmed. We also cannot be
certain that any patents will issue with claims that cover our products.
If the scope of the patent protection we or our licensors obtain is not sufficiently broad, we may not be able to
prevent others from developing and commercializing products and technology similar or identical to ours. The degree
of patent protection we require to successfully compete in the marketplace may be unavailable or severely limited in
some cases and may not adequately protect our rights or permit us to gain or keep any competitive advantage. We
cannot provide any assurances that any of our or our licensors’ patents have, or that any of our or our licensors’
pending patent applications that mature into issued patents will include, claims with a scope sufficient to protect our
products or otherwise provide any competitive advantage. In addition, to the extent that we license intellectual
property, we cannot make assurances that those licenses will remain in force. In addition, the laws of foreign countries
may not protect our rights to the same extent as the laws of the United States. Furthermore, patents have a limited
lifespan. In the United States, the natural expiration of a patent is generally 20 years after it is filed (21 years if first
filed as a provisional application). Various extensions may be available; however, the life of a patent, and the
protection it affords, is limited.
Even if they are unchallenged, our or our licensors’ patents and pending patent applications, if issued, may
not provide us with any meaningful protection or prevent competitors from designing around our or our licensors’
patent claims to circumvent our patents by developing similar or alternative technologies or therapeutics in a non-
infringing manner. For example, a third party may develop a competitive therapy that provides benefits similar to our
products but that uses a formulation and/or a method that falls outside the scope of our patent protection. If the patent
protection provided by the patents and patent applications we hold, license, or pursue with respect to our products is
not sufficiently broad to impede such competition, our ability to successfully commercialize our products could be
negatively affected, which would harm our business. Similar risks would apply to any patents or patent applications
that we may own or license.
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The patent prosecution process is expensive and time consuming, and we may not be able to file and
prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. In addition, we may
not pursue or obtain patent protection in all relevant markets. It is also possible that we will fail to identify patentable
aspects of our research and development output before it is too late to obtain patent protection. Moreover, in some
circumstances, we do not have the right to control the preparation, filing and prosecution of patent applications, or to
maintain the patents, covering products that we license from third parties and are reliant on our licensors. Therefore,
we cannot be certain that these patents and applications will be prosecuted and enforced in a manner consistent with
the best interests of our business. If such licensors fail to maintain such patents, or lose rights to those patents, the
rights we have licensed may be reduced or eliminated.
The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves
complex legal and factual questions, and has in recent years been the subject of much litigation. As a result, the
issuance, scope, validity, enforceability, and commercial value of our and our licensors’ patent rights are highly
uncertain. Our and our licensors’ pending and future patent applications may not result in patents being issued which
protect our products or which effectively prevent others from commercializing competitive products. Changes in either
the patent laws or interpretation of the patent laws in the United States and other countries may diminish the our ability
to protect our inventions, maintain and enforce our intellectual property rights, or narrow the scope of our patent
protection, or affect the value of our intellectual property.
The laws of foreign countries may not protect our rights to the same extent as the laws of the United States.
Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in
the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases, at all.
Therefore, we cannot be certain that we or our licensors were the first to make the inventions claimed in our owned or
licensed patents or pending patent applications, or that we or our licensors were the first to file for patent protection of
such inventions.
Assuming the other requirements for patentability are met, in the United States, for patents that have an
effective filing date prior to March 15, 2013, the first to make the claimed invention is entitled to the patent, while
outside the United States, the first to file a patent application is entitled to the patent. In March 2013, the United States
transitioned to a first inventor to file system in which, assuming the other requirements for patentability are met, the
first inventor to file a patent application will be entitled to the patent. We may be subject to a third-party pre-issuance
submission of prior art to the U.S. Patent and Trademark Office, or become involved in opposition, derivation,
reexamination, inter parties review or interference proceedings challenging our patent rights or the patent rights of
others. An adverse determination in any such submission, proceeding, or litigation could reduce the scope of, or
invalidate, our patent rights, allow third parties to commercialize our products and compete directly with us, without
payment to us, or result in our inability to manufacture or commercialize products without infringing third-party patent
rights.
Even if our owned and licensed patent applications issue as patents, they may not issue in a form that will
provide us with any meaningful protection, prevent competitors from competing with us, or otherwise provide us with
any competitive advantage. The scope of the invention claimed in a patent application can be significantly reduced
before the patent is issued, and this scope can be reinterpreted after issuance. Even where patent applications we
currently own, license, or that we may license in the future issue as patents, they may not issue in a form that will
provide us with adequate protection to prevent competitors or other third parties from competing with us, or otherwise
provide us with a competitive advantage. Any patents that eventually issue may be challenged, narrowed or invalidated
by third parties. Consequently, we do not know whether any of our products will be protectable or remain protected by
valid and enforceable patent rights. Our competitors or other third parties may be able to circumvent our owned or
licensed patents by developing similar or alternative technologies or products in a non-infringing manner.
The issuance of a patent is not conclusive as to its inventorship, scope, validity, or enforceability, and our
owned and licensed patents may be challenged in the courts or patent offices in the United States and abroad. There
may be prior art of which we are not aware that may affect the validity or enforceability of a patent claim. There also
may be prior art of which we are aware, but which we do not believe affects the validity or enforceability of a claim,
which may, nonetheless, ultimately be found to affect the validity or enforceability of a claim. We may in the future,
become subject to a third-party pre-issuance submission of prior art or opposition, derivation, revocation, re-
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examination, post-grant and inter partes review, or interference proceeding and other similar proceedings challenging
our patent rights or the patent rights of others in the USPTO or other foreign patent office. Such challenges may result
in loss of exclusivity or freedom to operate or in patent claims being narrowed, invalidated, or held unenforceable,
which could limit our ability to stop others from using or commercializing similar or identical products, or limit the
duration of the patent protection of our products.
In addition, given the amount of time required for the development, testing, and regulatory review of new
products, patents protecting such products might expire before or shortly after such products are commercialized. As a
result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from
commercializing products similar or identical to ours.
Moreover, some of our owned and in-licensed patents and patent applications are, and may in the future be,
co-owned with third parties. If we are unable to obtain an exclusive license to any such third-party co-owners’ interest
in such patents or patent applications, such co-owners may be able to license their rights to other third parties,
including our competitors, and our competitors could market competing products and technology. In addition, we or
our licensors may need the cooperation of any such co-owners of our owned and in-licensed patents in order to enforce
such patents against third parties, and such cooperation may not be provided to us or our licensors. Any of the
foregoing could have a material adverse effect on our competitive position, business, financial conditions, results of
operations and prospects.
If our efforts to protect the proprietary nature of the intellectual property related to our products are not adequate,
we may not be able to compete effectively in our market.
We rely upon a combination of patents, confidentiality agreements, trade secret protection and license
agreements to protect the intellectual property related to our products. Any disclosure to or misappropriation by third
parties of our confidential proprietary information could enable competitors to quickly duplicate or surpass our
technological achievements, thus eroding our competitive position in our market. We, or any partners, collaborators, or
licensors, may fail to identify patentable aspects of inventions made in the course of development and
commercialization activities before it is too late to obtain patent protection on them. Therefore, we may miss potential
opportunities to strengthen our patent position.
It is possible that defects of form in the preparation or filing of our patents or patent applications may exist, or
may arise in the future, for example with respect to proper priority claims, inventorship, claim scope, or requests for
patent term adjustments. If we or our partners, collaborators, or licensors fail to establish, maintain or protect such
patents and other intellectual property rights, such rights may be reduced or eliminated. If our partners, collaborators,
or licensors are not fully cooperative or disagree with us as to the prosecution, maintenance or enforcement of any
patent rights, such patent rights could be compromised. If there are material defects in the form, preparation,
prosecution, or enforcement of our patents or patent applications, such patents may be invalid and/or unenforceable,
and such applications may never result in valid, enforceable patents. Any of these outcomes could impair our ability to
prevent competition from third parties, which may have an adverse impact on our business.
We anticipate additional patent applications will be filed both in the United States and in other countries, as
appropriate. However, we cannot predict:
●
if additional patent applications covering new technologies related to our products will be filed;
●
if and when patents will issue;
●
the degree and range of protection any issued patents will afford us against competitors, including whether
third parties will find ways to invalidate or otherwise circumvent our patents;
●
whether any of our intellectual property will provide any competitive advantage;
●
whether any of our patents that may be issued may be challenged, invalidated, modified, revoked,
circumvented, found to be unenforceable or otherwise may not provide any competitive advantage;
●
whether or not others will obtain patents claiming aspects similar to those covered by our patents and
patent applications; or
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●
whether we will need to initiate or defend litigation or administrative proceedings which may be costly
regardless of whether we win or lose.
Additionally, we cannot be certain that the claims in our pending patent applications covering our products
and their methods of use will be considered patentable by the USPTO, or by patent offices in foreign countries, or that
the claims in any of our issued patents will be considered valid or patentable by courts in the United States or foreign
countries.
Method of use patents protect the use of a product for the specified method. These types of patents do not
prevent a competitor from making and marketing a product that is identical to our product for an indication that is
outside the scope of the patented method. Moreover, even if competitors do not actively promote their product for our
targeted indications, physicians may prescribe these products “off-label.” Although off-label prescriptions may, but not
necessarily, contribute to a finding of infringement of method of use patents, the practice is common and such
infringement is difficult to prevent or prosecute.
We may not be successful in obtaining or maintaining necessary rights to product components and processes for
our development pipeline through acquisitions and in-licenses.
Presently we have rights to certain patents and applications through licenses from third parties and own
patents and patent applications related to our products. Additional product candidates or therapies, including
combination therapies, with avutometinib and/or defactinib, may require the use of proprietary rights held by third
parties, the growth of our business will likely depend in part on our ability to acquire, in-license or use these
proprietary rights. We may be unable to acquire or in-license compositions, methods of use, processes or other
intellectual property rights from third parties that we identify as necessary or important to our business operations. If
we fail to obtain any of these licenses at a reasonable cost or on reasonable terms, if at all, it would harm our business.
We may need to cease use of the additional product candidates or methods covered by such third-party intellectual
property rights, and/or may need to seek to develop alternative approaches that do not infringe on such intellectual
property rights which may entail additional costs and development delays, even if it is possible and we were able to
develop such alternatives. Even if we are able to obtain a license, it may be non-exclusive, thereby giving our
competitors access to the same technologies that we have licensed. In that event, we may be required to expend
significant time and resources to develop or license replacement technologies. Moreover, the specific product
candidates or methods that may be used with our products may be covered by the intellectual property rights of others.
Additionally, we may seek to acquire new compounds and product candidates from other pharmaceutical and
biotechnology companies, academic scientists and other researchers, such as our exclusive in-license from Pfizer, and
Chugai to research, develop, commercialize, and manufacture products in oncology indications containing defactinib
and avutometinib, respectively. The success of this strategy depends partly upon our ability to identify, select, discover
and acquire promising pharmaceutical product candidates and products. The process of proposing, negotiating and
implementing a license or acquisition of a product candidate or approved product is lengthy and complex.
Furthermore, we have and may continue to collaborate with academic institutions to accelerate our preclinical
research or development under written agreements with these institutions. In certain cases, these institutions provide us
with an option to negotiate a license to any of the institution’s rights in technology resulting from the collaboration.
Regardless of such option, we may be unable to negotiate a license within the specified timeframe or under terms that
are acceptable to us. If we are unable to do so, the institution may offer the intellectual property rights to others,
potentially blocking our ability to pursue our program. If we are unable to successfully obtain rights to required third-
party intellectual property or to maintain the existing intellectual property rights we have, we may have to abandon
development of such program and our business and financial condition could suffer.
The licensing and acquisition of third-party intellectual property rights is a competitive area, and companies,
which may be more established, or have greater resources than we do, may also be pursuing strategies to license or
acquire third-party intellectual property rights that we may consider necessary or attractive in order to commercialize
our products. More established companies may have a competitive advantage over us due to their
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size, cash resources and greater clinical development and commercialization capabilities. Moreover, we may devote
resources to potential acquisitions or in-licensing opportunities that are never completed, or we may fail to realize the
anticipated benefits of such efforts. We also may be unable to license or acquire the relevant compound or product
candidate on terms that would allow us to make an appropriate return on our investment. Any product candidate that
we acquire may require additional development efforts prior to commercial sale, including manufacturing, pre-clinical
testing, extensive clinical testing and approval by the FDA and applicable foreign regulatory authorities. All product
candidates are prone to risks of failure typical of pharmaceutical product development.
In addition, future product or business acquisitions may entail numerous operational and financial risks,
including:
●
exposure to unknown liabilities;
●
disruption of our business and diversion of our management’s time and attention to develop acquired
products, product candidates, or technologies;
●
higher than expected acquisition and integration costs;
●
increased amortization expenses; and
●
incurrence of substantial debt, dilutive issuances of securities or depletion of cash to pay for acquisitions.
Future business acquisitions may also entail certain additional risks, such as:
●
difficulty in combining the operations and personnel of any acquired businesses with our operations and
personnel;
●
impairment of relationships with key suppliers or customers of any acquired businesses due to changes
in management and ownership; and
●
inability to motivate key employees of any acquired businesses.
Obtaining and maintaining our patent protection depends on compliance with various procedural, document
submission, fee payment and other requirements imposed by governmental patent agencies, and our patent
protection could be reduced or eliminated for non-compliance with these requirements.
Some of our pending patent applications may not be allowed in the future. We cannot be certain that an
allowed patent application will become an issued patent. There may be events that cause withdrawal of the allowance
of a patent application. For example, after a patent application has been allowed, but prior to being issued, material that
could be relevant to patentability may be identified. In such circumstances, the applicant may pull the application from
allowance in order for the USPTO to review the application in view of the new material. We cannot be certain that the
USPTO will issue the application in view of the new material. Further, periodic maintenance fees on any issued patent
are due to be paid to the USPTO and foreign countries may require the payment of maintenance fees or patent
annuities during the lifetime of a patent application and/or any subsequent patent that issues from the application. The
USPTO and various foreign governmental patent agencies require compliance with a number of procedural,
documentary, fee payment and other similar provisions during the patent application process and following the
issuance of a patent. While an inadvertent lapse can in many cases be cured by payment of a late fee or by other means
in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or
lapse of the patent or patent application. Such noncompliance can result in partial or complete loss of patent rights in
the relevant jurisdiction. Noncompliance events that could result in abandonment or lapse of a patent or patent
application include, but are not limited to, failure to respond to official actions within prescribed time limits, non-
payment of fees and failure to properly legalize and submit formal documents. Such an event could have a material
adverse effect on our business.
Issued patents covering our products could be found invalid or unenforceable if challenged in court or the USPTO.
If we or one of our licensing partners initiate legal proceedings against a third party to enforce a patent
covering our products, the defendant could counterclaim that the patent covering our products, as applicable, is
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invalid and/or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity
and/or unenforceability are commonplace, and there are various grounds upon which a third party can assert invalidity
or unenforceability of a patent. Third parties may also raise similar claims before administrative bodies in the United
States or abroad, even outside the context of litigation. Such mechanisms include re-examination, inter partes review,
post grant review and equivalent proceedings in foreign jurisdictions (such as opposition proceedings). Such
proceedings could result in revocation or amendment to our patents in such a way that they no longer cover our
products. The outcome following legal assertions of invalidity and unenforceability is unpredictable. With respect to
the validity question, for example, we cannot be certain that there is no invalidating prior art, of which we, our patent
counsel and the patent examiner were unaware during prosecution. If a defendant were to prevail on a legal assertion
of invalidity and/or unenforceability, or if we are otherwise unable to adequately protect our rights, we would lose at
least part, and perhaps all, of the patent protection on our products. Such a loss of patent protection could have a
material adverse impact on our business and our ability to commercialize or license our technology and products.
Changes to patent law in the United States and in foreign jurisdictions could diminish the value of patents in
general, thereby impairing our ability to protect our products.
As is the case with other drug and biopharmaceutical companies, our success is heavily dependent on
intellectual property, particularly patents. Obtaining and enforcing patents in the drug and biopharmaceutical industry
involves both technological and legal complexity, and is therefore costly, time-consuming and inherently uncertain. In
addition, the United States has passed wide-ranging patent reform legislation under the America Invents Act.
Moreover, recent U.S. Supreme Court rulings have narrowed the scope of patent protection available in certain
circumstances and weakened the rights of patent owners in certain situations. In addition to increasing uncertainty with
regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to
the value of patents, once obtained. Depending on decisions by the U.S. Congress, the federal courts, and the USPTO,
the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain
new patents or to enforce our existing patents and patents that we might obtain in the future. We cannot predict how
future decisions by the courts, Congress or the USPTO may impact the value of our patents. Similarly, any adverse
changes in the patent laws of other jurisdictions could have a material adverse effect on our business and financial
condition. Changes in the laws and regulations governing patents in other jurisdictions could similarly have an adverse
effect on our ability to obtain and effectively enforce our patent rights.
We have limited foreign intellectual property rights and may not be able to protect our intellectual property rights
throughout the world.
We may not be able to pursue patent coverage of our products in certain countries outside of the United
States. Filing, prosecuting and defending patents on products in all countries throughout the world would be
prohibitively expensive, and our intellectual property rights in some countries outside the United States may be less
extensive than those in the United States. In addition, the laws of some foreign countries do not protect intellectual
property rights to the same extent as federal and state laws in the United States. The breadth and strength of our patents
issued in foreign jurisdictions or regions may not be the same as the corresponding patents issued in the United States.
Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the
United States, or from selling or importing products made using our inventions in and into the United States or other
jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to
develop their own products and further, may export otherwise infringing products to certain territories where we have
patent protection, but enforcement is not as strong as that in the United States. These products may compete with our
products and our patents or other intellectual property rights may not be effective or sufficient to prevent them from
competing.
Many companies have encountered significant problems in protecting and defending intellectual property
rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not
favor the enforcement of patents, trade secrets and other intellectual property protections, particularly those relating to
drug and biopharmaceutical products. This difficulty with enforcing patents could make it difficult for us to stop the
infringement of our patents or marketing of competing products otherwise generally in violation of our proprietary
rights. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our
efforts and attention from other aspects of our business, could put our patents at risk of being
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invalidated or interpreted narrowly, put our patent applications at risk of not issuing and could provoke third parties to
assert claims against us. We may not prevail in any lawsuits that we initiate and the damages or other remedies
awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property
rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property
that we develop or license.
If we do not obtain patent term extension and data exclusivity for any of our current products, our business may be
materially harmed.
Depending upon the timing, duration and specifics of any FDA marketing approval of our current products,
one or more of our U.S. patents may be eligible for limited patent term extension under the Drug Price Competition
and Patent Term Restoration Act of 1984, or the Hatch-Waxman Amendments. The Hatch-Waxman Amendments
permit a patent extension term of up to five years as compensation for patent term lost during the FDA regulatory
review process. A patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from
the date of product approval, only one patent may be extended and only those claims covering the approved drug, a
method for using it, or a method for manufacturing it may be extended. However, we may not be granted an extension
because of, for example, failing to exercise due diligence during the testing phase or regulatory review process, failing
to apply for a patent extension within applicable deadlines, failing to apply prior to expiration of relevant patents, or
otherwise failing to satisfy applicable requirements. Moreover, the applicable time period or the scope of patent
protection afforded could be less than we request. If we are unable to obtain patent term extension or the term of any
such extension is less than we believe we are entitled to, our competitors may obtain approval of competing products
sooner than we would expect, and our business, financial condition, results of operations, and prospects could be
materially harmed.
We may become involved in lawsuits to protect or enforce our patents, which could be expensive, time consuming,
and unsuccessful.
Competitors may infringe our patents or the patents of our licensors. To counter infringement or unauthorized
use, we may be required to file infringement claims, which can be expensive and time consuming.
In addition, in an infringement proceeding, a court may decide that a patent of ours is invalid or
unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that our patents
do not cover the technology in question. An adverse result in any litigation proceeding could put one or more of our
patents at risk of being invalidated or interpreted narrowly and could put our patent applications at risk of not issuing.
Defense against these assertions, non-infringement, invalidity or unenforceability regardless of their merit, would
involve substantial litigation expense and would be a substantial diversion of employee resources from our business. In
the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble
damages and attorneys’ fees for willful infringement, obtain one or more licenses from third parties, pay royalties or
redesign our infringing products, which may be impossible or require substantial time and monetary expenditure.
Post-grant proceedings provoked by third parties or brought by the USPTO may be brought to determine the
validity or priority of inventions with respect to our patents or patent applications or those of our licensors. An
unfavorable outcome could result in a loss of our current patent rights and could require us to cease using the related
technology or to attempt to license rights to it from the prevailing party. Our business could be harmed if the prevailing
party does not offer us a license on commercially reasonable terms. Litigation or post-grant proceedings may result in
a decision adverse to our interests and, even if we are successful, may result in substantial costs and distract our
management and other employees. We may not be able to prevent, alone or with our licensors, misappropriation of our
trade secrets or confidential information, particularly in countries where the laws may not protect those rights as fully
as those within the United States.
Furthermore, because of the substantial amount of discovery required in connection with intellectual property
litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type
of litigation. In addition, our licensors may have rights to file and prosecute such claims, and we are reliant on them.
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Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the
outcome of which would be uncertain and could have a material adverse effect on the success of our business.
Our commercial success depends upon our ability and the ability of our collaborators to commercialize,
develop, manufacture, market, and sell our products without infringing the proprietary rights of third parties. We have
yet to conduct comprehensive freedom to operate searches to determine whether our use of certain of the patent rights
owned by or licensed to us would infringe patents issued to third parties. We may become party to, or threatened with,
future adversarial proceedings or litigation regarding intellectual property rights with respect to our products, including
interference proceedings before the U.S. Patent and Trademark Office. Third parties may assert infringement claims
against us based on existing patents or patents that may be granted in the future. If we are found to infringe a third
party’s intellectual property rights, we could be required to obtain a license from such third party to continue
developing and marketing our products. However, we may not be able to obtain any required license on commercially
reasonable terms or at all. Even if we were able to obtain a license, it could be non-exclusive, thereby giving our
competitors access to the same technologies licensed to us. We could be forced, including by court order, to cease
commercializing the infringing product. In addition, we could be found liable for monetary damages. A finding of
infringement could prevent us from commercializing our products or force us to cease some of our business
operations, which could materially harm our business. Claims that we have misappropriated the confidential
information or trade secrets of third parties could have a similar negative impact on our business.
If a third party alleges that we infringe its intellectual property rights, we may face a number of issues,
including, but not limited to:
●
infringement and other intellectual property misappropriation which, regardless of merit, may be
expensive and time-consuming to litigate and may divert our management’s attention from our core
business;
●
substantial damages for infringement or misappropriation, which we may have to pay if a court decides
that the product or technology at issue infringes on or violates the third-party’s rights, and, if the court
finds we have willfully infringed intellectual property rights, we could be ordered to pay treble damages
and the patent owner’s attorneys’ fees;
●
an injunction prohibiting us from manufacturing, marketing or selling our products, or from using our
proprietary technologies, unless the third party agrees to license its patent rights to us;
●
even if a license is available from a third party, we may have to pay substantial royalties, upfront fees and
other amounts, and/or grant cross-licenses to intellectual property rights protecting our products; and
●
we may be forced to try to redesign our products or processes so they do not infringe third-party
intellectual property rights, an undertaking which may not be possible or which may require substantial
monetary expenditures and time.
Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we
can because they have substantially greater resources. In addition, any uncertainties resulting from the initiation and
continuation of any litigation could have a material adverse effect on our ability to raise the funds necessary to
continue our operations or could otherwise have a material adverse effect on our business, results of operations,
financial condition and prospects.
Third parties may assert that we are employing their proprietary technology without authorization. Patents issued
in the United States by law enjoy a presumption of validity that can be rebutted only with evidence that is “clear and
convincing,” a heightened standard of proof. There may be issued third-party patents of which we are currently
unaware with claims to compositions, formulations, methods of manufacture or methods for treatment related to the
use or manufacture of our products. Patent applications can take many years to issue. There may be currently pending
patent applications which may later result in issued patents that may be infringed by our products. Moreover, we may
fail to identify relevant patents or incorrectly conclude that a patent is invalid, not enforceable, exhausted, or not
infringed by our activities. If any third-party patents, held now or obtained in the future by a third party, were found by
a court of competent jurisdiction to cover the manufacturing process of our products, constructs or molecules used in
or formed during the manufacturing process, or any final product or methods use of
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the product, the holders of any such patents may be able to block our ability to commercialize the product unless we
obtained a license under the applicable patents, or until such patents expire or they are finally determined to be held
invalid or unenforceable. Similarly, if any third-party patent were held by a court of competent jurisdiction to cover
any aspect of our formulations, any combination therapies or patient selection methods, the holders of any such patent
may be able to block our ability to develop and commercialize the product unless we obtained a license or until such
patent expires or is finally determined to be held invalid or unenforceable. In either case, such a license may not be
available on commercially reasonable terms or at all. If we are unable to obtain a necessary license to a third-party
patent on commercially reasonable terms, or at all, our ability to commercialize our products may be impaired or
delayed, which could in turn significantly harm our business. Even if we obtain a license, it may be non-exclusive,
thereby giving our competitors access to the same technologies licensed to us. In addition, if the breadth or strength of
protection provided by our patents and patent applications is threatened, it could dissuade companies from
collaborating with us to license, develop or commercialize our products.
Parties making claims against us may seek and obtain injunctive or other equitable relief, which could
effectively block our ability to further develop and commercialize our products. Defense of these claims, regardless of
their merit, could involve substantial litigation expense and would be a substantial diversion of employee resources
from our business. In the event of a successful claim of infringement against us, we may have to pay substantial
damages, including treble damages and attorneys’ fees for willful infringement, obtain one or more licenses from third
parties, pay royalties or redesign our infringing products, which may be impossible or require substantial time and
monetary expenditure. We cannot predict whether any such license would be available at all or whether it would be
available on commercially reasonable terms. Furthermore, even in the absence of litigation, we may need or may
choose to obtain licenses from third parties to advance our research or allow commercialization of our products. We
may fail to obtain any of these licenses at a reasonable cost or on reasonable terms, if at all. In that event, we would be
unable to further develop and commercialize our products, which could harm our business significantly.
We may be subject to claims challenging the inventorship or ownership of our patents and other intellectual
property.
We generally enter into confidentiality and intellectual property assignment agreements with our employees,
consultants, and contractors. These agreements generally provide that inventions conceived by the party in the course
of rendering services to us will be our exclusive property. However, those agreements may not be honored and may not
effectively assign intellectual property rights to us. Moreover, there may be some circumstances, where we are unable
to negotiate for such ownership rights. Disputes regarding ownership or inventorship of intellectual property can also
arise in other contexts, such as collaborations and sponsored research. If we are subject to a dispute challenging our
rights in or to patents or other intellectual property, such a dispute could be expensive and time-consuming. If we were
unsuccessful, we could lose valuable rights in intellectual property that we regard as our own.
We may be subject to claims that our employees have wrongfully used or disclosed alleged trade secrets of their
former employers.
Many of our employees were previously employed at universities or other biotechnology or pharmaceutical
companies, including our competitors or potential competitors. Although we try to ensure that our employees do not
use the proprietary information or know how of others in their work for us, we may be subject to claims that we or
these employees have used or disclosed intellectual property, including trade secrets or other proprietary information,
of any such employee’s former employer. Litigation may be necessary to defend against these claims. If we fail in
defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights
or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs and
be a distraction to management.
Intellectual property litigation could cause us to spend substantial resources and distract our personnel from their
normal responsibilities.
Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may
cause us to incur significant expenses, and could distract our technical and management personnel from their
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normal responsibilities. In addition, there could be public announcements of the results of hearings, motions, or other
interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it
could have a substantial adverse effect on the price of our common stock. Such litigation or proceedings could
substantially increase our operating losses and reduce the resources available for development activities or any future
sales, marketing or distribution activities. We may not have sufficient financial or other resources to adequately
conduct such litigation or proceedings. Some of our competitors may be able to sustain the costs of such litigation or
proceedings more effectively than we can because of their greater financial resources. Uncertainties resulting from the
initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability
to compete in the marketplace.
If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be
harmed.
In addition to seeking patents for some of our products, we also rely on trade secrets, including unpatented
know-how, technology, and other proprietary information, to maintain our competitive position. We seek to protect
these trade secrets, in part, by entering into non-disclosure and confidentiality agreements with parties who have
access to them, such as our employees, corporate collaborators, outside scientific collaborators, contract
manufacturers, consultants, advisors, and other third parties. We also enter into confidentiality and invention or patent
assignment agreements with our employees and consultants. Despite these efforts, any of these parties may breach the
agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain
adequate remedies for such breaches. These parties may also be subject to cyberattacks that result in such information
becoming available to competitors, including in jurisdictions where we or such parties may not be able to enforce our
rights.
Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive, and
time consuming, and the outcome is unpredictable. If we are unable to prevent unauthorized material disclosure of our
intellectual property to third parties, we may not be able to establish or maintain a competitive advantage in our
market, which could materially adversely affect our business, operating results and financial condition. If we choose to
go to court to stop a third party from using any of our trade secrets, we may incur substantial costs. These lawsuits may
consume our time and other resources even if we are successful. In addition, some courts inside and outside the United
States are less willing or unwilling to protect trade secrets. As a result, we may encounter significant problems in
protecting and defending our intellectual property both in the United States and abroad. If any of our trade secrets were
to be lawfully obtained or independently developed by a competitor, we would have no right to prevent them from
using that technology or information to compete with us. If any of our trade secrets were to be disclosed to or
independently developed by a competitor, our competitive position would be harmed.
If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition
in our marks of interest and our business may be adversely affected.
Our trademarks or trade names may be challenged, infringed, circumvented or declared generic or determined to
be infringing on other marks. We rely on both registration and common law protection for our trademarks. We may not
be able to protect our rights to these trademarks and trade names or may be forced to stop using these names, which we
need for name recognition by potential partners or customers in our markets of interest. During the trademark
registration process, we may receive Office Actions from the USPTO objecting to the registration of our trademark.
Although we would be given an opportunity to respond to those objections, we may be unable to overcome such
rejections. In addition, in the USPTO and in comparable agencies in many foreign jurisdictions, third parties are given
an opportunity to oppose pending trademark applications and/or to seek the cancellation of registered trademarks.
Opposition or cancellation proceedings may be filed against our trademarks, and our trademarks may not survive such
proceedings. If we are unable to establish name recognition based on our trademarks and trade names, we may not be
able to compete effectively and our business may be adversely affected.
European patents and patent applications could be challenged in the recently created Unified Patent Court for the
European Union.
Our owned or our licensors’ European patents and patent applications could be challenged in the recently
created Unified Patent Court (“UPC”) for the European Union. We may decide to opt out our European patents and
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patent applications from the UPC. However, if certain formalities and requirements are not met, our European patents
and patent applications could be challenged for non-compliance and brought under the jurisdiction of the UPC. We
cannot be certain that our or our licensors’ European patents and patent applications will avoid falling under the
jurisdiction of the UPC, if we decide to opt out of the UPC. Under the UPC, a granted European patent would be valid
and enforceable in numerous European countries. A successful invalidity challenge to a European patent under the
UPC would result in loss of patent protection in those European countries. Accordingly, a single proceeding under the
UPC could result in the partial or complete loss of patent protection in numerous European countries, rather than in
each validated European country separately as such patents always have been adjudicated. Such a loss of patent
protection could have a material adverse impact on our business and our ability to commercialize our technology and
products and, resultantly, on our business, financial condition, prospects and results of operations.
Risks Related to Achieving Regulatory Approval of Our Product Candidates and Other Legal Compliance
Matters
If we are not able to obtain, or if there are delays in obtaining, required regulatory approvals for our product
candidates, we will not be able to commercialize such candidates, and our ability to generate revenue will be
materially impaired.
Although the FDA has accepted for review our NDA under the accelerated approval pathway for
avutometinib in combination with defactinib for the treatment of adult patients with recurrent LGSOC who received at
least one prior systemic therapy and have a KRAS mutation, the NDA may not be approved. Obtaining approval of an
NDA can be a lengthy, expensive, and uncertain process, and the FDA has substantial discretion in the review and
approval process and may decide that our data is insufficient for approval and require additional preclinical, clinical, or
other studies. While we have engaged in discussions with the FDA with respect to the scope and nature of our NDA
submission for avutometinib in combination with defactinib, the FDA may, for example, require additional data under
the RAMP 301 study before approving the NDA for the scope we request, or at all. There can be no assurance
regarding the timing and outcome of the FDA review and approval of our NDA submission.
The activities associated with a product candidate’s development and commercialization, including its design,
testing, manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising, promotion, sale, and
distribution are subject to comprehensive regulation by the FDA and other regulatory agencies in the United States and
by comparable authorities in other countries. Failure to obtain marketing approval for product candidates will prevent
us from commercializing such product candidates. We have not received approval to market any of our current product
candidates from regulatory authorities in any jurisdiction in the United States. We have only limited experience in
filing and supporting the applications necessary to gain marketing approvals and have relied on and expect to rely on
third-party contract research organizations to assist us in this process. Securing FDA approval requires the submission
of extensive preclinical and clinical data and supporting information to the FDA for each therapeutic indication to
establish the product candidate’s safety and efficacy. Securing FDA approval also requires the submission of
information about the product manufacturing process to, and inspection of manufacturing facilities by, the FDA. A
product candidate may not be effective, may be only moderately effective, or may prove to have undesirable or
unintended side effects, toxicities or other characteristics that may preclude our obtaining marketing approval or
prevent or limit commercial use.
The process of obtaining marketing approvals, both in the United States and abroad, is expensive, may take
many years if additional clinical trials are required, if approval is obtained at all, and can vary substantially based upon
a variety of factors, including the type, complexity, and novelty of the product candidates involved. Changes in
marketing approval policies during the development period, changes in or the enactment of additional statutes or
regulations, or changes in regulatory review for each submitted product application, may cause delays in the approval
or rejection of an application. Any marketing approval we ultimately obtain may be subject to more limited indications
than those we propose or subject to restrictions or post approval commitments that render the approved product not
commercially viable.
If we experience delays in obtaining approval or if we fail to obtain approval of a product candidate, its
commercial prospects may be harmed and our ability to generate revenues will be materially impaired.
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We have received orphan drug designation for certain of our product candidates, but there can be no assurance that
we will be able to prevent third parties from developing and commercializing products that are competitive to these
product candidates.
In March 2024, the FDA granted orphan drug designation to avutometinib, alone or in combination with
defactinib for the treatment of patients with recurrent LGSOC. In July 2024, the FDA granted orphan drug designation
to avutometinib, in combination with defactinib, for the treatment of pancreatic cancer. Defactinib has received orphan
drug designation in the United States, the European Union, and Australia for the treatment of patients with ovarian
cancer. Orphan drug exclusivity grants seven years of marketing exclusivity under the FDCA, up to ten years of
marketing exclusivity in Europe, and five years of marketing exclusivity in Australia. Other companies have received
orphan drug designations for compounds other than defactinib for the same indications for which we may have
received orphan drug designation in corresponding territories. While orphan drug exclusivity for defactinib provides
market exclusivity against the same active ingredient for the same indication, we would not be able to exclude other
companies from manufacturing and/or selling drugs using the same active ingredient for the same indication beyond
that timeframe on the basis of orphan drug exclusivity. Furthermore, the marketing exclusivity in Europe can be
reduced from ten years to six years if the orphan designation criteria are no longer met or if the drug is sufficiently
profitable so that market exclusivity is no longer justified. Even if we are the first to obtain marketing authorization for
an orphan drug indication, there are circumstances under which the FDA may approve a competing product for the
same indication during the seven-year period of marketing exclusivity, such as if the later product is the same
compound as our product but is shown to be clinically superior to our product, or if the later product is a different drug
than our product candidate. Further, the seven-year marketing exclusivity would not prevent competitors from
obtaining approval of the same compound for other indications or of another compound for the same use as the orphan
drug. A decision in 2021 by the U.S. Court of Appeals for the Eleventh Circuit in Catalyst Pharmaceuticals, Inc. vs.
Becerra regarding interpretation of the Orphan Drug Act’s exclusivity provisions as applied to drugs and biologics
approved for orphan indications narrower than the product’s orphan designation has the potential to significantly
broaden the scope of orphan exclusivity for such products. FDA announced on January 24, 2023 that despite the
Catalyst decision, it will continue to apply its longstanding regulations, which tie the scope of orphan exclusivity to the
uses or indications for which the drug is approved, rather than to the designation. FDA’s application of its orphan drug
regulations post-Catalyst could be the subject of future legislation or to further challenges in court, which could impact
our ability to obtain or seek to work around orphan exclusivity and might affect our ability to retain orphan exclusivity
that the FDA previously has recognized for our products.
We have sought and obtained fast track designation from the FDA for one of our product candidates, and may seek
such fast track designation for one more additional product candidates, but we might not receive such additional
designation, and such designation may not actually lead to a faster development or regulatory review or approval
process nor does it ensure that we will receive marketing approval.
Any sponsor may seek fast track designation for a drug if it is intended for the treatment of a serious
condition and nonclinical or clinical data demonstrate the potential to address unmet medical need for this condition, a
drug sponsor may apply for FDA fast track designation. In January 2024, the FDA granted fast track designation for
combination of avutometinib and LUMAKRAS for the treatment of patients with KRAS G12C-mutant metastatic
NSCLC who have received at least one prior systematic therapy and have not been previously treated with a KRAS
G12C inhibitor. In April 2024, the FDA granted fast track designation for avutometinib, in combination with defactinib
plus LUMAKRAS for the treatment of patients with KRAS G12C-mutated metastatic NSCLC who received at least
one prior systematic therapy. We may also seek fast track designation for additional product candidates, which we may
not receive from the FDA. However, fast track designation does not ensure that we will receive marketing approval or
that approval will be granted within any particular timeframe. We may not experience a faster development or
regulatory review or approval process with fast track designation compared to conventional FDA procedures. In
addition, the FDA may withdraw fast track designation if it believes that the designation is no longer supported by data
from our clinical development program. Fast track designation alone does not guarantee qualification for the FDA’s
priority review procedures.
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We have completed an NDA submission under the FDA’s accelerated approval pathway for one of our product
candidates, and we may seek accelerated approval for one more additional product candidates. The FDA has
substantial discretion regarding approvals under the accelerated approval pathway, and we may not be able to
obtain accelerated approval for any of our product candidates.
The FDA has accepted for review our NDA under the accelerated approval pathway for avutometinib in
combination with defactinib for the treatment of adult patients with recurrent LGSOC, who received at least one prior
systemic therapy, and have a KRAS mutation. We may explore regulatory strategies for our other product candidates
that involve use of the FDA’s accelerated approval pathway. Under the accelerated approval program, the FDA may
grant accelerated approval to a drug designed to treat a serious or life-threatening condition that provides meaningful
therapeutic benefit over available therapies upon a determination that the drug has an effect on a surrogate endpoint or
intermediate clinical endpoint that is reasonably likely to predict clinical benefit. As a condition of approval, the FDA
requires that a sponsor of a drug receiving accelerated approval perform a post-marketing confirmatory clinical trial or
trials.
FDA has broad discretion with regard to approval under the accelerated approval program, and FDA’s
interpretation of the criteria for accelerated approval, such as what it considers to be available therapies, is subject to
change. No assurance can be given that other therapeutics will not receive full approval prior to our potential receipt of
accelerated approval. If that were to occur, no assurance can be given that we would be successful in proving
meaningful benefit over those later approved products. If we were unable to prove meaningful benefit over any
available therapies, we would be effectively blocked from receiving accelerated approval.
Even if we receive approval for any of our product candidates through the accelerated approval program, we
will be subject to rigorous post-marketing requirements, including the completion of one or more post-market
confirmatory studies, to verify the clinical benefit of our product candidate, and submission to the FDA of all
promotional materials prior to their dissemination. The FDA could seek to withdraw the approval, if received, for
multiple reasons, including if we fail to conduct any required post-market confirmatory trial with due diligence, our
post-market confirmatory trial does not confirm the predicted clinical benefit, other evidence shows that our product
candidate is not safe or effective under the conditions for use, or we disseminate promotional materials that are found
by FDA to be false or misleading.
Any delay in obtaining, or inability to obtain, approval through the accelerated approval pathway, or any
issues in maintaining any such approvals that we receive, would delay or prevent commercialization of our product
candidates, and would materially adversely affect our business, financial condition, results of operations, and cash
flows.
Any product candidate for which we obtain marketing approval could be subject to restrictions or withdrawal from
the market, and we may be subject to penalties if we fail to comply with regulatory requirements or if we experience
unanticipated problems with our products, when and if any of them are approved.
Any product candidate for which we obtain marketing approval, along with the manufacturing processes, post
approval clinical data, labeling, advertising, and promotional activities for such product, will be subject to continual
requirements of and review by the FDA and other regulatory authorities. These requirements include submissions of
safety and other post marketing information and reports, registration and listing requirements, cGMP requirements
relating to quality control, quality assurance, and corresponding maintenance of records and documents, requirements
regarding the distribution of samples to physicians and recordkeeping. Even if marketing approval of a product
candidate is granted, the approval may be subject to limitations on the indicated uses for which the product may be
marketed or to the conditions of approval, or contain requirements for costly post marketing testing and surveillance to
monitor the safety or efficacy of the product, including the imposition of a REMS.
The FDA closely regulates the post approval marketing and promotion of drugs to ensure drugs are marketed
only for the approved indications and in accordance with the provisions of the approved labeling. The FDA imposes
stringent restrictions on manufacturers’ communications regarding off label use, and if we do not market our products
for their approved indications, we may be subject to enforcement action for off label marketing.
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In addition, later discovery of previously unknown problems with our products, manufacturers or
manufacturing processes, or failure to comply with regulatory requirements, may yield various results, including:
●
restrictions on such products, manufacturers, or manufacturing processes;
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restrictions on the labeling or marketing of a product;
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restrictions on product distribution or use;
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requirements to conduct post marketing clinical trials;
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warning or untitled letters;
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withdrawal of the products from the market;
●
refusal to approve pending applications or supplements to approved applications that we submit;
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recall of products;
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fines, restitution, or disgorgement of profits or revenue;
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suspension or withdrawal of marketing approvals;
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refusal to permit the import or export of our products;
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product seizure; or
●
injunctions or the imposition of civil or criminal penalties.
The FDA’s and other regulatory authorities’ policies may change and additional government regulations may
be enacted that could prevent, limit or delay regulatory approval of our product candidates. If we are slow or unable to
adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to
maintain regulatory compliance, we may fail to obtain any marketing approvals, lose any marketing approval that we
may have obtained and we may not achieve or sustain profitability.
Our business operations, including our relationships with healthcare providers, third-party payors, and patients,
are or will be subject to a broad range of healthcare laws and regulations, which could expose us to criminal
sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings if our
activities are challenged as non-compliant.
Pharmaceutical manufacturers and their products are subject to extensive federal and state regulation,
including laws intended to prevent fraud and abuse in the healthcare industry. These laws may constrain the business
or financial arrangements and relationships through which we conduct business, including how we conduct research
regarding, market, sell, and distribute our products. In the United States, these laws include, but are not limited to the
following, some of which are likely to apply only if or when we obtain marketing approval for a product candidate:
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the federal healthcare anti-kickback statute prohibits, among other things, persons from knowingly and
willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in
kind, to induce or reward either the referral of an individual for, or the purchase, order or
recommendation of, any good or service, for which payment may be made under federal and state
healthcare programs such as Medicare and Medicaid. A person or entity does not need to have actual
knowledge of the anti-kickback statute or specific intent to violate it in order to have committed a
violation;
●
the federal False Claims Act (“FCA”), which imposes criminal and civil penalties on individuals or
entities for knowingly presenting, or causing to be presented, to the federal government, claims for
payment that are false or fraudulent or making a false statement to avoid, decrease, or conceal an
obligation to pay money to the federal government and actions under the FCA may be brought by private
whistleblowers as well as the government. In addition, the government may assert that a claim including
items and services resulting from a violation of the federal anti-kickback statute constitutes a false or
fraudulent claim for purposes of the FCA;
●
the federal civil monetary penalties laws, which impose civil fines for, among other things, the offering
or transfer of remuneration to a Medicare or state healthcare program beneficiary if the person knows or
should know it is likely to influence the beneficiary’s selection of a particular provider, practitioner, or
supplier of services reimbursable by Medicare or a state healthcare program;
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●
the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), as amended, which
imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program
and also establishes requirements related to the privacy, security, and transmission of individually
identifiable health information which apply to many healthcare providers, physicians, and third-party
payors with whom we interact;
●
the federal false statements statute prohibits knowingly and willfully falsifying, concealing, or covering
up a material fact or making any materially false statement in connection with the delivery of or payment
for healthcare benefits, items or services;
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the federal anti-kickback prohibition known as Eliminating Kickbacks in Recovery Act, or EKRA,
which prohibits certain payments related to referrals of patients to certain providers (recovery homes,
clinical treatment facilities, and laboratories) and applies to services reimbursed by private health plans
as well as government health care programs;
●
the FDCA, which, among other things, strictly regulates drug product and medical device marketing,
prohibits manufacturers from marketing such products for off-label use and regulates the distribution of
samples;
●
federal laws that require pharmaceutical manufacturers to calculate, report and certify certain complex
product prices to the government or provide certain discounts or rebates to government authorities or
private entities, often as a condition of reimbursement under governmental healthcare programs, which
data may be used in the calculation of reimbursement and/or discounts on approved products;
●
federal and state consumer protection and unfair competition laws, which broadly regulate marketplace
activities and activities that potentially harm consumers;
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federal and state medical privacy and comprehensive privacy statutes, which regulate the privacy and
security of personal information, and may vary significantly, complicating compliance efforts;
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the so-called federal “sunshine law” or Open Payments which requires manufacturers of drugs, devices,
biologics, and medical supplies to report to the Centers for Medicare & Medicaid Services information
related to payments and other transfers of value to teaching hospitals, physicians, and other healthcare
practitioners, as well as ownership and investment interests held by physicians and their immediate
family members; and
●
analogous state laws and regulations, such as state anti-kickback and false claims laws, which may apply
to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-
governmental third-party payors, including private insurers, and state laws which regulate interactions
between pharmaceutical companies and healthcare providers, require pharmaceutical companies to
comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance
guidance promulgated by the federal government, require pharmaceutical companies to report
information on transfers of value to other healthcare providers, marketing expenditures or pricing
information and/or require licensing of sales representatives.
Similar healthcare and data privacy laws and regulations exist in the European Union and other foreign
jurisdictions, including reporting requirements detailing interactions with and payments to healthcare providers and
laws governing the privacy and security of certain protected information. For example, the General Data Protection
Regulation (“GDPR”), impose obligations with respect to operations in the European Economic Area (“EEA”), and
increasing the scrutiny applied to transfers of personal data from the EEA (including health data from our clinical sites
in the EEA) to countries that are considered by the European Commission to lack an adequate level of data protection,
such as the United States. The compliance obligations imposed by the GDPR have required us to revise our operations
and increased our cost of doing business. In addition, the GDPR provides for substantial fines for breaches of data
protection requirements, and it confers a private right of action on data subjects for breaches of data protection
requirements. In connection with the separation from the European Union, the United Kingdom adopted similar
legislation, and many other countries and more than twelve U.S. states have adopted comprehensive data privacy laws
that may increase the costs of compliance, inhibit the sharing of personal data across national boundaries, and impact
operations.
The number and complexity of both federal and state laws continues to increase; the laws contain ambiguous
requirements or require administrative guidance for implementation; government interpretations of the laws continue
to evolve; and additional governmental resources are being used to enforce these laws and to prosecute companies and
individuals who are believed to be violating them. Efforts to ensure that our business
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arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial
costs. Governmental authorities may potentially conclude that our business practices, including arrangements we may
have with physicians and other healthcare providers, or patient assistance programs, may not comply with applicable
laws. If our operations are found to be in violation of any of these laws or any other governmental regulations that may
apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, exclusion
from government funded healthcare programs, such as Medicare and Medicaid, additional reporting obligations and
oversight if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-
compliance with these laws, and the curtailment or restructuring of our operations. If any of the physicians or other
providers or entities with whom we expect to do business is found to be not in compliance with applicable laws, they
may be subject to criminal, civil, or administrative sanctions, including exclusions from government funded healthcare
programs. Further, we are exposed to the risk that our employees, independent contractors, principal investigators,
CROs, consultants and vendors may engage in fraud or other misconduct, including actions resulting non-compliance
with regulatory standards and requirements such as those described above. It is not always possible to identify and
deter misconduct by employees and other third parties, and the precautions we take to detect and prevent this activity
may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental
investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws, standards, or
regulations. Defending against any such actions can be costly, time-consuming and may require significant personnel
resources. Therefore, even if we are successful in defending against any such actions that may be brought against us,
our business may be impaired.
The FDA and other comparable regulatory authorities could require clearance or approval of an in vitro diagnostic
or companion diagnostic device as a condition of approval for any product candidates that require or would
commercially benefit from such tests, including the combination of avutometinib and defactinib. If we are unable to
successfully validate, develop and obtain regulatory approval for companion diagnostic tests for our product
candidates that require or would commercially benefit from such tests, or experience significant delays in doing so,
we may not realize the full commercial potential of these product candidates and our drug development strategy and
operational results may be harmed.
If safe and effective use of any of our product candidates depends on an in vitro diagnostic, then the FDA
generally will require approval or clearance of that test, known as a companion diagnostic, at the same time that the
FDA approves our product candidates. Companion diagnostics, which provide information that is essential for the safe
and effective use of a corresponding therapeutic product, are subject to regulation by the FDA and other comparable
regulatory authorities as medical devices and require separate regulatory authorization from therapeutic approval prior
to commercialization. The development programs for some of our product candidates contemplate working with
developers or obtaining access to marketed companion diagnostic tests, which are assays or tests to identify an
appropriate patient population. For example, in connection with our NDA for the treatment of adult patients with
recurrent LGSOC, who received at least one prior systemic therapy and have a KRAS mutation, we may be required to
obtain FDA approval or clearance of a companion diagnostic.
If safe and effective use of any of our product candidates we may develop depends on a companion
diagnostic, we may not receive marketing approval, or marketing approval may be delayed, if we are unable to or are
delayed in developing, identifying, or obtaining regulatory approval or clearance for the companion diagnostic product
for use with our product candidate. In addition, the process of obtaining or creating such companion diagnostics is time
consuming and costly and we, and/or future collaborators, may encounter difficulties in developing and obtaining
regulatory clearance or approval for the companion diagnostics.
Current and future health care reforms may increase the difficulty and cost for us to obtain marketing approval of
and commercialize our product candidates and affect the prices we may obtain.
In the United States and some foreign jurisdictions, there have been, and we expect there will continue to be,
a number of legislative and regulatory changes and proposed changes regarding the healthcare system that could,
among other things, prevent or delay marketing approval of our product candidates, restrict or regulate post approval
activities, and affect our ability to profitably sell any of our product candidates for which we obtain marketing
approval.
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The U.S. healthcare industry generally and U.S. government healthcare programs in particular are highly
regulated and subject to frequent and substantial changes. The U.S. government and individual states have been
aggressively pursuing healthcare reform. For example, the ACA, enacted in March 2010, was intended to broaden
access to health insurance through a Medicaid expansion and the implementation of the individual mandate for health
insurance coverage, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse,
add new transparency requirements for healthcare and health insurance industries, impose new taxes and fees on the
health industry, and impose additional health policy reforms. The law, for example, increased drug rebates under state
Medicaid programs for brand name prescription drugs and extended those rebates to Medicaid managed care and
assessed a fee on manufacturers and importers of brand name prescription drugs reimbursed under certain government
programs, including Medicare and Medicaid.
Beyond the ACA, there are ongoing and widespread health care reform efforts, a number of which have
focused on regulation of prices or payment for drug products. Drug pricing and payment reform has been an ongoing
focus. For example, federal legislation eliminated a statutory cap on Medicaid drug rebate program rebates effective
January 1, 2024. As another example, the Inflation Reduction Act (“IRA”) of 2022 includes a number of changes
intended to address rising prescription drug prices in Medicare Parts B and D, with varying implementation dates.
These changes include caps on Medicare Part D out-of-pocket costs, Medicare Part B and Part D drug price inflation
rebates, a new Medicare Part D manufacturer discount drug program (replacing the ACA Medicare Part D coverage
gap discount program) and a drug price negotiation program for certain high spend Medicare Part B and D drugs. The
IRA is anticipated to have a significant impact on the pharmaceutical industry. Subsequent to the enactment of the
IRA, in 2024, the Biden Administration announced its commitment to expanding certain IRA reforms. There have
been significant and wide-ranging reforms to federal policy and the federal government under the new Trump
Administration. The focus on drug pricing and payment reform is likely to continue under the new Trump
Administration. Other potential healthcare reform efforts under the Trump Administration could affect access to
healthcare coverage or the funding of health care benefits. There is significant uncertainty regarding the nature or
impact of any such reform implemented by the Trump Administration through executive action or by Congress.
Healthcare reform efforts have been and may continue to be subject to scrutiny and legal challenge. For
example, with respect to the ACA, tax reform legislation was enacted that eliminated the tax penalty established for
individuals who do not maintain mandated health insurance coverage beginning in 2019 and, in 2021, the U.S.
Supreme Court dismissed the latest judicial challenge to the ACA brought by several states without specifically ruling
on the constitutionality of the ACA. As another example, revisions to regulations under the federal anti-kickback
statute would remove protection for traditional Medicare Part D discounts offered by pharmaceutical manufacturers to
pharmacy benefit managers and health plans. Pursuant to court order, the removal was delayed and recent legislation
imposed a moratorium on implementation of the rule until January 1 2032. As a further example, the IRA drug price
negotiation program has been challenged in litigation filed by various pharmaceutical manufacturers and industry
groups.
Recently, there has been considerable public and government scrutiny of pharmaceutical pricing and
proposals to address the perceived high cost of pharmaceuticals. There have also been efforts at the federal level to
implement measures to regulate drug pricing or payment for pharmaceutical products, including legislation on drug
importation. Individual states in the United States have also become increasingly active in passing legislation and
implementing regulations designed to control pharmaceutical product pricing, including price constraints, restrictions
on copayment assistance by pharmaceutical manufacturers, marketing cost disclosure and transparency measures, and,
in some cases, measures designed to encourage importation from other countries and bulk purchasing. We expect
continued scrutiny on drug pricing and government price reporting from Congress, agencies, and other bodies.
In addition, other broader legislative changes have been adopted that could have an adverse effect upon, and
could prevent, our products’ commercial success. For example, the Budget Control Act of 2011, as amended, resulted
in the imposition of reductions in Medicare (but not Medicaid) payments to providers in 2013 and remains in effect
through 2032 unless additional Congressional action is taken. Any significant spending reductions affecting Medicare,
Medicaid or other publicly funded or subsidized health programs that may be implemented and/or any significant taxes
or fees that may be imposed on us could have an adverse impact on our results of operations.
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We cannot be sure whether additional legislative changes will be enacted, or whether the regulations,
guidance or interpretations will be changed, or what the impact of such changes on the marketing approvals of our
product candidates may be. In addition, increased scrutiny by the U.S. Congress of the FDA’s approval process may
significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post
marketing testing and other requirements.
The U.S. Supreme Court’s June 2024 decision in Loper Bright Enterprises v. Raimondo overturned the
longstanding Chevron doctrine, under which courts were required to give deference to regulatory agencies’ reasonable
interpretations of ambiguous federal statutes. The Loper decision could result in additional legal challenges to
regulations and guidance issued by federal agencies, including the FDA, on which we rely. Any such legal challenges,
if successful, could have a material impact on our business. Additionally, the Loper decision may result in increased
regulatory uncertainty, inconsistent judicial interpretations, and other impacts to the agency rulemaking process, any of
which could adversely impact our business and operations. We cannot predict the likelihood, nature or extent of
government regulation that may arise from future legislation or administrative action or as a result of legal challenges,
either in the United States or abroad. If we are slow or unable to adapt to changes in existing requirements or the
adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, our business could
be materially harmed.
We continue to evaluate federal and state health care reform efforts and the effect that such efforts may have
on our business. Healthcare reform measures that may be adopted in the future could have a material adverse effect on
our industry generally and on our ability to successfully commercialize any product candidates, if and when approved.
Disruptions at the FDA and other government agencies caused by funding shortages could prevent our product
candidates from being developed, approved, or commercialized in a timely manner, or at all, which could negatively
impact our business.
The ability of the FDA and foreign regulatory authorities to review or approve new product candidates can be
affected by a variety of factors, including government budget and funding levels, statutory, regulatory, and policy
changes, the FDA’s or foreign regulatory authorities’ ability to hire and retain key personnel and accept the payment of
user fees, and other events that may otherwise affect the FDA’s or foreign regulatory authorities’ ability to perform
routine functions. Average review times at the FDA and foreign regulatory authorities have fluctuated in recent years
as a result. In addition, government funding of other government agencies that fund research and development
activities is subject to the political process, which is inherently fluid and unpredictable. For example, over the last
several years, the U.S. federal government has shut down several times and certain regulatory agencies, such as the
FDA, have had to furlough critical FDA employees and stop critical activities. If a prolonged government
shutdown occurs, preventing the FDA or other regulatory authorities from conducting their regular inspections,
reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other regulatory
authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our
business.
Due to the recent change in presidential administration, we face uncertainty regarding potential regulatory
developments that may adversely affect our business.
We face uncertainty regarding the potential for changes in the regulatory environment following the change in
presidential administration in January 2025. While many of the Trump administration’s proposed policies appear to be
focused on deregulation, the new administration and federal government could adopt legislation, regulation, or policy
that adversely affects our business or creates a more challenging and costly environment to pursue the development
and commercialization of our current or future product candidates. For example, the federal government, including the
FDA, may implement legislative, regulatory, or policy changes regarding the standards for approving drugs that we
may be unable to satisfy or regarding the marketing of approved drugs that may limit or prohibit the advertising and
promotion of our current or future product candidates, if approved. Additionally, because one objective of the current
Trump administration appears to be to decrease spending in the federal government, the FDA could face staff
reductions, which could impact the FDA’s ability to engage in routine regulatory and oversight activities and result in
delays or limitations on our ability to proceed with clinical development programs and obtain regulatory approvals. It
is difficult to predict how executive actions that may be
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taken under the current Trump administration may affect the FDA’s ability to exercise its regulatory authority. If such
executive actions impose constraints on the FDA’s ability to engage in routine oversight and product review activities
in the normal course, our business may be negatively impacted.
Risks Related to Employee Matters and Managing Growth
Our future success depends on our ability to retain our chief executive officer and other key executives and to
attract, retain and motivate qualified personnel.
We are highly dependent on the efforts and abilities of the principal members of our senior management and
other key personnel, including Daniel Paterson, our President and Chief Executive Officer, Daniel Calkins, our Chief
Financial Officer, and Matthew Ros, our Chief Operating Officer. Although we have formal employment agreements
with Daniel Paterson, Daniel Calkins, Matthew Ros and other members of our senior management and key personnel,
these agreements do not prevent them from terminating their employment with us at any time. We do not maintain
“key person” insurance for any of our executives or other employees. The loss of the services of any of these persons
could impede the achievement of our research, development and commercialization objectives.
Recruiting and retaining qualified scientific, clinical, manufacturing, and sales and marketing personnel will
also be critical to our success. We may not be able to attract and retain these personnel on acceptable terms given the
competition among numerous pharmaceutical and biotechnology companies, universities, and research institutions for
similar personnel. Although we have implemented a retention plan for certain key employees, our retention plan may
not be successful in incentivizing these employees to continue their employment with us. In addition, we rely on
consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and
development and commercialization strategy. Our consultants and advisors, including our scientific co-founders, may
be employed by employers other than us and may have commitments under consulting or advisory contracts with other
entities that may limit their availability to us.
We may expand our development, regulatory and future sales and marketing capabilities over time, and as a result,
we may encounter difficulties in managing our growth, which could disrupt our operations.
We may experience significant growth over time in the number of our employees and the scope of our
operations, particularly in the areas of drug development, regulatory affairs, and sales and marketing. To manage our
anticipated future growth, we may continue to implement and improve our managerial, operational, and financial
systems, expand our facilities, and continue to recruit and train additional qualified personnel. Due to our limited
financial resources and the limited experience of our management team in managing a company with such anticipated
growth, we may not be able to effectively manage the expansion of our operations or recruit and train additional
qualified personnel when we expand. The physical expansion of our operations may lead to significant costs and may
divert our management and business development resources. Any inability to manage growth could delay the
execution of our business plans or disrupt our operations.
Our business and operations may be materially adversely affected in the event of computer system breaches or
failures.
There are growing risks related to the security, confidentiality, and integrity of personal and corporate
information stored and transmitted electronically due to increasingly diverse and sophisticated threats to networks,
systems, and data security. Despite our efforts to implement security measures, our information technology systems,
and those of our contract research organizations and other third parties who process information on our behalf or have
access to our systems, are vulnerable to damage from computer viruses, ransomware, unauthorized access, natural
disasters, fire, terrorism, war, and telecommunication and electrical failures. Similarly, our information system
providers and their software and hardware supply chains are vulnerable to attacks. These attacks may not be identified
or addressed quickly enough to avoid harm, particularly when threat actors use stealthy and persistent tactics.
Cybersecurity breaches may be the result of negligent or unauthorized activity by our employees and contractors, as
well as by third parties who use cyberattack techniques involving malware, ransomware, hacking and phishing, among
others. Cyberattacks have increased in frequency and potential harm over time, and the methods used to gain
unauthorized access constantly evolve, making it increasingly difficult to anticipate, prevent, and/or detect incidents
successfully in every instance.
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We are required to expend significant resources in an effort to protect against security incidents and may be
required or choose to spend additional resources or modify our business activities, particularly where required by
applicable data privacy and security laws or regulations or industry standards. The SEC and other regulatory bodies are
increasingly focusing on cybersecurity enforcement, and the costs of complying with these regulatory initiatives may
be significant. If a security incident or data breach were to occur and cause interruptions in our operations, it could
result in a material disruption of our key business processes and clinical development programs. For example, the loss
of clinical trial data from ongoing or planned clinical trials could result in delays in our regulatory approval efforts and
significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach
results in a loss of or damage to our data or applications, or inappropriate disclosure of confidential or proprietary
information, we could be exposed to substantial remediation costs, claims or litigation, regulatory enforcement,
liability including under laws that protect the privacy of personal information, and additional reporting requirements,
any of which could have a material adverse effect on our operating results and financial condition, affect our
reputation, undermine market and commercial confidence, erode goodwill, and possibly delay the further development
and commercialization of our product candidates.
Risks Related to Our Capital Stock
Provisions in our corporate charter documents and under Delaware law could make an acquisition of us, which
may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or
remove our current management.
Provisions in our corporate charter and our bylaws may discourage, delay or prevent a merger, acquisition, or
other change in control of us that stockholders may consider favorable, including transactions in which you might
otherwise receive a premium for your shares. These provisions could also limit the price that investors might be
willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock.
In addition, because our board of directors is responsible for appointing the members of our management team, these
provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by
making it more difficult for stockholders to replace members of our board of directors. Among other things, these
provisions:
●
establish a classified board of directors such that not all members of the board are elected at one time;
●
allow the authorized number of our directors to be changed only by resolution of our board of directors;
●
limit the manner in which stockholders can remove directors from the board;
●
establish advance notice requirements for stockholder proposals that can be acted on at stockholder
meetings and nominations to our board of directors;
●
require that stockholder actions must be affected at a duly called stockholder meeting and prohibit
actions by our stockholders by written consent;
●
limit who may call stockholder meetings;
●
authorize our board of directors to issue preferred stock without stockholder approval, which could be
used to institute a "poison pill" that would work to dilute the stock ownership of a potential hostile
acquirer, effectively preventing acquisitions that have not been approved by our board of directors; and
●
require the approval of the holders of at least 75% of the votes that all our stockholders would be entitled
to cast to amend or repeal certain provisions of our charter or bylaws.
Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the
Delaware General Corporation Law, which prohibits a person who owns in excess of 15% of our outstanding voting
stock from merging or combining with us for a period of three years after the date of the transaction in which the
person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a
prescribed manner.
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The market price of our common stock has been, and may continue to be, highly volatile.
Our stock price has been volatile. Since January 27, 2012, when we became a public company, the closing
price for one share of our common stock has reached a high of $194.53 and a low of $2.20 through December 31,
2024, on a post reverse stock split basis. We cannot predict whether the price of our common stock will rise or fall.
The market price for our common stock may be influenced by many factors, including:
●
the success of competitive products or technologies;
●
results of clinical trials of our product candidates or those of our competitors;
●
regulatory or legal developments in the United States and other countries;
●
developments or disputes concerning patent applications, issued patents or other proprietary rights;
●
the recruitment or departure of key personnel;
●
the level of expenses related to any of our product candidates or clinical development programs;
●
the results of our efforts to discover, develop, acquire, or in-license additional product candidates or
products;
●
actual or anticipated changes in estimates as to financial results, development timelines, or
recommendations by securities analysts;
●
developments regarding the commercialization of our product candidates, including avutometinib and
defactinib;
●
variations in our financial results or those of companies that are perceived to be similar to us;
●
changes in the structure of healthcare payment systems;
●
market conditions in the pharmaceutical and biotechnology sectors;
●
general economic, industry and market conditions; and
●
the other factors described in this "Risk Factors" section.
In addition, the stock market in general and the market for small pharmaceutical companies and
biotechnology companies in particular have experienced extreme price and volume fluctuations that have often been
unrelated or disproportionate to the operating performance of particular companies. Broad market and industry factors
may negatively affect the market price of our common stock, regardless of our actual operating performance. In the
past, following periods of volatility in the market, securities class action litigation has often been instituted against
companies. Such litigation, if instituted against us, could result in substantial costs and diversion of management's
attention and resources, which could materially and adversely affect our business and financial condition.
Because we do not anticipate paying any cash dividends on our capital stock in the foreseeable future, capital
appreciation, if any, will be the source of gain for our stockholders.
We have never declared or paid cash dividends on our capital stock. We currently intend to retain all of our
future earnings to finance the growth and development of our business. In addition, the terms of any current or future
debt agreements may preclude us from paying dividends. As a result, capital appreciation, if any, of our common stock
will be the sole source of gain for our stockholders for the foreseeable future.
We can issue and have issued shares of preferred stock, which may adversely affect the rights of holders of our
common stock.
We have in the past issued, and we may at any time in the future issue, shares of preferred stock, and as of
December 31, 2024 we have 1,000,000 shares of our Series A convertible preferred stock, par value $0.0001 per share
(the “Series A Convertible Preferred Stock”) and 0 shares of our Series B convertible preferred stock, par value
$0.0001 per share (the “Series B Convertible Preferred Stock” and together with the Series A Convertible Preferred
Stock, the “Preferred Stock”) issued and outstanding. Our amended and restated certificate of incorporation authorizes
us to issue up to 5,000,000 shares of preferred stock with designations, rights and preferences determined from time-
to-time by our board of directors. Accordingly, our board of directors is empowered, without stockholder approval, to
issue preferred stock with dividend, liquidation, conversion, voting or
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other rights superior to those of holders of our common stock. For example, our Series B Convertible Preferred Stock
ranks senior to our common stock, and the holders of our Series B Convertible Preferred Stock are entitled to a
liquidation preference of $1.00 per share of Series B Convertible Preferred Stock in the event of our liquidation,
dissolution or winding up, which could limit or eliminate any payments that the holders of our common stock could
expect to receive upon our liquidation. Additionally, holders of our Preferred Stock are entitled to receive, on an as
converted basis, dividends and consideration in the event of certain transactions equivalent to the dividends and
consideration received by the holders of our common stock, which would make paying dividends and engaging in
certain transactions more expensive. We also may not make any changes to our amended and restated certificate of
incorporation that would limit the rights of the holders of our either series of our preferred stock without the
affirmative vote of a majority of such series of preferred stock, which may make it more difficult to take certain
corporate actions in the future.
Our stockholders will experience substantial dilution if outstanding warrants or pre-funded warrants are exercised
for shares common stock.
As of December 31, 2024, there were pre-funded warrants to purchase up to 5,000,000 shares of our common
stock and warrants to purchase up to 18,083,334 shares of our common stock outstanding. The pre-funded warrants
have an exercise price equal to $0.001 per underlying share of common stock and do not expire. Each warrant has an
exercise price equal to $3.50 and is exercisable for one shares of our common stock (or, in certain limited
circumstances in lieu of a share of common stock, a pre-funded warrant for one share of our common stock at the
warrant exercise price less the exercise price of the pre-funded warrant purchased). The warrants expire on January 25,
2026. The conversion of the outstanding pre-funded warrants and warrants into shares of common stock would be
substantially dilutive to existing stockholders. Any dilution or potential dilution may cause our stockholders to sell
their shares, which may contribute to a downward movement in the stock price of our common stock.
Raising additional capital or entering into certain licensing arrangements may cause dilution to our stockholders,
restrict our operations or require us to relinquish rights to our product candidates.
Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs
through a combination of equity offerings, debt financings, collaborations, grants and government funding, strategic
alliances and licensing arrangements. To the extent that we raise additional capital through the sale of equity or
securities convertible into our common stock, the ownership interest of our existing stockholders will be diluted, and
the terms of these securities may include liquidation or other preferences that adversely affect the rights of our existing
stockholders. To the extent that we enter into certain licensing arrangements, the ownership interest of our existing
stockholders may be diluted if we elect to make certain payments in shares of our common stock. Additional debt
financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific
actions, such as incurring additional debt, making capital expenditures or declaring dividends.
If we raise additional funds through collaborations, strategic alliances or licensing arrangements with third
parties, we may have to relinquish future revenue streams or valuable rights to product candidates or to grant licenses
on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings
when needed, we may be required to delay, limit, reduce, or terminate our product development or future
commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to
develop and market ourselves.
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Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Risk management and strategy.
In the ordinary course of our business, we and our third-party service providers, such as contract research
organizations, contract manufacturing organizations, and managed service providers collect, maintain and transmit
sensitive data on our networks and systems, including our intellectual property and proprietary or confidential business
information (such as research and development data and personal information). The secure maintenance of this
confidentiality, availability and integrity of this information is critical to our business and reputation. In addition, we
are heavily dependent on the functioning of our information technology applications and services to carry out our
business processes. While we have adopted administrative, technical and physical safeguards to protect such systems
and data, our systems and those of third-party service providers may be vulnerable to a cyber-attack.
We have adopted processes designed to identify, assess and manage material risks from cybersecurity threats.
Those processes include assessment of, and response to internal and external threats to the security, confidentiality,
integrity and availability of our data and information systems, along with other material risks to our operations, at least
annually or whenever there are material changes to our systems or operations.
Our risk management team collaborates with our Chief Information Officer (“CIO”), our internal information
technology (“IT”) department, our Compliance team and our third-party IT managed service providers to evaluate and
address cybersecurity risks in alignment with our business objectives and operational needs. We have processes to
detect potential vulnerabilities and anomalies through technical safeguards and have adopted policies and procedures
around internal and external notification of cybersecurity incidents. Our CIO and IT Department implement processes
around security monitoring and vulnerability testing. We also have in place an incident response process for
responding to and escalating cybersecurity events and incidents.
As part of our risk management process, we engage outside providers to conduct periodic internal and
external penetration testing of our systems, networks and web properties. We also employ internal security testing
solutions and security awareness training for all employees.
We engage a security operations platform provider to assist us in monitoring, assessing and managing
potential cyber events. We also perform periodic cyber maturity assessments to measure our cybersecurity profile
against industry peers and standards.
We rely on third parties, including software-as-a-service and platform-as-a-services cloud vendors, for various
business functions. Our third-party services providers have access to our information systems and data, and we rely on
such third parties for the continuous operation of our business. We oversee these third-party service providers by
conducting vendor diligence during contracting and onboarding and through ongoing monitoring. Vendors are
assessed for risk based on the nature of their service, access to data and systems, and the level to which those systems
and data impact our business. Based on that assessment, we conduct diligence that may include completing security
questionnaires, onsite audits, and other technical and data security evaluations.
Governance.
Our Board of Directors provides oversight of the Company’s cybersecurity risk management program and
integrates this oversight into its overall evaluation of enterprise risk. Our Audit Committee has primary responsibility
for oversight of cybersecurity and is briefed on cybersecurity risks at least once each year and following any material
cybersecurity incidents.
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At the management level, our cybersecurity program is managed by our CIO, reporting into the executive leadership
team. Our CIO has over 30 years of experience managing IT operations and cybersecurity within the pharmaceutical,
biotechnology and high-tech industries.
Our CIO reports at least annually to the Audit Committee and such reporting will include an overall
assessment of our compliance with our cybersecurity policies and procedures as well as topics that may include risk
assessments, risk management and control decisions, service provider arrangements, test results, security incidents and
responses and recommendations for changes and updates to policies and procedures. In the event of a cybersecurity
incident, the CIO reports the incident to the executive leadership team. If the cybersecurity incident is determined to be
material the executive leadership team will report the incident to the Audit Committee or Board of Directors as
appropriate.
As of the date of this report, we have not experienced a cybersecurity incident that resulted in a material effect
on our business strategy, results of operations, or financial condition. Despite our continuing efforts, we cannot
guarantee that our cybersecurity safeguards will prevent breaches or breakdowns of our or our third-party service
providers’ information technology systems, particularly in the face of continually evolving cybersecurity threats and
increasingly sophisticated threat actors. A cybersecurity incident may materially affect our business, results of
operations or financial condition, including where such an incident results in reputational, competitive or business
harm or damage to our brand, lost sales, reduced demand, loss of intellectual property rights, significant costs or
government investigations, litigation, fines or damages.
For more information, see “Our business and operations may be materially adversely affected in the event of
computer system breaches or failures” in Item 1A. Risk Factors in this Annual Report on Form 10-K.
Item 2. Properties
We occupy approximately 27,810 square feet of office space in Needham, Massachusetts under a lease that
expires in June 2026. We believe that our facility is sufficient to meet our current needs and that suitable additional
space will be available as and when needed.
Item 3. Legal Proceedings
From time to time, we are subject to various legal proceedings and claims that arise in the ordinary course of
our business activities. We do not believe we are currently party to any pending legal action, the outcome of which, if
determined adversely to us, would individually or in the aggregate be reasonably expected to have a material adverse
effect on our business or operating results.
Item 4. Mine Safety Disclosures
Not applicable.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuers Purchases of Equity
Securities
MARKET INFORMATION
Our common stock is publicly traded on The Nasdaq Global Market under the symbol “VSTM.”
HOLDERS
As of February 28, 2025, there were 7 holders of record of our common stock and the closing price of our
common stock on The Nasdaq Capital Market as of that date was $5.60. The number of holders of record does not
include beneficial owners whose shares are held by nominees in street name.
DIVIDENDS
We have never declared or paid cash dividends on our common stock, and we do not expect to pay any cash
dividends on our common stock in the foreseeable future.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The information required by this Item 5 of Form 10-K regarding equity compensation plans will be included
in our 2025 Proxy Statement and is incorporated herein by reference.
PERFORMANCE GRAPH
The following performance graph and related information shall not be deemed to be “soliciting material” or to
be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the
Securities Act of 1933, as amended, except to the extent that we specifically incorporate it by reference into such
filing.
The following graph compares the performance of our common stock to the Nasdaq Composite Index and to
the Nasdaq Biotechnology Index from December 31, 2019 through December 31, 2024. The comparison assumes $100
was invested after the market closed on December 31, 2019 in our common stock and in each of the foregoing indices,
and it assumes reinvestment of dividends, if any.
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Cumulative Total Return Comparison
December 31,
2019
2020
2021
2022
2023
2024
Verastem, Inc.
100.00
158.96
152.99
30.04
50.62
32.15
NASDAQ Composite
100.00
144.92
177.06
119.45
172.77
233.87
NASDAQ Biotechnology
100.00
126.42
126.45
113.65
118.87
118.19
PURCHASE OF EQUITY SECURITIES
We did not purchase any of our equity securities during the period covered by this Annual Report on
Form 10-K.
Item 6. Reserved
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations
together with our consolidated financial statements and related notes appearing elsewhere in this Annual Report on
Form 10-K. The following discussion contains forward-looking statements that involve risks and uncertainties. Our
actual results and the timing of certain events could differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including those discussed below and as set forth under “Risk Factors.” Please
also refer to the section under the heading “Forward-Looking Statements.”
OVERVIEW
We are a late-stage development biopharmaceutical company committed to the development and
commercialization of new medicines to improve the lives of patients diagnosed with RAS/ MAPK pathway-driven
cancers. Our pipeline is focused on novel small molecule drugs that inhibit critical signaling pathways in cancer that
promote cancer cell survival and tumor growth, including RAF/MEK inhibition, FAK inhibition and KRAS G12D
inhibition.
Our most advanced product candidates, avutometinib and defactinib, are being investigated in both preclinical
and clinical studies for the treatment of various solid tumors, including, but not limited to LGSOC, NSCLC and
pancreatic cancer. We believe that avutometinib may be beneficial as a therapeutic, as a single agent or when used
together in combination with defactinib, other agents, other pathway inhibitors, or other current and emerging standard
of care treatments in cancers that do not adequately respond to currently available therapies.
Our operations to date have been organizing and staffing our company, business planning, raising capital,
identifying and acquiring potential product candidates, undertaking preclinical studies and clinical trials for our
product candidates and initiating U.S. commercial operations following the approval of COPIKTRA through our
ownership period ending in September 2020. We have financed our operations to date primarily through public and
private offerings of our common stock, warrants and pre-funded warrants, offerings of convertible notes, sales of
common stock under our at-the-market equity offering programs, our loan and security agreement executed with
Hercules in March 2017, as amended, the Loan Agreement, the Note Purchase Agreement, the upfront payments and
milestone payments under our license and collaboration agreements with Sanofi, CSPC, and Yakult, the upfront
payment and milestone payments received under the Secura APA, and sales of Series B Convertible Preferred Stock.
Additionally, from our U.S. commercial launch of COPIKTRA on September 24, 2018, through our ownership period
ending in September 2020, we financed a portion of our operations through product revenue.
As of December 31, 2024, we had an accumulated deficit of $955.5 million. Our net loss was $130.6 million,
$87.4 million, and $73.8 million, for the years ended December 31, 2024, 2023, and 2022, respectively. As of
December 31, 2024, we had cash, cash equivalents, and investments of $88.8 million. In accordance with applicable
accounting standards, we evaluated whether there are conditions and events, considered in the aggregate, that raise
substantial doubt about our ability to continue as a going concern within 12 months after the date of the issuance of the
consolidated financial statements. We anticipate operating losses may continue for the foreseeable future since we do
not yet have regulatory approval to sell any of our product candidates, and we continue to incur operating costs to
execute our strategic plan, including costs related to research and development of our product candidates and
commercial readiness activities. As a result of the assessment in accordance with the applicable accounting standards,
these conditions raise substantial doubt about our ability to continue as a going concern for 12 months after the date
the consolidated financial statements are issued.
We expect to finance our operations with our existing cash, cash equivalents and investments, through
potential future milestones and royalties received pursuant to the Secura APA, through the Note Purchase Agreement
or through other strategic financing opportunities that could include, but are not limited to collaboration agreements,
future offerings of our equity, or the incurrence of debt. However, given the risks associated with these potential
strategic or financing opportunities, they are not deemed probable for purposes of the going concern assessment. If we
fail to obtain additional future capital, we may be unable to complete our planned preclinical studies and clinical trials
and obtain approval of certain investigational product candidates from the FDA or foreign regulatory
authorities. Therefore, there is substantial doubt about our ability to continue as a going concern.
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FINANCIAL OPERATIONS OVERVIEW
Revenue
Sale of licenses and related assets revenue to date have been generated through our sale of our duvelisib
license and related assets to Secura. The sale included intellectual property related to duvelisib in oncology indications,
certain existing duvelisib inventory, certain manufacturing equipment and, claims and rights under certain contracts
pertaining to duvelisib including net contract prepaid balances.
Research and development expenses
Research and development expenses consist of costs associated with our research activities, including the
development of our product candidates. Research and development expenses include product/ product candidate and/or
project-specific costs, as well as unallocated costs. We allocate the expenses related to external research and
development services, such as CROs, clinical sites, manufacturing organizations and consultants, by project and/or
product candidate. We use our employee and infrastructure resources in a cross-functional manner across multiple
research and development projects. Our project costing methodology does not allocate personnel, infrastructure and
other indirect costs to specific clinical programs or projects.
Product/ product candidate/ project specific costs include:
●
direct third-party costs, which include expenses incurred under agreements with CROs, the cost of
consultants who assist with the development of our product candidates on a program-specific basis,
clinical site costs, and any other third-party expenses directly attributable to the development of the
product candidates;
●
direct costs related to avutometinib or defactinib that are not specific to a clinical trial such as the costs
relating to contract manufacturing operations including manufacturing costs in connection with
producing avutometinib and defactinib are included within “Avutometinib and defactinib manufacturing
and non-clinical trial specific” as the cost to manufacture avutometinib and defactinib is not allocated to
specific clinical trials; and
●
license fees.
Unallocated costs include:
●
research and development employee-related expenses, including salaries, benefits, travel, and stock-
based compensation expense;
●
cost of consultants, including our scientific advisory board, who assist with our research and
development but are not allocated to a specific program; and
●
facilities, depreciation, and other allocated expenses, which include direct and allocated expenses for rent
and maintenance of facilities, and laboratory supplies.
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The table below summarizes our direct research and development expenses for our product/ product
candidates/ projects and our unallocated research and development costs for the years ended December 31, 2024, 2023,
and 2022:
Year ended December 31,
2024
2023
2022
(in thousands)
(in thousands)
(in thousands)
Product/ product candidate / project specific costs
Avutometinib + defactinib - LGSOC
$
25,079 $
13,360 $
9,000
Avutometinib + defactinib - NSCLC
7,271
8,487
7,666
Avutometinib + defactinib - pancreatic cancer
2,966
—
—
Avutometinib + defactinib - other indications
1,282
1,225
70
Avutometinib and defactinib manufacturing and non-clinical trial specific
15,020
16,462
16,215
GenFleet
3,939
2,177
—
COPIKTRA
—
93
183
Unallocated costs
Personnel costs, excluding stock-based compensation
14,657
12,299
10,848
Stock-based compensation expense
2,134
1,987
1,766
Other unallocated expenses
8,986
5,266
4,810
Total research and development expense
$
81,334 $
61,356 $
50,558
Costs for certain development activities, such as clinical trial expenses, are recognized based on an evaluation
of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations, and
information provided us by our vendors on their actual costs incurred or level of effort expended. Payments for these
activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred,
and are reflected on the consolidated balance sheets as prepaid expenses and other current assets or accrued expenses.
Our research and development expenses may increase significantly in future periods as we undertake costlier
development activities for our existing and future product candidates, including larger and later-stage clinical trials.
The successful development of our product candidates is highly uncertain. At this time, we cannot reasonably
estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete development
of our product candidates or the period, if any, in which material net cash inflows from our product candidates may
commence. This is due to the numerous risks and uncertainties associated with developing drugs, including the
uncertainty of:
●
clinical trial results;
●
the scope, rate of progress, and expense of our research and development activities, including preclinical
research and clinical trials;
●
the potential benefits of our product candidates over other therapies;
●
our ability to market, commercialize, and achieve market acceptance for any of our product candidates
that we receive regulatory approval for;
●
the terms and timing of regulatory approvals; and
●
the expense of filing, prosecuting, defending, and enforcing patent claims and other intellectual property
rights.
A change in the outcome of any of these variables with respect to the development of a product candidate
could mean a significant change in the costs and timing associated with the development of that product candidate. For
example, if the FDA or other regulatory authority were to require us to conduct clinical trials beyond those which we
currently anticipate will be required for the completion of clinical development of a product candidate or if we
experience significant delays in enrollment in any clinical trials, we could be required to expend significant additional
financial resources and time on the completion of clinical development.
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Selling, general, and administrative expenses
Selling, general, and administrative expenses consist primarily of salaries and related costs for personnel,
including stock-based compensation expense, in our executive, finance, legal, information technology, commercial,
communication, human resources, and business development functions. Other selling, general, and administrative
expenses include allocated facility costs, commercial costs, professional fees for legal, patent, investor and public
relations, consulting, insurance premiums, audit, tax, and other public company costs.
Other income, other expense, interest income and interest expense
Other expense for each of the years ended December 31, 2024 and 2023 was comprised of transaction losses
due to changes in foreign currency exchange rates. Other income for the year ended December 31, 2022 was
comprised of a gain on the sale of fixed assets and transaction gains due to changes in foreign currency exchange rates.
Interest income reflects interest earned on our cash, cash equivalents and available-for-sale securities.
Interest expense reflects interest expense due on our Loan Agreement with Oxford and our convertible notes,
as well as non-cash interest related to the amortization of debt discount and issuance costs.
Change in fair value of preferred stock tranche liability
The change in fair value of preferred stock tranche liability for the years ended December 31, 2024 and
December 31, 2023, was comprised of the mark-to-market adjustment related to the second tranche right issued as part
of the Securities Purchase Agreement (the “Series B Convertible Preferred Stock Securities Purchase Agreement”),
dated January 24, 2023 with certain purchasers pursuant to which the Company agreed to sell and issue to the
purchasers in a private placement up to 2,144,160 shares of its Series B Convertible Preferred Stock in two tranches.
The preferred stock tranche liability expired in July 2024 and is no longer outstanding. There was no preferred stock
tranche liability outstanding during the year ended December 31, 2022.
Change in fair value of common stock warrant liability
The change in fair value of warrant liability for the year ended December 31, 2024 was comprised of the
mark-to-market adjustment related to liability classified warrants issued as part of the July 2024 Offering (defined
herein). There were no warrants outstanding during the years ended December 31, 2023, or December 31, 2022.
CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT JUDGMENTS AND ESTIMATES
Our management’s discussion and analysis of our financial condition and results of operations is based on our
consolidated financial statements, which we have prepared in accordance with United States generally accepted
accounting principles (“U.S. GAAP”). The preparation of these consolidated financial statements requires us to make
estimates and judgments that affect the reported amounts of certain assets, liabilities, revenues and expenses and the
disclosure of contingent assets and liabilities in our financial statements. On an ongoing basis, we evaluate our
estimates and judgments, including those related to accrued and prepaid research and development expenses, stock-
based compensation, revenue recognition, and collaborative agreements, described in greater detail below. We base our
estimates on our limited historical experience, known trends and events and various other factors that we believe are
reasonable under the circumstances, the results of which form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.
Our significant accounting policies are described in more detail in the notes to our consolidated financial
statements appearing elsewhere in this Annual Report on Form 10-K. However, we believe that the following
accounting policies are the most critical to aid you in fully understanding and evaluating our financial condition and
results of operations.
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Revenue recognition
We recognize revenue when our customer obtains control of promised goods or services, in an amount that
reflects the consideration which we expect to receive in exchange for those goods or services in accordance with
Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606 Revenue
from Contracts with Customers (“ASC 606”).
Sales of intellectual property
For sales of license and intellectual property, that include sale-based royalties, including milestone payments
based on a level of sales, we evaluate whether the royalties and sales-based milestones are considered probable of
being achieved and estimate the amount of royalties to include over the contractual term using the expected value
method and estimate the sales-based milestones using the most likely amount method. If it is probable that a significant
revenue reversal would not occur, the associated royalty and milestone value is included in the transaction price.
Royalties and sales-based milestones for territories for which there is not regulatory approval are not considered
probable until such regulatory approval is achieved. We evaluate factors such as whether consideration is outside of
our control, timeline for when the uncertainty will be resolved and historical sales of COPIKTRA if applicable. There
is considerable judgment involved in determining whether it is probable that a significant revenue reversal would not
occur. At the end of each subsequent reporting period, we reevaluate the probability of achievement of all milestones
subject to constraint and amount of royalty revenue to be received and, if necessary, adjust our estimate of the overall
transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and
earnings in the period of adjustment. At December 31, 2024, we determined no future potential royalties pursuant to
the Secura APA were not constrained.
Refer to Note 2. Significant Accounting Policies and Note 13. License, collaboration and commercial
agreements to our consolidated financial statements located in this Annual Report on Form 10-K for further discussion
of revenue.
Collaborative Arrangements
Collaborative Arrangements: Contracts are considered to be collaborative arrangements pursuant to U.S.
GAAP when they satisfy the following criteria defined in ASC Topic 808, Collaborative Arrangements: (i) the parties
to the contract must actively participate in the joint operating activity and (ii) the joint operating activity must expose
the parties to the possibility of significant risk and rewards, based on whether or not the activity is successful.
Payments received from or made to a partner that are the result of a collaborative relationship with a partner, instead of
a customer relationship, such as co-development activities, are recorded as a reduction or increase to research and
development expense, respectively.
Accrued and prepaid research and development expenses
As part of the process of preparing our consolidated financial statements, we are required to estimate our
accrued expenses. This process involves reviewing contracts, identifying services that have been performed on our
behalf and estimating the level of service performed and the associated cost incurred when we have not yet been
invoiced or otherwise notified of the actual cost. The majority of our service providers invoice us monthly in arrears
for services performed or when contractual milestones are met. We make estimates of our accrued expenses as of each
balance sheet date in our financial statements based on facts and circumstances known to us at that time. We
periodically confirm the accuracy of our estimates with the service providers and make adjustments if necessary. The
significant estimates in our accrued research and development expenses include fees paid to CROs in connection with
research and development activities for which we have not yet been invoiced.
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We base our expenses related to CROs on our estimates of the services received and efforts expended
pursuant to quotes and contracts with CROs that conduct research and development on our behalf. The financial terms
of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows.
There may be instances in which payments made to our vendors will exceed the level of services provided and result in
a prepayment of the research and development expense. In accruing service fees, we estimate the time period over
which services will be performed and the level of effort to be expended in each period. If the actual timing of the
performance of services or the level of effort varies from our estimate, we adjust the accrual or prepaid accordingly.
Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding
of the status and timing of services performed relative to the actual status and timing of services performed may vary
and could result in us reporting amounts that are too high or too low in any particular period. To date, there have been
no material differences between our estimates of such expenses and the amounts actually incurred.
Refer to Note 2. Significant Accounting Policies, and Note 4. Accrued expenses to our consolidated financial
statements located in this Annual Report on Form 10-K for further discussion of accrued research and development
expenses.
Stock-based compensation
For service-based awards, we recognize stock-based compensation expense for stock options, and restricted
stock units (“RSUs”) issued to employees, directors and consultants based on the grant date fair value of the awards on
a straight-line basis over the requisite service period. In addition, we issue shares under our employee stock purchase
plan (“ESPP”) to employees. The fair value of our stock options and ESPP grants is estimated at the date of grant
using the Black-Scholes option pricing model. For determining fair value of stock options when the stock options are
not at the money because of a modification, we are precluded from utilizing the simplified method as described in SEC
SAB Topic 14.D.2 to calculate the expected term as a key assumption in the Black-Scholes pricing model. Therefore,
when valuing stock options that are not at the money, we utilize a binomial lattice model to calculate the fair value of
the stock option.
We have also granted performance-based RSUs and stock options with terms that allow the recipients to vest
in a specific number of shares based upon the achievement of performance-based milestones as specified in the grants.
Stock-based compensation expense associated with these performance-based RSUs and stock options is recognized if
the performance condition is considered probable of achievement using management’s best estimates of the
achievement of the performance-based milestones. If the actual achievement of the performance-based milestones
varies from our estimates, stock-based compensation expense could be materially different than what is recorded in the
period. The cumulative effect on current and prior periods of a change in estimate for performance-based RSUs and
stock options will be recognized as compensation cost in the period of the revision, and recorded as a change in
estimate.
While the assumptions used to calculate and account for stock-based compensation awards represent
management’s best estimates, these estimates involve inherent uncertainties and the application of management’s
judgment. As a result, if revisions are made to our underlying assumptions and estimates, our stock-based
compensation expense could vary significantly from period to period.
During the year ended December 31, 2024, we recorded $7.3 million of stock-based compensation expense.
As of December 31, 2024, there was approximately $6.0 million of unrecognized stock-based compensation related to
stock options, which are expected to be recognized over a weighted-average period of 2.1 years. As of December 31,
2024, there was approximately $4.0 million of unrecognized stock-based compensation related to RSUs, which are
expected to be recognized over a weighted-average period of 2.3 years. See Note 2. Significant accounting policies and
Note 8. Stock-based compensation to our consolidated financial statements located in this Annual Report on Form 10-
K for further discussion of stock-based compensation.
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RESULTS OF OPERATIONS
All financial information presented has been consolidated and includes the accounts of our wholly-owned
subsidiaries, Verastem Securities Company and Verastem Europe GmbH. All intercompany balances and transactions
have been eliminated in consolidation.
Year Ended December 31,
2024
2023
2022
Revenue:
Sale of COPIKTRA license and related assets
10,000
—
2,596
Total revenue
10,000
—
2,596
Operating expenses:
Research and development
81,334
61,356
50,558
Selling, general and administrative
43,622
30,728
24,975
Total operating expenses
124,956
92,084
75,533
Loss from operations
(114,956)
(92,084)
(72,937)
Other expense
(123)
(109)
47
Interest income
4,149
6,214
1,215
Interest expense
(4,562)
(4,139)
(2,137)
Change in fair value of preferred stock tranche liability
4,189
2,751
—
Change in fair value of warrant liability
(19,149)
—
—
Net loss before taxes
(130,452)
(87,367)
(73,812)
Income tax expense
(185)
—
—
Net Loss
(130,637)
(87,367)
(73,812)
Comparison of the Year Ended December 31, 2024 to the Year Ended December 31, 2023
Sale of COPIKTRA license and related assets revenue. Sale of COPIKTRA license and related assets revenue
for the year ended December 31, 2024 (the “2024 Period”) was $10.0 million compared to $0.0 million for the year
ended December 31, 2023 (the “2023 Period”). Sale of COPIKTRA license and related assets revenue for the 2024
Period was comprised of one sales milestone of $10.0 million due upon Secura achieving cumulative worldwide net
sales of COPIKTRA exceeding $100.0 million during the 2024 Period. The $10.0 million milestone payment was
received by us in July 2024.
Research and development expense. Research and development expense for the 2024 Period was $81.3
million compared to $61.4 million for the 2023 Period. The $19.9 million increase from the 2023 Period to the 2024
Period was primarily related to an increase of $6.4 million in CRO costs, an increase of $4.7 million in investigator
fees, an increase of $4.5 million in consulting costs, an increase of $2.5 million in personnel related costs, including
non-cash stock-based compensation, and an increase of $1.8 million in clinically supply costs. The increase in CRO
costs and investigator fees was primarily driven by increased costs related to the RAMP 301 study which we
commenced in the last quarter of 2023. The increase in consulting costs was primarily driven by additional consultants
in 2024 to support RAMP 301 startup and enrollment and additional consulting costs related to completing the NDA
submission for avutometinib and defactinib for treatment of patients with recurrent LGSOC.
Selling, general and administrative expense. Selling, general and administrative expense for the 2024 Period
was $43.6 million compared to $30.7 million for the 2023 Period. The increase of $12.9 million from the 2023 Period
to the 2024 Period primarily resulted from an increase of $4.8 million in personnel related costs, including non-cash
stock-based compensation, an increase of $4.7 million of costs in anticipation of the potential launch of avutometinib
and defactinib in LGSOC, an increase of $3.0 million in July 2024 Offering financing fees in the 2024 Period, and an
increase of $1.0 million in consulting and professional fee, partially offset by $0.6 million in financing fees for the
offering of our Series B Convertible Preferred Stock in the 2023 Period.
Other expense. Other expense of $0.1 million for the 2024 Period and the 2023 Period was comprised of
transaction losses due to changes in foreign currency exchange rates.
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Interest income. Interest income for the 2024 Period was $4.1 million compared to $6.2 million for the 2023
Period. The decrease of $2.1 million in interest income was primarily driven by a decrease in interest rates and
investment balances on short-term investments and cash equivalents.
Interest expense. Interest expense for the 2024 Period was $4.6 million compared to $4.1 million for the 2023
Period. The increase of $0.5 million from the 2023 Period to the 2024 Period was primarily driven by additional
interest expense in the 2024 Period on the Loan Agreement as a result of the additional $15.0 million debt drawdown
on March 22, 2023.
Change in fair value of preferred stock tranche liability. The change in fair value of the preferred stock
tranche liability was $4.2 million income for the 2024 Period compared to $2.8 million income for the 2023 Period.
The change in fair value of preferred stock tranche liability was comprised of the mark-to-market adjustment related to
the second tranche right issued as part of the Series B Convertible Preferred Stock Securities Purchase Agreement. The
fair value of the preferred stock tranche liability decreased from $4.2 million at the beginning of the 2024 Period and
expired in July 2024 resulting in $4.2 million income in the 2024 Period. The fair value of the preferred stock tranche
liability decreased from $6.9 million upon issuance on January 24, 2023, to $4.1 million at the end of the 2023 Period
resulting in $2.8 million income in the 2023 Period.
Change in fair value of warrant liability. The change in fair value of the warrant liability of $19.1 million
expense for the 2024 Period was comprised of the mark-to-market adjustment for the liability classified warrants
issued as part of the July 2024 Offering. The liability classified warrants increased in value from July 23, 2024, to
December 31, 2024 primarily driven by an increase in our stock price. There was no warrant liability outstanding
during the 2023 Period.
Income tax expense. Income tax expense of $0.2 million for the 2024 Period was comprised of interest under
IRC section 453A related to the $10.0 million milestone payment from Secura because it was an installment sale for
tax purposes. There was no income tax expense in the 2023 Period.
LIQUIDITY AND CAPITAL RESOURCES
Sources of liquidity
We have financed our operations to date primarily through public and private offerings of our common stock,
warrants and pre-funded warrants, offerings of convertible notes, convertible preferred stock sales of common stock
under our at-the-market equity offering programs, our loan and security agreement executed with Hercules in March
2017, as amended, the Loan Agreement, the Note Purchase Agreement, the upfront payments and milestone payments
under our license and collaboration agreements with Sanofi, CSPC, and Yakult, and the upfront payment and milestone
payments received under the Secura APA. Additionally, from our commercial launch of COPIKTRA in the United
States on September 24, 2018, through our ownership period ending in September 2020, we financed a portion of our
operations through product revenue. As of September 30, 2020, we have sold our COPIKTRA license and no longer
sell COPIKTRA in the United States. We expect to finance a portion of our business through future potential
milestones and royalties received pursuant to the Secura APA.
As of December 31, 2024, we had $88.8 million in cash, cash equivalents, and investments. We primarily
invest our cash, cash equivalents and investments in U.S. Government money market funds, government bonds,
corporate bonds and commercial paper of publicly traded companies.
Risks and uncertainties include those identified under Item 1A. Risk Factors, in this Annual Report on Form
10-K.
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Cash flows
The following table sets forth the primary sources and uses of cash for each of the periods set forth below (in
thousands):
Year ended December 31,
2024
2023
2022
Net cash (used in) provided by:
Operating activities
$ (104,771)
$ (86,460) $ (63,673)
Investing activities
59,972
(44,447)
66,185
Financing activities
54,782
134,194
51,784
Increase in cash, cash equivalents and restricted cash
$
9,983
$
3,287
54,296
Operating activities. The use of cash in operating activities in the 2024 Period and 2023 Period resulted
primarily from our net losses adjusted for non-cash adjustments and changes in the components of working capital.
Our cash outflow from net losses adjusted for non-cash adjustments was $108.5 million and $85.5 million for the 2024
Period and 2023 Period, respectively. Non-cash adjustments for the 2024 Period were primarily related to stock-based
compensation expense, change in the fair value of warrant liability and change in the fair value of preferred stock
tranche liability. Non-cash adjustments for the 2023 Period were primarily related to stock-based compensation
expense, non-cash interest, net and change in the fair value of preferred stock tranche liability. Our cash inflow for the
2024 Period from operating activities due to changes in operating assets and liabilities was $3.7 million primarily
driven by an increase of $8.0 million in accrued expenses and other liabilities, partially offset by a decrease of $3.2
million in accounts payable, an increase of $0.6 million in prepaid expenses, other current assets and other assets, a
decrease of $0.3 million in deferred liabilities and an increase of $0.2 million in grant receivable. Our cash outflow for
the 2023 Period from operating activities due to changes in operating assets and liabilities was $1.0 million for the
2023 Period primarily driven by an increase of $5.8 million in prepaid expenses, other current assets and other assets,
and a decrease of $0.4 million in deferred liabilities, partially offset by an increase of $2.9 million in accrued expenses
and other liabilities, and an increase of $2.3 million in accounts payable. The increases in both periods in prepaid
expenses, other current assets, and other asserts is exclusive of cash received from PanCAN and used on the RAMP
205 study. Cash used in operating activities was $104.8 million and $86.5 million for the 2024 Period and the 2023
Period, respectively.
Investing activities. The cash provided by investing activities for the 2024 Period primarily relates to the net
maturities of investments of $60.0 million. The cash used in investing activities for the 2023 Period primarily relates to
the net purchases of investments of $44.4 million.
Financing activities. The cash provided by financing activities for the 2024 Period represents $53.8 million of
net proceeds received from the issuance of shares of common stock, pre-funded warrants, and warrants as part of the
July 2024 Offering, $1.3 million of proceeds received from insurance premium financing, $0.9 million of proceeds
received from exercise of warrants and $0.2 million of proceeds received from exercise of stock options and our
employee stock purchase plan, partially offset by $1.3 million of payments on insurance premium financing, and $0.2
million of fees paid to the Lenders to amend our Loan Agreement with Oxford. The cash provided by financing
activities for the 2023 Period primarily represents $91.4 million of proceeds from our public offering in June 2023 of
common stock and pre-funded warrants to purchase shares of our common stock, net of issuance costs, $28.1 million
of proceeds received from issuance of Series B Convertible Preferred Stock, net of issuance costs, $14.9 million of
proceeds received pursuant to the Loan Agreement, $1.4 million of proceeds received from insurance premium
financing and $0.1 million of proceeds received related to our employee stock purchase plan, partially offset by $1.4
million of payments on insurance premium financing, and $0.3 million of repayment of our 5.00% Convertible Senior
Notes due 2048.
Refer to Note 7. Capital Stock to our consolidated financial statements located in this Annual Report on Form
10-K for additional details on the July 2024 Offering of common stock, pre-funded warrants, and warrants, the June
2023 Offering of common stock and pre-funded warrants, and the January 2023 offering of our Series B Convertible
Preferred Stock; Note 5. Debt to our consolidated financial statements located in this Annual Report on Form 10-K for
additional details on the Loan Agreement; and Note 14. Notes Payable to our consolidated financial statements located
in this Annual Report on Form 10-K for additional details on the finance agreement with
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AFCO Premium Credit LLC related to insurance premium financing and the monthly payments of principal and
interest related thereto.
Funding requirements
We expect to continue to incur significant expenses and may continue to incur operating losses. Refer to risk
factor titled We have incurred significant losses since our inception. We may incur losses for the foreseeable future and
may never achieve or maintain profitability within section Item 1A. Risk Factors for detailed activities which may
drive our continued operating losses and expenses in future periods.
Because of the numerous risks and uncertainties associated with the development and commercialization of
our product candidates, and the extent to which we may enter into collaborations with third parties for development
and commercialization of our product candidates, we are unable to estimate the amounts of increased capital outlays
and operating expenses associated with completing the development of our current product candidates. Our future
capital requirements will depend on many factors, including:
●
the costs and timing of activities in anticipation of potential commercialization for avutometinib and
defactinib and product candidates for which we expect to receive marketing approval;
●
the scope, progress, and results of our ongoing and potential future clinical trials;
●
the extent to which we acquire or in-license other product candidates and technologies;
●
the costs, timing, and outcome of regulatory review of our product candidates (including our efforts to
seek approval and fund the preparation and filing of regulatory submissions);
●
revenue, if any, received from commercial sales of our product candidates, including avutometinib and
defactinib, should any of our product candidates receive marketing approval;
●
the costs of preparing, filing, and prosecuting patent applications, maintaining and enforcing our
intellectual property rights, and defending intellectual property related claims;
●
our ability to establish collaborations or partnerships on favorable terms, if at all; and
●
receipt of milestone payments and royalties pursuant to the Secura APA including timing of such receipt.
Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs
through a combination of equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements,
and through future potential milestones and royalties received pursuant to the Secura APA. To the extent that we raise
additional capital through the sale of equity, warrants or convertible debt securities, the ownership interest of our
existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that
adversely affect the rights of our existing stockholders. Debt financing, if available, may involve agreements that
include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making
capital expenditures, or declaring dividends. If we raise additional funds through collaborations, strategic alliances, or
licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future
revenue streams, research programs, or product candidates or grant licenses on terms that may not be favorable to us.
If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay,
limit, reduce or terminate our product development or commercialization efforts or grant rights to develop and market
product candidates that we would otherwise prefer to develop and market ourselves.
Without additional funding we believe that we may not have sufficient funds to meet our obligations within
the next 12 months from the date of issuance of these consolidated financial statements. While we believe that we may
have sufficient funds to meet our obligations within the next 12 months from the date of the issuance of the
consolidated financial statements for the year ended December 31, 2024, in performing this analysis under the
applicable accounting standards management excluded certain elements of our operating plan that cannot be
considered probable of occurring. Accordingly, management has concluded that substantial doubt exists about our
ability to continue as a going concern for 12 months from the date the consolidated financial statements are issued.
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CONTRACTUAL OBLIGATIONS AND COMMITMENTS
On April 15, 2014, we entered into a lease agreement for approximately 15,197 square feet of office and
laboratory space in Needham, Massachusetts. The lease term commenced on April 15, 2014 and it was scheduled to
expire on September 30, 2019. Effective February 15, 2018, we amended our lease agreement to relocate within the
facility to another location consisting of 27,810 square feet of office space (the “February 2018 Amended Lease
Agreement”). The February 2018 Amended Lease Agreement extended the expiration date of the lease from
September 2019 through June 2025. Pursuant to the February 2018 Amended Lease Agreement, the initial annual base
rent amount was approximately $0.7 million, which increased during the lease term to $1.1 million for the last 12-
month period. Effective November 1, 2024, we amended the February 2018 Amended Lease Agreement to extend the
expiration date from June 2025 to June 2026 (the “November 2024 Amended Lease Agreement”). The payment terms
of the November 2024 Amended Lease Agreement are $1.1 million per annum through the expiration date in June
2026. As of December 31, 2024, the total future lease payments under the agreement are $1.6 million through June
2026.
In 2024 we entered into a master services agreement with IQVIA (“IQVIA Master Services Agreement”) for
our strategic collaboration with IQVIA to leverage IQVIA’s infrastructure and established commercialization solutions
to complement our launch strategy for the potential launch of avutometinib and defactinib in patients with KRAS mt
LGSOC planned for middle of 2025. As of December 31, 2024, we have committed to spend approximately $60.0
million under the IQVIA Master Services Agreement which we expect to spend in the next three to four years.
As discussed in Note 13. License, collaboration and commercial agreements to the consolidated financial
statements located in this Annual Report on Form 10-K, we are party to several agreements to license intellectual
property. The license agreements may require us to pay upfront license fees, ongoing annual license maintenance fees,
milestone payments, minimum royalty payments, as well as reimbursement of certain patent costs incurred by the
licensors, as applicable. As of December 31, 2024, we do not have any minimum contractual obligations in relation to
these agreements because: there were no upfront license fees payable in future periods; no annual license maintenance
fees; we cannot estimate if milestone and/or royalty payments will occur in future periods; and patent cost
reimbursement costs are perpetual and the agreements are cancelable by us at any time upon prior written notice to the
licensor.
TAX LOSS CARRYFORWARDS
As of December 31, 2024, we had federal and state NOL carryforwards of $370.6 million and $56.7 million,
respectively, which are available to reduce future taxable income. We also had federal and state tax credits of
$2.6 million and $0.2 million, respectively, which may be used to offset future tax liabilities. The NOL and tax credit
carryforwards will expire at various dates through 2044, except for $333.4 million of federal NOL carryforwards
which may be carried forward indefinitely. NOL and tax credit carryforwards are subject to review and possible
adjustment by the Internal Revenue Service and state tax authorities and may become subject to an annual limitation in
the event of certain cumulative changes in the ownership interest of significant stockholders over a three-year period in
excess of 50%, as defined under Sections 382 and 383 of the IRC, as well as similar state provisions. This could limit
the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount
of the annual limitation is determined based on the value of our company immediately prior to the ownership change.
Subsequent ownership changes may further affect the limitation in future years. At December 31, 2024, we recorded a
100% valuation allowance against our NOL and tax credit carryforwards, as we believe it is more likely than not that
the tax benefits will not be fully realized. In the future, if we determine that a portion or all of the tax benefits
associated with our tax carryforwards will be realized, net income would increase in the period of determination.
Based on our analysis under Section 382 of the IRC and similar provisions under state law, we believe that
our federal NOL carryforwards, our state NOL carryforwards, our research and development (“R&D”) credits and our
Orphan Drug (“OD”) credits will be limited as of December 31, 2024. The portion of federal NOL, state NOL, R&D
credits and OD credits that were determined to be limited by Section 382 have been written off as of December 31,
2024. The remaining unused carryforwards remain available for future periods. During 2024, we believe we triggered
ownership changes under Section 382 of the IRC and similar provisions under state law. We
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95
have approximately $346.4 million of federal NOLs generated prior to such ownership changes inclusive of $309.3
million of federal NOLs which may be carried forward indefinitely. Since the $309.3 million of federal NOLs may be
carried forward indefinitely these have not been written off as of December 31, 2024, but due to the limitations under
Section 382, generally we can only use $1.6 million per year against taxable income in the future. Due to our full
valuation allowance the write off of NOLs, R&D credits, and OD credits did not have any impact to the statements of
operation and comprehensive loss for the 2024 Period and 2023 Period.
RECENTLY ADOPTED ACCOUNTING STANDARDS
Refer to Note 2. Significant Accounting Policies to our consolidated financial statements located in this
Annual Report on Form 10-K for recently adopted accounting standards.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risk related to changes in interest rates. We had cash, cash equivalents, and
investments of $88.8 million and $137.1 million as of December 31, 2024 and 2023, respectively, consisting of cash,
U.S. Government money market funds, government bonds, corporate bonds and commercial paper of publicly traded
companies. Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general
level of U.S. interest rates, particularly because most of our investments are interest bearing. Our available for sale
securities are subject to interest rate risk and will fall in value if market interest rates increase. Due to the short-term
duration of most of our investment portfolio and the low risk profile of our investments, an immediate 100 basis point
change in interest rates would not have a material effect on the fair market value of our portfolio.
We contract with CROs and contract manufacturers globally, which may be denominated in foreign
currencies. We may be subject to fluctuations in foreign currency rates in connection with these agreements.
Transactions denominated in currencies other than the functional currency are recorded based on exchange rates at the
time such transactions arise. As of December 31, 2024, an immaterial amount of our total liabilities was denominated
in currencies other than the functional currency.
As of December 31, 2024, we had borrowed $40.0 million under the Loan Agreement. The Loan Agreement
bears interest at a floating rate equal to (a) the greater of (i) the one-month CME Secured Overnight Financing Rate
and (ii) 0.13% plus (b) 7.37%, which is subject to an overall floor and cap. Changes in interest rates can cause interest
charges to fluctuate under the Loan Agreement. A 10% increase in current interest rates would have resulted in an
immaterial increase in the amount of cash interest expense for the year ended December 31, 2024 due to the overall
interest rate floor and cap.
Item 8. Consolidated Financial Statements and Supplementary Data
Our consolidated financial statements, together with the report of our independent registered public
accounting firm (e.g., Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)), appear on
pages F-1 through F-42 of this Annual Report on Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating our disclosure controls and procedures and internal control over financial
reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure
controls and procedures and internal control over financial reporting must reflect the fact that there are resource
constraints and that management is required to apply judgment in evaluating the benefits of possible controls and
procedures relative to their costs.
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96
Evaluation of Disclosure Controls and Procedures
Our Chief Executive Officer and our Chief Financial Officer evaluated the effectiveness of our disclosure
controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the
period covered by this report. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer
concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over our financial
reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act
as the process designed by, or under the supervision of, our Chief Executive Officer and our Chief Financial Officer
and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the
reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance
with U.S. GAAP, and includes those policies and procedures that:
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of assets;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with U.S. GAAP, and that receipts and expenditures are being made
only in accordance with the authorizations of management and directors; and
(3) provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition,
use or disposition of assets that could have a material effect on our financial statements.
Under the supervision and with the participation of our management, including our Chief Executive Officer
and our Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial
reporting based on the framework provided in Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (2013 Framework). Based on this evaluation, our management
concluded that our internal control over financial reporting was effective as of December 31, 2024.
This Annual Report on Form 10-K does not include an attestation report of our registered public accounting
firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the
Company’s independent registered public accounting firm, as allowed by the SEC.
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting during the fiscal quarter ended
December 31, 2024, that has materially affected, or is reasonably likely to materially affect, the Company’s internal
control over financial reporting.
Item 9B. Other Information
Trading Plans of Our Directors and Officers
During our fiscal quarter ended December 31, 2024, none of our directors or officers (as defined in Rule 16a-
1(f) under the Exchange Act) entered into, modified (as to amount, price or timing of trades) or terminated (i)
contracts, instructions or written plans for the purchase or sale of our securities that are intended to satisfy the
conditions specified in Rule 10b5-1(c) under the Exchange Act for an affirmative defense against liability for trading
in securities on the basis of material nonpublic information or (ii) non-Rule 10b5-1 trading arrangements (as defined in
Item 408(c) of Regulation S-K).
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
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97
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
Information regarding our directors, including the audit committee and audit committee financial experts, and
executive officers and compliance with Section 16(a) of the Exchange Act will be included in our 2025 Proxy
Statement and is incorporated herein by reference.
We have adopted a Code of Business Conduct and Ethics for all of our directors, officers, and employees as
required by Nasdaq governance rules and as defined by applicable SEC rules. Stockholders may locate a copy of our
Code of Business Conduct and Ethics on our website at www.verastem.com or request a copy without charge from:
Verastem, Inc.
Attention: Investor Relations
117 Kendrick St., Suite 500
Needham, MA 02494
We will post to our website any amendments to the Code of Business Conduct and Ethics and any waivers
that are required to be disclosed by the rules of either the SEC or Nasdaq.
Insider Trading Policies and Procedures
We have adopted an insider trading policy that governs the purchase, sale, and other dispositions of our
securities by our directors, officers and employees, and other covered persons. The insider trading policy also applies
to transactions by the Company in its securities. We believe that the insider trading policy is reasonably designed to
promote compliance with insider trading laws, rules and regulations and the listing standards of Nasdaq. A copy of our
Insider Trading Policy is filed with this Annual Report on Form 10-K as Exhibit 19.1.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item 11 of Form 10-K regarding executive compensation will be included in
our 2025 Proxy Statement and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The information required by this Item 12 of Form 10-K regarding security ownership of certain beneficial
owners and management will be included in our 2025 Proxy Statement and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
The information required by this Item 13 of Form 10-K regarding certain relationships and related
transactions and director independence will be included in our 2025 Proxy Statement and is incorporated herein by
reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this Item 14 of Form 10-K regarding principal accountant fees and services will
be included in our 2025 Proxy Statement and is incorporated herein by reference.
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98
PART IV
Item 15. Exhibits and Financial Statement Schedules
(a) The following documents are filed as part of this Annual Report on Form 10-K:
(1) Consolidated Financial Statements
See Part II, Item 8 for the Financial Statements required to be included in this Annual Report on Form 10-K.
(2) Consolidated Financial Statement Schedules
All financial statement schedules are omitted because they are not applicable or the required information is
included in the consolidated financial statements or notes thereto.
(3) Exhibits
Those exhibits required to be filed by Item 601 of Regulation S-K are listed in the Exhibit Index immediately
preceding the exhibits hereto and such listing is incorporated herein by reference.
Item 16. Form 10-K Summary
None.
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99
EXHIBIT INDEX
Exhibit
number
Description of exhibit
3.1
Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Annual
Report on Form 10-K filed by the Registrant on March 12, 2019)
3.2
Certificate of Amendment to the Restated Certificate of Incorporation of the Registrant (incorporated by
reference to Exhibit 3.2 to the Annual Report on Form 10-K filed by the Registrant on March 12, 2019)
3.3
Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.4 to Amendment
No. 3 to the Registration Statement on Form S-1 (File No. 333-177677) filed by the Registrant on January 13,
2012)
3.4
Certificate of Amendment to the Restated Certificate of Incorporation of Verastem, Inc. (incorporated by
reference to Exhibit 3.1 to the Form 8-K filed by the Registrant with the Securities and Exchange
Commission on May 21, 2020)
3.5
Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock
(incorporated by reference to Exhibit 3.1 to the Form 8-K filed by the Registrant with the Securities and
Exchange Commission on November 7, 2022)
3.6
Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock
(incorporated by reference to Exhibit 3.1 to the Form 8-K filed by the Registrant with the Securities and
Exchange Commission on January 25, 2023)
3.7
Certificate of Amendment to the Restated Certificate of Incorporation of Verastem, Inc. (incorporated by
reference to Exhibit 3.1 to the Form 8-K filed by the Registrant with the Securities and Exchange
Commission on May 31, 2023)
4.1
Specimen certificate evidencing shares of common stock (incorporated by reference to Exhibit 4.1 to
Amendment No. 3 to the Registration Statement on Form S-1 (File No. 333-177677) filed by the Registrant
on January 13, 2012)
4.2*
Description of Securities
4.3
Form of Pre-Funded Warrant. (incorporated by reference to Exhibit 4.1 to the Form 8-K filed by the
Registrant with the Securities and Exchange Commission on June 21, 2023).
4.4
Form of Pre-Funded Warrant to Purchase Stock (incorporated by reference to Exhibit 4.1 to the Form 8-K
filed by the Registrant with the Securities and Exchange Commission on July 25, 2024).
4.5
Form of Warrant to Purchase Stock (incorporated by reference to Exhibit 4.2 to the Form 8-K filed by the
Registrant with the Securities and Exchange Commission on July 25, 2024).
10.1#
Form of Incentive Stock Option Agreement under 2012 Incentive Plan (incorporated by reference to
Exhibit 10.3 to Amendment No. 3 to the Registration Statement on Form S-1 (File No. 333-177677) filed by
the Registrant on January 13, 2012)
10.2#
Form of Incentive Stock Option Agreement under Amended and Restated 2012 Incentive Plan (incorporated
by reference to Exhibit 10.4 of the Registrant’s Annual Report on Form 10-K filed by the Registrant on
March 13, 2018)
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100
10.3#
Form of Nonstatutory Stock Option Agreement under 2012 Incentive Plan (incorporated by reference to
Exhibit 10.4 to Amendment No. 3 to the Registration Statement on Form S-1 (File No. 333-177677) filed by
the Registrant on January 13, 2012)
10.4#
Form of Nonstatutory Stock Option Agreement under Amended and Restated 2012 Incentive Plan
(incorporated by reference to Exhibit 10.6 of the Registrant’s Annual Report on Form 10-K filed by the
Registrant on March 13, 2018)
10.5#
Form of Restricted Stock Unit Agreement under 2012 Incentive Plan (incorporated by reference to
Exhibit 10.16 to Amendment No. 3 to the Registration Statement on Form S-1 (File No. 333-177677) filed by
the Registrant on January 13, 2012)
10.6#
Amendment to Form of Restricted Stock Unit Agreement under 2012 Incentive Plan (incorporated by
reference to Exhibit 10.25 to the Annual Report on Form 10-K filed by the Registrant on March 26, 2013)
10.9#
Form of Restricted Stock Unit Agreement under Amended and Restated 2012 Incentive Plan (incorporated by
reference to Exhibit 10.9 of the Registrant’s Annual Report on Form 10-K filed by the Registrant on March
13, 2018)
10.7#
Form of Inducement Award Nonstatutory Stock Option Agreement (incorporated by reference to Exhibit 4.4
to the Registration Statement on Form S-8 filed by the Registrant with the Securities and Exchange
Commission on December 19, 2014)
10.8#
Form of Inducement Award Nonstatutory Stock Option Agreement (incorporated by reference to Exhibit
10.11 of the Registrant’s Annual Report on Form 10-K filed by the Registrant on March 13, 2018)
10.9#
Form of Inducement Award Restricted Stock Unit Agreement (incorporated by reference to Exhibit 4.3 of the
Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, filed by the Registrant
with the Securities and Exchange Commission on November 7, 2018)
10.10#
Form of Indemnification Agreement between the Registrant and each director and executive officer
(incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q filed by the Registrant on
August 8, 2017)
10.11
Lease Agreement, dated April 15, 2014, between the Registrant and Intercontinental Fund III 117 Kendrick
Street LLC (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the
Registrant on April 18, 2014)
10.12
First Amendment of Lease Agreement, dated February 15, 2018, between the Registrant and 117 Kendrick
DE, LLC, as successor-in-interest to Intercontinental Fund III 117 Kendrick Street, LLC (incorporated by
reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q filed by the Registrant on May 3, 2018)
10.13*
Second Amendment of Lease Agreement, dated November 1, 2024, between the Registrant and 117 Kendrick
DE, LLC
10.14#
Employment Agreement, dated August 2, 2023, by and between Verastem, Inc. and Daniel W. Paterson
(incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Registrant with the Securities and
Exchange Commission on August 4, 2023).
10.15†
License Agreement, dated July 11, 2012, by and between the Registrant and Pfizer Inc. (incorporated by
reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q filed by the Registrant on August 13, 2012)
10.16†
Letter Agreement, dated December 7, 2012, by and between the Registrant and Pfizer Inc. (incorporated by
reference to Exhibit 10.31 to the Annual Report on Form 10-K filed by the Registrant on March 6, 2014)
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101
10.17†
License Agreement for CKI27, dated January 7, 2020, between Verastem, Inc. and Chugai Pharmaceutical
Co., Ltd. (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q filed by the
Registrant on May 7, 2020)
10.18†*
First Amendment to License Agreement for CKI27, dated April 19, 2020 between Verastem, Inc. and Chugai
Pharmaceutical, Co. Ltd.
10.19†*
Second Amendment to License Agreement for CKI27, dated August 12, 2021, between Verastem, Inc. and
Chugai Pharmaceutical Co. Ltd.
10.20†*
Third Amendment to License Agreement for CKI27, dated May 10, 2023, between Verastem, Inc. and Chugai
Pharmaceutical Co. Ltd.
10.21#
Form of Restricted Stock Unit Agreement under the 2012 Incentive Plan (incorporated by reference to
Exhibit 10.2 to the Quarterly Report on Form 10-Q filed by the Registrant on May 7, 2020)
10.22#
Form of Inducement Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.3 to the
Quarterly Report on Form 10-Q filed by the Registrant on May 7, 2020)
10.23#
Form of Incentive Stock Option Agreement under the 2012 Incentive Plan (incorporated by reference to
Exhibit 10.4 to the Quarterly Report on Form 10-Q filed by the Registrant on May 7, 2020)
10.24#
Form of Nonstatutory Stock Option Agreement under the 2012 Incentive Plan (incorporated by reference to
Exhibit 10.5 to the Quarterly Report on Form 10-Q filed by the Registrant on May 7, 2020)
10.25#
Form of Inducement Nonstatutory Stock Option Agreement (incorporated by reference to Exhibit 10.6 to the
Quarterly Report on Form 10-Q filed by the Registrant on May 7, 2020)
10.26#
Form of Incentive Stock Option Agreement under the 2021 Equity Incentive Plan (incorporated by reference
to Exhibit 10.2 to the Quarterly Report on Form 10-Q filed by the Registrant on August 2, 2021)
10.27#
Form of Nonstatutory Stock Option Agreement (Employees) under the 2021 Equity Incentive Plan
(incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q filed by the Registrant on
August 2, 2021)
10.28#
Form of Nonstatutory Stock Option Agreement (Non-Employees) under the 2021 Equity Incentive Plan
(incorporated by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q filed by the Registrant on
August 2, 2021)
10.29#
Form of Restricted Stock Unit Agreement under the 2021 Equity Incentive Plan (incorporated by reference to
Exhibit 10.5 to the Quarterly Report on Form 10-Q filed by the Registrant on August 2, 2021)
10.30#
Form of Inducement Nonstatutory Stock Option Agreement (incorporated by reference to Exhibit 10.6 to the
Quarterly Report on Form 10-Q filed by the Registrant on August 2, 2021)
10.31#
Form of Inducement Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.7 to the
Quarterly Report on Form 10-Q filed by the Registrant on August 2, 2021)
10.32†
Asset Purchase Agreement by and between Secura Bio, Inc. and Verastem, Inc. (incorporated by reference to
Exhibit 10.1 to the Quarterly Report on Form 10-Q filed by the Registrant on November 9, 2020)
10.33
Loan and Security Agreement, dated as of March 25, 2022, among Verastem, Inc., as borrower, Oxford
Finance LLC, as collateral agent and a lender, and Oxford Finance Credit Fund III LP, as a lender
(incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K, filed by the
Registrant with the Securities and Exchange Commission on March 27, 2022)
Table of Contents
102
10.34#
Employment Agreement, dated October 24, 2023 by and between Verastem, Inc. and Daniel Calkins
(incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Registrant with the Securities and
Exchange Commission on October 27, 2023).
10.35#
Employment Agreement dated January 14, 2025 by and between Verastem, Inc. and Matthew Ros.
(incorporated by reference to Exhibit 10.1 to Form 8-K filed by the Registrant with the Securities and
Exchange Commission on January 21, 2025)
10.36
First Amendment to Loan and Security Agreement, dated as of January 4, 2024, among Verastem, Inc., as
borrower, Oxford Finance LLC, as collateral agent and a lender, and the other lenders party thereto.
(incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Registrant with the Securities and
Exchange Commission on January 8, 2024)
10.37#
Amended and Restated 2018 Employee Stock Purchase Plan. (incorporated by reference to Exhibit 10.1 to
Form 10-Q filed by the Registrant with the Securities and Exchange Commission on August 8, 2023)
10.38#
Amended and Restated 2012 Incentive Plan. (incorporated by reference to Exhibit 10.2 to Form 10-Q by the
Registrant with the Securities and Exchange Commission on August 8, 2023)
10.39#
Amended and Restated 2021 Equity Incentive Plan. (incorporated by reference to Exhibit 10.3 to Form 10-Q
by the Registrant with the Securities and Exchange Commission on August 8, 2023)
10.40
Exchange Agreement, dated November 4, 2022, by and among Verastem, Inc. and Biotechnology Value
Fund, L.P., Biotechnology Value Fund II, L.P., Biotechnology Value Trading Fund OS LP and MSI BVF SPV,
LLC (incorporated by reference to Exhibit 10.1 to for the form 8-K filed by the Registrant with the Securities
and Exchange Commission on November 7, 2022)
10.41
Amended and Restated 2021 Equity Incentive Plan. (incorporated by reference to Exhibit 10.1 to Form 10-Q
by the Registrant with the Securities and Exchange Commission on August 8, 2024)
10.42
Note Purchase Agreement, dated as of January 13 2025, by and among Verastem, Inc., RGCM SA LLC,
Oberland Capital Management LLC and certain funds managed by Oberland Capital Management LLC.
(incorporated by reference to Exhibit 10.1 to Form 8-K filed by the Registrant with the Securities and
Exchange Commission on January 13, 2025)
10.43
Stock Purchase Agreement, dated as of January 13, 2025, among Verastem, Inc. and the investors party
thereto. (incorporated by reference to Exhibit 10.2 to Form 8-K filed by the Registrant with the Securities and
Exchange Commission on January 13, 2025)
10.44†*
Collaboration and Option Agreement by and between Verastem, Inc. and GenFleet Therapeutics (Shanghai),
Inc. dated as of August 24, 2023.
10.45#*
Form of Restricted Stock Unit Agreement under the Amended and Restated 2021 Equity Incentive Plan.
19.1*
Insider Trading Policy
21.1*
Subsidiaries of the Registrant
23.1*
Consent of Ernst & Young LLP
31.1*
Certification of the Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a)
31.2*
Certification of the Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a)
32.1*
Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
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103
32.2*
Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section , as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
97.1
Policy for Recoupment of Incentive Compensation (incorporated by reference to Exhibit 97.1 to Annual
Report on Form 10-K filed by the Registrant with the Securities and Exchange Commission on March 14,
2024)
99.1*
Press Release issued by Verastem, Inc. on March 20, 2025 (furnished herewith).
101.INS*
Inline XBRL Instance Document
101.SCH*
Inline XBRL Taxonomy Extension Schema Document
101.CAL*
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
*
Filed herewith.
†
Certain confidential information contained in this exhibit has been omitted because it (i) is not material and (ii) is
of the type that the Company treats as private or confidential. Confidential materials omitted will be filed
separately with the SEC upon request.
#
Management contract or compensatory plan, contract or agreement.
Table of Contents
104
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on this 20th day of
March 2025.
VERASTEM, INC.
By:
/s/ Daniel W. Paterson
Daniel W. Paterson
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the
following persons on behalf of the registrant in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Daniel W. Paterson
Daniel W. Paterson
President, Chief Executive Officer and Director
(Principal Executive Officer)
March 20, 2025
/s/ Daniel Calkins
Daniel Calkins
Chief Financial Officer
(Principal Financial and Accounting officer)
March 20, 2025
/s/ PAUL BUNN, M.D.
Paul Bunn, M.D.
Director
March 20, 2025
/s/ Robert Gagnon
Robert Gagnon
Director
March 20, 2025
/s/ Anil Kapur
Anil Kapur
Director
March 20, 2025
/s/ Michael Kauffman, M.D.,Ph.D.
Michael Kauffman, M.D., Ph.D.
Director
March 20, 2025
/s/ JOHN JOHNSON
John Johnson
Director
March 20, 2025
/s/ MICHELLE ROBERTSON
Michelle Robertson
Director
March 20, 2025
/s/ Eric Rowinsky, M.D.
Eric Rowinsky, M.D.
Director
March 20, 2025
/s/ BRIAN STUGLIK
Brian Stuglik
Director
March 20, 2025
/s/ Karin Tollefson
Karin Tollefson
Director
March 20, 2025
Table of Contents
F-1
Verastem, Inc.
CONSOLIDATED FINANCIAL STATEMENTS
CONTENTS
Report of Independent Registered Public Accounting Firm
F-2
Consolidated Financial Statements
Consolidated Balance Sheets
F-4
Consolidated Statements of Operations and Comprehensive Loss
F-5
Consolidated Statements of Stockholders’ (Deficit) Equity
F-6
Consolidated Statements of Cash Flows
F-7
Notes to Consolidated Financial Statements
F-8
Table of Contents
F-2
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Verastem, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Verastem, Inc. (the Company) as of December 31,
2024 and 2023, the related consolidated statements of operations and comprehensive loss, convertible preferred stock
and stockholders' (deficit) equity and cash flows for each of the three years in the period ended December 31, 2024,
and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the
consolidated financial statements present fairly, in all material respects, the consolidated financial position of the
Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.
The Company’s Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as
a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from
operations, has a working capital deficiency, and has stated that substantial doubt exists about the Company’s ability to
continue as a going concern. Management’s evaluation of the events and conditions and management’s plans regarding
these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an
opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with
the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an
audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements,
whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for
our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial
statements that was communicated or required to be communicated to the audit committee and that: (1) relates to
accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion
on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter
below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Table of Contents
F-3
Accrued and Prepaid Clinical Trial Expense
Description of
the Matter
As summarized in Note 4 to the consolidated financial statements, the Company’s accrued
clinical expenses were $10.9 million at December 31, 2024, which included the estimated
obligation for clinical trial expenses incurred as of December 31, 2024 but not paid as of that
date. In addition, the Company’s total prepaid expenses and other current assets were $5.9
million, which included amounts that were paid in advance of services incurred pursuant to
clinical trials. As discussed in Note 2 to the consolidated financial statements, the Company
records clinical trial expenses as incurred. The Company’s determination of costs incurred for
certain development activities, such as clinical trial expenses, are recognized based on an
evaluation of the progress to completion of specific tasks using data such as patient enrollment,
clinical site activations, and information provided to the Company by its vendor on their actual
costs incurred or level of effort expended. Payments for these activities are based on the terms of
the individual arrangements, which may differ from the pattern of costs incurred, and are
reflected on the consolidated balance sheets as prepaid expenses and other current assets or
accrued expenses.
Auditing the Company’s accrued and prepaid clinical trial expenses was especially challenging
due to the volume of information received from vendors that perform services on the Company’s
behalf. While the Company’s estimates of accrued and prepaid clinical trial expenses are
primarily based on information received from its vendors for each study, the Company is
required to make an estimate for additional costs incurred. Additionally, due to the long duration
of clinical trials and the timing of vendor invoices, the actual amounts incurred are not typically
known at the time the financial statements are issued.
How We
Addressed the
Matter in Our
Audit
To evaluate the accrued and prepaid clinical trial expenses, our audit procedures included, among
others, testing the accuracy and completeness of the underlying data used in the estimates and
evaluating the significant assumptions used by management to estimate the recorded accruals
and prepayments. We obtained third party confirmation from the Company’s most significant
contract research organizations to validate the underlying data used in management’s estimate.
We corroborated the progress of research and development activities associated with clinical
trials through discussion with the Company’s research and development personnel that oversee
the clinical activities. In addition, we performed analytics over fluctuations in accruals and
prepaids by vendor throughout the period subject to audit and compared subsequent invoices
received from third parties to amounts accrued.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2011.
Boston, Massachusetts
March 20, 2025
Table of Contents
F-4
Verastem, Inc.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
December 31,
2024
2023
Assets
Current assets:
Cash and cash equivalents
$
88,818
$
77,909
Short-term investments
—
59,220
Grant receivable
200
—
Prepaid expenses and other current assets
5,943
6,553
Total current assets
94,961
143,682
Property and equipment, net
32
37
Right-of-use asset, net
1,405
1,171
Restricted cash
241
241
Other assets
4,899
4,587
Total assets
$
101,538
$
149,718
Liabilities, convertible preferred stock and stockholders’ equity
Current liabilities:
Accounts payable
$
4,026
$
7,184
Accrued expenses
25,952
17,928
Deferred liabilities
—
327
Lease liability, short-term
995
941
Total current liabilities
30,973
26,380
Non-current liabilities:
Long-term debt
40,724
40,086
Lease liability, long-term
535
530
Preferred stock tranche liability
—
4,189
Warrant liability
58,199
—
Total liabilities
130,431
71,185
Convertible preferred stock:
Series B Convertible Preferred Stock, $0.0001 par value; 944 shares and 2,144 shares designated at
December 31, 2024 and December 31, 2023, respectively; 0 shares and 1,200 shares issued and outstanding
at December 31, 2024 and December 31, 2023, respectively
—
21,159
Stockholders’ equity:
Preferred Stock, $0.0001 par value; 5,000 shares authorized:
Series A Convertible Preferred Stock, $0.0001 par value; 1,000 shares designated, 1,000 shares issued and
outstanding at December 31, 2024 and December 31, 2023
—
—
Common stock, $0.0001 par value; 300,000 shares authorized, 44,784 and 25,281 shares issued and
outstanding at December 31, 2024 and December 31, 2023, respectively
4
3
Additional paid-in capital
926,630
882,248
Accumulated other comprehensive income
—
13
Accumulated deficit
(955,527)
(824,890)
Total stockholders’ (deficit) equity
(28,893)
57,374
Total liabilities, convertible preferred stock and stockholders’ (deficit) equity
$
101,538
$
149,718
See accompanying notes to the consolidated financial statements.
Table of Contents
F-5
Verastem, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except per share amounts)
Year Ended December 31,
2024
2023
2022
Revenue:
Sale of COPIKTRA license and related assets
$
10,000
$
—
$
2,596
Total revenue
10,000
—
2,596
Operating expenses:
Research and development
81,334
61,356
50,558
Selling, general and administrative
43,622
30,728
24,975
Total operating expenses
124,956
92,084
75,533
Loss from operations
(114,956)
(92,084)
(72,937)
Other income (expense)
(123)
(109)
47
Interest income
4,149
6,214
1,215
Interest expense
(4,562)
(4,139)
(2,137)
Change in fair value of preferred stock tranche liability
4,189
2,751
—
Change in fair value of warrant liability
(19,149)
—
—
Net loss before taxes
(130,452)
(87,367)
(73,812)
Income tax expense
(185)
—
—
Net loss
(130,637)
(87,367)
(73,812)
Net loss per share—basic and diluted
(3.66)
(3.96)
(4.57)
Weighted average common shares outstanding used in computing net loss per
share—basic and diluted
35,713
22,054
16,138
Net loss
$ (130,637)
$
(87,367)
$ (73,812)
Unrealized gain (loss) on available-for-sale securities
(13)
13
(34)
Comprehensive loss
$ (130,650)
$
(87,354)
$ (73,846)
See accompanying notes to the consolidated financial statements.
Table of Contents
F-6
Verastem, Inc.
CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’
(DEFICIT) EQUITY
(in thousands, except share data)
Accumulated
other
Additional comprehensive
Total
Series B Convertible Preferred Stock
Series A Convertible Preferred Stock
Common stock
paid-in
(loss)
Accumulated
stockholders'
Shares
Amount
Shares
Amount
Shares
Amount
capital
income
deficit
equity
Balance at December 31, 2021
—
$
—
—
$
—
15,440,830
$
2
$ 751,234
$
34
$
(663,711) $
87,559
Net loss
—
—
—
—
—
—
—
—
(73,812)
(73,812)
Unrealized loss on available-for-
sale marketable securities
—
—
—
—
—
—
—
(34)
—
(34)
Issuance of Series A Convertible
Preferred Stock in exchange for
common stock
—
—
1,000,000
—
(833,333)
—
—
—
—
—
Issuance of common stock under
Employee Stock Purchase Plan
—
—
—
—
10,194
—
164
—
—
164
Issuance of common stock resulting
from vesting of restricted stock
units
—
—
—
—
121,441
—
—
—
—
—
Issuance of common stock resulting
from exercise of stock options
—
—
—
—
8,181
—
118
—
—
118
Issuance of common stock resulting
from at-the-market transactions, net
—
—
—
—
1,964,448
—
27,349
—
—
27,349
Stock-based compensation expense
—
—
—
—
—
—
6,047
—
—
6,047
Balance at December 31, 2022
—
$
—
1,000,000
$
—
16,711,761
$
2
$ 784,912
$
—
$
(737,523) $
47,391
Net loss
—
—
—
—
—
—
—
—
(87,367)
(87,367)
Unrealized gain on available-for-
sale marketable securities
—
—
—
—
—
—
—
13
—
13
Issuance of Series B Convertible
Preferred Stock, net of issuance
costs of $1,901 and preferred stock
tranche liability of $6,940
1,200,000
21,159
—
—
—
—
—
—
—
—
Issuance of common stock, and pre-
funded warrants, net of issuance
cost of $6,351
—
—
—
—
8,489,409
1
91,419
—
—
91,420
Issuance of common stock under
Employee Stock Purchase Plan
—
—
—
—
14,270
—
57
—
—
57
Issuance of common stock resulting
from vesting of restricted stock
units
—
—
—
—
65,710
—
—
—
—
—
Stock-based compensation expense
—
—
—
—
5,860
—
—
5,860
Balance at December 31, 2023
1,200,000
$
21,159
1,000,000
$
—
25,281,150
$
3
$ 882,248
$
13
$
(824,890) $
57,374
Net loss
—
—
—
—
—
—
—
—
(130,637)
(130,637)
Unrealized loss on available-for-
sale marketable securities
—
—
—
—
—
—
—
(13)
—
(13)
Issuance of common stock and pre-
funded warrants, net of issuance
costs of $1,179
—
—
—
—
13,333,334
1
14,220
—
—
14,221
Conversion of Series B Convertible
Preferred Stock to common stock
(1,200,000)
(21,159)
—
—
4,236,568
—
21,159
—
—
21,159
Issuance of common stock upon
exercise of pre-funded warrants
—
—
—
—
1,538,201
—
—
—
—
—
Issuance of common stock upon
exercise of warrants
—
—
—
—
250,000
—
1,420
—
—
1,420
Issuance of common stock resulting
from exercise of stock options
—
—
—
—
21,978
—
172
—
—
172
Issuance of common stock under
Employee Stock Purchase Plan
—
—
—
—
15,231
—
69
—
—
69
Issuance of common stock resulting
from vesting of restricted stock
units
—
—
—
—
107,888
—
—
—
—
—
Stock-based compensation expense
—
—
—
—
—
—
7,342
—
—
7,342
Balance at December 31, 2024
—
$
—
1,000,000
$
—
44,784,350
$
4
$ 926,630
$
—
$
(955,527) $
(28,893)
See accompanying notes to the consolidated financial statements.
Table of Contents
F-7
Verastem, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Year Ended December 31,
2024
2023
2022
Operating activities
Net loss
$ (130,637)
$ (87,367)
$ (73,812)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation
26
62
118
Non-cash operating lease cost
(175)
(175)
(154)
Stock-based compensation expense
7,342
5,860
6,047
Amortization of deferred financing costs, debt discounts and premiums and discounts on
available-for-sale marketable securities
(5)
(1,132)
228
Change in fair value of preferred stock tranche liability
(4,189)
(2,751)
—
Change in fair value of warrant liability
19,149
—
—
Changes in operating assets and liabilities:
Accounts receivable, net
—
31
485
Grant receivable
(200)
—
—
Prepaid expenses, other current assets and other assets
(596)
(5,826)
744
Accounts payable
(3,158)
2,283
2,599
Accrued expenses and other liabilities
7,999
2,938
(638)
Deferred liabilities
(327)
(383)
710
Net cash used in operating activities
(104,771)
(86,460)
(63,673)
Investing activities
Purchases of property and equipment
(28)
—
—
Purchases of investments
—
(96,447)
(17,815)
Maturities of investments
60,000
52,000
84,000
Net cash provided by (used in) investing activities
59,972
(44,447)
66,185
Financing activities
Payments for loan amendment
(150)
—
—
Proceeds from issuance of Series B Convertible Preferred Stock, net
—
28,099
—
Proceeds from long-term debt, net
—
14,918
24,148
Repayment of 2018 Notes
—
(300)
—
Proceeds from insurance premium financing
1,298
1,430
—
Payments on insurance premium financing
(1,298)
(1,430)
—
Proceeds from the exercise of stock options and employee stock purchase program
241
57
282
Proceeds from the issuance of common stock and pre-funded warrants, net
14,221
91,420
27,354
Proceeds from the issuance of warrants
39,595
—
—
Proceeds from exercise of warrants
875
—
—
Net cash provided by financing activities
54,782
134,194
51,784
Increase in cash, cash equivalents and restricted cash
9,983
3,287
54,296
Cash, cash equivalents and restricted cash at beginning of period
79,076
75,789
21,493
Cash, cash equivalents and restricted cash at end of period
$
89,059
$ 79,076
$ 75,789
Supplemental disclosure
Cash paid for interest
3,774
3,361
1,536
Supplemental disclosure of non-cash investing and financing activities
Issuance of preferred stock tranche liability
$
—
$
6,940
$
—
Purchases of property and equipment included in accounts payable and accrued expenses
$
—
$
7
$
—
Issuance costs included in accounts payable and accrued expenses
$
32
$
—
$
—
Conversion of Series B Convertible Preferred Stock to common stock
$
21,159
$
—
$
—
Conversion of warrant liability to common stock upon warrant exercise
$
545
$
—
$
—
Right of use asset obtained in exchange for operating lease liability
$
988
$
—
$
—
See accompanying notes to the consolidated financial statements.
Table of Contents
F-8
1. Nature of business
Verastem, Inc. (the “Company”) is a late-stage development biopharmaceutical company committed to the
development and commercialization of new medicines to improve the lives of patients diagnosed with ras sarcoma
(“RAS”)/ mitogen activated pathway kinase (“MAPK”) pathway-driven cancers. The Company’s pipeline is focused
on novel small molecule drugs that inhibit critical signaling pathways in cancer that promote cancer cell survival and
tumor growth, including RAF/MEK inhibition, FAK inhibition and KRAS G12D inhibition.
The Company’s most advanced product candidates, avutometinib and defactinib, are being investigated in
both preclinical and clinical studies for the treatment of various solid tumors, including, but not limited to low grade
serous ovarian cancer (“LGSOC”), non-small cell lung cancer (“NSCLC”) and pancreatic cancer. The Company
believe that avutometinib may be beneficial as a therapeutic, as a single agent or when used together in combination
with defactinib, other agents, other pathway inhibitors, or other current and emerging standard of care treatments in
cancers that do not adequately respond to currently available therapies.
The consolidated financial statements include the accounts of Verastem Securities Company and Verastem
Europe GmbH, wholly-owned subsidiaries of the Company. All financial information presented has been consolidated
and includes the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and
transactions have been eliminated in consolidation.
The Company is subject to the risks associated with other life science companies, including, but not limited
to, possible failure of preclinical testing or clinical trials, competitors developing new technological innovations,
inability to obtain marketing approval of the Company’s product candidates, avutometinib and defactinib, market
acceptance and commercial success of the Company’s product candidates, avutometinib and defactinib, following
receipt of regulatory approval, and, protection of proprietary technology and the continued ability to obtain adequate
financing to fund the Company’s future operations. If the Company does not obtain marketing approval and
successfully commercialize its product candidates, avutometinib and defactinib, following regulatory approval, it will
be unable to generate product revenue or achieve profitability and may need to raise additional capital.
As of December 31, 2024, the Company had cash, cash equivalents, and investments of $88.8 million. In
accordance with applicable accounting standards, the Company evaluated whether there are conditions and events,
considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern
within 12 months after the date of the issuance of these consolidated financial statements. The Company anticipates
operating losses may continue for the foreseeable future since the Company does not yet have regulatory approval to
sell any of its product candidates, and the Company continues to incur operating costs to execute its strategic plan,
including costs related to research and development of its product candidates and commercial readiness activities. As
a result of the assessment in accordance with the applicable accounting standards, these conditions raise substantial
doubt about the Company’s ability to continue as a going concern for 12 months after the date the consolidated
financial statements are issued.
The Company expects to finance its operations with its existing cash, cash equivalents and investments,
through potential future milestones and royalties received pursuant to the Company’s Asset Purchase Agreement
(“Secura APA”) with Secura Bio, Inc. (“Secura”), pursuant to the Company’s Note Purchase Agreement (the “Note
Purchase Agreement”) with RGCM SA LLC, as purchaser agent, Oberland Capital Management LLC (“Oberland”)
and certain funds managed by Oberland, as purchasers (together with the other purchasers party thereto referred as the
“Note Purchase Agreement Purchasers”), or through other strategic financing opportunities that could include, but are
not limited to collaboration agreements, future offerings of its equity, or the incurrence of debt. However, given the
risks associated with these potential strategic or financing opportunities, they are not deemed probable for purposes of
the going concern assessment. If the Company fails to obtain additional future capital, it may be unable to complete its
planned preclinical studies and clinical trials and obtain approval of certain investigational product candidates from the
U.S. Food and Drug Administration (“FDA”) or foreign regulatory authorities. Therefore, there is substantial doubt
about the Company’s ability to continue as a going concern.
Table of Contents
F-9
Reverse Stock Split
On May 30, 2023, the Company filed a Certificate of Amendment to the Company’s Restated Certificate of
Incorporation, as amended to date, with the Secretary of State of the State of Delaware to effect a reverse stock split of
the Company’s issued and outstanding common stock, par value $0.0001 at a ratio of 1-for-12 (the “Reverse Stock
Split”), as authorized at the Company’s 2023 annual meeting of stockholders held on May 15, 2023. The Company
effected the Reverse Stock Split on May 31, 2023. No fractional shares were issued in connection with the Reverse
Stock Split. Stockholders who otherwise were entitled to a fractional share of common stock were entitled to receive a
price equal to the closing price of the common stock on the Nasdaq Capital Market on the date immediately preceding
the Reverse Stock Split, as adjusted by the ratio of one share of common stock for every 12 shares of common stock,
multiplied by the applicable fraction of a share. The number of shares of common stock that the Company is
authorized to issue remains at 300,000,000 shares and the par value of its common stock remains unchanged at
$0.0001 per share.
The Company has retroactively restated the share and per share amounts in the consolidated financial
statements for the 12 months ended December 31, 2023 and 2022, to give retroactive effect to the Reverse Stock
Split. Proportionate adjustments were made to the per share exercise price and number of shares of common stock
issuable under all outstanding stock options, convertible notes and preferred stock. In addition, proportionate
adjustments have been made to the number of shares of common stock issuable upon vesting of the restricted stock
units and the number of shares of common stock reserved for the Company’s equity incentive compensation plans. The
consolidated statements of convertible preferred stock and stockholders’ equity reflect the impact of the Reverse Stock
Split by reclassifying from “common stock” to “additional paid-in capital” in an amount equal to the par value of the
decreased shares resulting from the Reverse Stock Split the years ended December 31, 2023, and 2022.
2. Significant accounting policies
Basis of presentation
The accompanying financial statements of the Company have been prepared in accordance with U.S.
generally accepted accounting principals (“GAAP”) under the assumption that the Company will continue as a going
concern for the next 12 months. Accordingly, they do not include any adjustments that might result from the
uncertainty related to the Company’s ability to continue as a going concern.
Use of estimates
The preparation of the Company’s financial statements in conformity with U.S. GAAP requires management
to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying
notes. On an ongoing basis, management evaluates its estimates, including but not limited to estimates related to
revenue recognition, accrued and prepaid clinical trial expense and other general accruals, stock-based compensation
expense, its preferred stock tranche liability and its warrant liability. The Company bases its estimates on historical
experience and other market-specific or other relevant assumptions that it believes to be reasonable. Actual results
could differ from such estimates.
Segment and geographic information
Operating segments are defined as components of an enterprise about which separate discrete information is
available and regularly reviewed by the chief operating decision maker, or decision-making group, in deciding how to
allocate resources and in assessing performance. The Company views its operations and manages its business in one
operating segment, which is the business of researching, developing and commercializing drugs for the treatment of
patients with cancer. All material long-lived assets of the Company reside in the United States.
Table of Contents
F-10
Proceeds from grants
In May 2022, the Company was awarded the “Therapeutic Accelerator Award” grant from Pancreatic Cancer
Network (“PanCAN”) for up to $3.8 million (the “PanCAN Grant”). In August 2022, PanCAN agreed to provide the
Company with an additional $0.5 million for the collection and analysis of patient samples. The grant is supporting a
Phase 1b/2 clinical trial of GEMZAR (gemcitabine) and ABRAXANE (Nab-paclitaxel) in combination with
avutometinib and defactinib entitled RAMP 205. The RAMP 205 trial is evaluating whether combining avutometinib
(to target KRAS mutant, which is found in more than 90% of pancreatic adenocarcinomas), and defactinib (to reduce
stromal density and adaptive resistance to avutometinib) to the standard GEMZAR/ABRAXANE regimen improves
outcomes for patients with such pancreatic cancers. The Company recognizes grants as contra research and
development expense in the consolidated statement of operations and comprehensive loss on a systematic basis over
the periods in which the Company recognizes as expenses the related costs for which the grants are intended to
compensate. Eligible expenses incurred in excess of grant payments received up to the total amount of the PanCAN
Grant are recorded as a grant receivable. Through December 31, 2024 the Company has received $4.1 million of cash
proceeds which was initially recorded as deferred liabilities on the balance sheet. The Company recorded $2.0 million,
$2.0 million and $0.3 million of the proceeds as a reduction of research and development expense during the years
ended December 31, 2024, 2023, and 2022, respectively. As of December 31, 2024, the company recorded $0.2
million as a grant receivable related to the PanCAN Grant in the consolidated balance sheet. As of December 31, 2023,
the Company recorded $0.3 million as deferred liabilities related to the PanCAN Grant in the consolidated balance
sheet.
Cash, cash equivalents and restricted cash
The Company considers all highly liquid investments with an original or remaining maturity of three months
or less at the date of purchase to be cash equivalents. Cash equivalents consist of a U.S. Government money market
funds and corporate bonds and commercial paper of publicly traded companies. Cash equivalents are reported at fair
value.
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the
consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of
cash flows (in thousands):
December 31,
2024
December 31,
2023
Cash and cash equivalents
$
88,818
$
77,909
Restricted cash
241
1,167
Total cash, cash equivalents and restricted cash
$
89,059
$
79,076
Amounts included in restricted cash as of December 31, 2024 is cash held to collateralize outstanding letters
of credit provided as a security deposit for the Company’s office space located in Needham, Massachusetts in the
amount of $0.2 million. Amounts included in restricted cash as of December 31, 2023 represent (i) cash held to
collateralize outstanding letters of credit provided as a security deposit for the Company’s office space located in
Needham, Massachusetts in the amount of $0.2 million and (ii) cash received pursuant to the PanCAN Grant restricted
for expenditures for specific research and development activities in the amounts of $0.9 million. The letters of credit
are included in non-current restricted cash on the consolidated balance sheets as of December 31, 2024 and December
31, 2023. Cash held pursuant to the PanCAN Grant is included in prepaid expenses and other current assets on the
consolidated balance sheet as of December 31, 2023.
Table of Contents
F-11
Fair value of financial instruments
The Company determines the fair value of its financial instruments based upon the fair value hierarchy, which
prioritizes valuation inputs based on the observable nature of those inputs. The fair value hierarchy applies only to the
valuation inputs used in determining the reported fair value of the investments and is not a measure of the investment
credit quality. The hierarchy defines three levels of valuation inputs:
Level 1 inputs
Quoted prices in active markets for identical assets or liabilities that the Company can access at the
measurement date.
Level 2 inputs
Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly or indirectly.
Level 3 inputs
Unobservable inputs that reflect the Company’s own assumptions about the assumptions market
participants would use in pricing the asset or liability.
Items Measured at Fair Value on a Recurring Basis
The following table presents information about the Company’s financial instruments that are measured at fair
value on a recurring basis (in thousands)
December 31, 2024
Description
Total
Level 1
Level 2
Level 3
Financial assets
Cash equivalents
$
63,304
$
63,304
$
—
$
—
Total financial assets
$
63,304
$
63,304
$
—
$
—
Warrant liability
$
58,199
$
—
$
—
$
58,199
December 31, 2023
Description
Total
Level 1
Level 2
Level 3
Financial assets
Cash equivalents
$
46,093
$
46,093
$
—
$
—
Short-term investments
59,220
5,992
53,228
—
Total financial assets
$ 105,313
$
52,085
$
53,228
$
—
Preferred stock tranche liability
$
4,189
$
—
$
—
$
4,189
The investments and cash equivalents have been initially valued at the transaction price and subsequently
valued, at the end of each reporting period, utilizing third party pricing services or other market observable data. The
pricing services utilize industry standard valuation models, including both income and market-based approaches and
observable market inputs to determine value. These observable market inputs include reportable trades, benchmark
yields, credit spreads, broker/dealer quotes, bids, offers, current spot rates and other industry and economic events. The
Company validates the prices provided by third party pricing services by reviewing their pricing methods and matrices,
obtaining market values from other pricing sources, analyzing pricing data in certain instances and confirming that the
relevant markets are active. After completing its validation procedures, the Company did not adjust or override any fair
value measurements provided by the pricing services as of December 31, 2024 and 2023.
Warrant liability
A warrant liability was recorded as a result the July 2024 Offering (defined herein) (see Note 7. Capital
Stock). The fair value measurement of the warrant liability is classified as Level 3 under the fair value hierarchy. The
fair value of the warrant liability at inception and December 31, 2024, was determined using the Black-Scholes
valuation model. The inputs to the Black-Scholes valuation model include the risk-free rate, stock price volatility,
expected dividends and remaining term. Significant increases or decreases in any of those inputs in isolation could
result in a significantly lower or higher fair value measurement.
Table of Contents
F-12
Below are the inputs used to value the warrant liability at July 23, 2024 and December 31, 2024:
December 31, 2024
July 23, 2024
Risk-free interest rate
4.17 %
4.63 %
Volatility
137 %
132 %
Dividend yield
—
—
Remaining term (years)
1.1
1.5
The following table represents a reconciliation of the warrant liability (in thousands):
July 23, 2024
$
39,595
Fair value of warrants exercised
(545)
Fair value adjustment
19,149
December 31, 2024
$
58,199
Preferred Stock tranche liability
A preferred stock tranche liability was recorded as a result of the entry into the Series B Convertible Preferred
Stock Securities Purchase Agreement (defined herein) (see Note 7. Capital Stock). The fair value measurement of the
preferred stock tranche liability is classified as Level 3 under the fair value hierarchy. The fair value of the preferred
stock tranche liability was determined using a Monte-Carlo simulation. The inputs to the Monte-Carlo include the risk-
free rate, stock price volatility, expected dividends and remaining term. Significant increases or decreases in any of
those inputs in isolation could result in a significantly lower or higher fair value measurement. The preferred stock
tranche liability expired in July 2024 and is no longer outstanding.
Below are the inputs used to value the preferred stock tranche liability at December 31, 2023:
December 31, 2023
Risk-free interest rate
5.13-5.52 %
Volatility
75 %
Dividend yield
—
Remaining term (years)
0.6
The following table represents a roll forward for the year ended December 31, 2024 of the preferred stock
right liability (in thousands):
January 1, 2024
$
4,189
Fair value adjustment
(4,189)
December 31, 2024
$
—
Long-term debt
The fair value of the Company’s long-term debt is determined using a discounted cash flow analysis with
current applicable rates for similar instruments as of the consolidated balance sheet date. The carrying value of the
Company’s long-term debt as of December 31, 2024 and December 31, 2023, was approximately $40.7 million and
$40.1 million, respectively. The Company estimates that the fair value of its long-term debt as of December 31, 2024
and December 31, 2023, was approximately $41.1 million and $39.6 million, respectively. The fair value of the
Company’s long-term debt was determined using Level 3 inputs.
Table of Contents
F-13
Investments
Investments and cash equivalents consist of investments in a U.S. Government money market funds,
overnight repurchase agreements collateralized by government agency securities or U.S. Treasury securities, corporate
bonds and commercial paper of publicly traded companies that are classified as available-for-sale pursuant to
Accounting Standards Codification (“ASC”) Topic 320, Investments—Debt and Equity Securities. The Company
classifies investments available to fund current operations as current assets on its consolidated balance sheets. Debt
securities are carried at fair value with unrealized gains and losses included as a component of accumulated other
comprehensive income (loss), which is a separate component of stockholders’ equity, until such gains and losses are
realized. The fair value of these securities is based on quoted prices for identical or similar assets.
The Company reviews investments for impairment whenever the fair value of a investment is less than the
amortized cost and evidence indicates that a investment’s carrying amount is not recoverable. Unrealized losses are
evaluated for impairment under ASC Topic 326, Financial Instruments - Credit Losses (“ASC 326”), to determine if
the impairment is credit-related or noncredit-related. Credit-related impairment is recognized as an allowance on the
balance sheet with a corresponding adjustment to earnings, and noncredit-related impairment is recognized in other
comprehensive income (loss). Evidence considered in this assessment includes reasons for the impairment, compliance
with our investment policy, the severity of the impairment, collectability of the security, and any adverse conditions
specifically related to the security, an industry, or geographic area. Realized gains and losses are determined using the
specific identification method and are included in interest income in the consolidated statements of operations and
comprehensive loss.
There were no realized gains or losses on investments for the years ended December 31, 2024, 2023 or 2022.
Accrued interest receivable is excluded from the amortized cost and estimated fair value of the Company’s
investments. There was no accrued interest receivable as of December 31, 2024. Accrued interest receivable of $0.1
million is presented within prepaid expenses and other current assets on the consolidated balance sheets as of
December 31, 2023. There were zero and two debt securities in an unrealized loss position at each of December 31,
2024, and December 31, 2023, respectively. None of these investments had been in an unrealized loss position for
more than 12 months as of December 31, 2023. The Company considered the decline in the market value for these
securities to be primarily attributable to current economic conditions and not credit related. At December 31, 2023, the
Company had the intent and ability to hold such securities until recovery. As a result, the Company did not record any
charges for credit-related impairments for its investments as of December 31, 2023.
The following is a summary of available-for-sale securities with unrealized losses for less than 12 months as
of December 31, 2024 and 2023 (in thousands):
December 31, 2024
December 31, 2023
Fair
Unrealized
Fair
Unrealized
Value
Losses
Value
Losses
Corporate bonds, agency bonds and commercial paper (due
within 1 year)
$
—
$
—
$
8,896
$
(1)
Total available-for-sale securities in an unrealized loss
position
$
—
$
—
$
8,896
$
(1)
Cash, cash equivalents, restricted cash and investments consist of the following (in thousands):
December 31, 2024
Gross
Gross
Amortized
Unrealized
Unrealized
Fair
Cost
Gains
Losses
Value
Cash, cash equivalents & restricted cash:
Cash and money market accounts
$
89,059
$
—
$
—
$ 89,059
Total cash, cash equivalents & restricted cash:
$
89,059
$
—
$
—
$ 89,059
Table of Contents
F-14
December 31, 2023
Gross
Gross
Amortized Unrealized Unrealized
Fair
Cost
Gains
Losses
Value
Cash, cash equivalents & restricted cash:
Cash and money market accounts
$
79,076
$
—
$
—
$
79,076
Total cash, cash equivalents & restricted cash:
$
79,076
$
—
$
—
$
79,076
Investments:
Corporate bonds, agency bonds and commercial paper (due
within 1 year)
$
59,208
$
13
(1)
$
59,220
Total investments
$
59,208
$
13
$
(1)
$
59,220
Total cash, cash equivalents, restricted cash and investments
$ 138,284
$
13
$
(1)
$ 138,296
Concentrations of credit risk and off-balance sheet risk
Cash and cash equivalents, investments, and trade accounts receivable are financial instruments that
potentially subject the Company to concentrations of credit risk. The Company mitigates this risk by maintaining its
cash and cash equivalents and investments with high quality, accredited financial institutions. The management of the
Company’s investments is not discretionary on the part of these financial institutions. As of December 31, 2024, the
Company’s cash, cash equivalents and investments were deposited at four financial institutions and it has no
significant off-balance sheet concentrations of credit risk, such as foreign currency exchange contracts, option
contracts or other hedging arrangements.
For the year ended December 31, 2024 and December 31, 2022 there was one customer, Secura, who
individually accounted for all of the Company’s revenue. Refer to Note 13. License, collaboration, and commercial
agreements for a detailed discussion of the Secura APA.
Property and equipment
Property and equipment consist of laboratory equipment, office furniture, computer equipment and leasehold
improvements. Expenditures for repairs and maintenance are recorded to expense as incurred, whereas major
betterments are capitalized as additions to property and equipment. Depreciation and amortization are calculated using
the straight-line method over the following estimated useful lives of the assets:
Laboratory equipment
5 years
Furniture
5 years
Computer equipment
3 years
Leasehold improvements
Lesser of useful life or life of lease
Upon retirement or sale, the cost of the disposed asset and the related accumulated depreciation are removed
from the accounts and any resulting gain or loss is recognized.
The Company reviews its long-lived assets for impairment whenever events or changes in business
circumstances indicate that the carrying value of assets may not be recoverable. Recoverability is measured by
comparison of the asset’s book value to future net undiscounted cash flows that the assets are expected to generate. If
such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the
book value of the assets exceed their fair value, which is measured based on the projected discounted future net cash
flows arising from the assets. No impairment losses have been recorded through December 31, 2024.
Table of Contents
F-15
Research and development costs
The Company expenses research and development costs to operations as incurred. Research and development
expenses consist of:
●
employee-related expenses, including salaries, benefits, travel and stock-based compensation expense;
●
external research and development expenses incurred under arrangements with third parties, such as
contract research organizations, clinical trial sites, manufacturing organizations and consultants,
including the scientific advisory board;
●
license fees;
●
facilities, depreciation and other expenses, which include direct and allocated expenses for rent and
maintenance of facilities, and laboratory supplies; and
Costs for certain development activities, such as clinical trial expenses, are recognized based on an evaluation
of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations, and
information provided to the Company by its vendor on their actual costs incurred or level of effort expended. Payments
for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs
incurred, and are reflected on the consolidated balance sheets as prepaid expenses and other current assets or accrued
expenses.
Stock-based compensation
For service-based equity awards, the Company recognizes stock-based compensation expense for stock
options, and restricted stock units (“RSUs”) issued to employees, directors, and consultants based on the grant date fair
value of the awards on a straight-line basis over the requisite service period, which typically is the vest period. The
Company recognized stock-based compensation for shares issued to employees under the Company’s employee stock
purchase plan (“ESPP”) plan.
The Company has granted performance-based RSUs and stock options with terms that allow the recipients to
vest in a specific number of shares based upon the achievement of performance-based milestones as specified in the
grants. Stock-based compensation expense associated with these performance-based RSUs and stock options is
recognized if the performance condition is considered probable of achievement using the Company’s best estimates of
the time to vesting for the achievement of the performance-based milestones. Awards subject to performance-based
vesting requirements are expensed utilizing an accelerated attribution model if achievement of the performance criteria
is determined to be probable.
The grant date fair value of stock options is estimated using the Black-Scholes option pricing model that takes
into account the fair value of its common stock, the exercise price, the expected life of the option, the expected
volatility of its common stock, expected dividends on its common stock, and the risk-free interest rate over the
expected life of the option. The Company applies the simplified method described in the Securities and Exchange
Commission (“SEC”) Staff Accounting Bulletin (“SAB”) Topic 14.D.2 to calculate the expected term as it does not
have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term for
options granted to employees. The expected term is applied to the stock option grant group as a whole, as the
Company does not expect substantially different exercise or post-vesting termination behavior among its population.
The Company has not paid and do not anticipate paying cash dividends on the Company’s shares of common stock;
therefore, the expected dividend yield is assumed to be zero. The computation of expected volatility is based on the
historical volatility of the Company’s common stock. The risk-free interest rate is based on a treasury instrument
whose term is consistent with the expected term of the stock options. The Company accounts for forfeitures as they
occur.
The Company issues shares under the Company’s ESPP to employees. Stock-based compensation expense for
discounted purchases under the ESPP is measured using the Black-Scholes model to compute the fair value of the
lookback provision plus the purchase discount and is recognized as compensation expense over the offering period.
Table of Contents
F-16
Leases
Leases are accounted for in accordance with ASC Topic 842, Leases (“ASC 842”). This standard requires
lessees to recognize in the statement of financial position a liability to make lease payments and a right-of-use asset
representing its right to use the underlying asset for the lease term for both finance and operating leases.
At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease
based on the unique facts and circumstances within the arrangement. A lease is identified where an arrangement
conveys the right to control the use of identified property, plant, and equipment for a period of time in exchange for
consideration. Leases which are identified within the scope of ASC 842 and which have a term greater than one year
are recognized on the Company’s consolidated balance sheets as right-of-use assets, lease liabilities and, if applicable,
long-term lease liabilities. The Company has elected not to recognize leases with terms of one year or less on its
consolidated balance sheets. Operating lease liabilities and their corresponding right-of-use assets are recorded based
on the present value of lease payments over the expected remaining lease term. However, certain adjustments to the
right-of-use asset may be required for items such as initial direct costs paid or incentives received. The interest rate
implicit in lease contracts is typically not readily determinable. As a result, the Company utilizes its incremental
borrowing rates to calculate the present value of lease payments. Incremental borrowing rates are the rates the
Company incurs to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a
similar economic environment.
In accordance with ASC 842, components of a lease are split into three categories: lease components (e.g.,
land, building, etc.), non-lease components (e.g., common area maintenance, maintenance, consumables, etc.), and
non-components (e.g., property taxes, insurance, etc.). The fixed and in-substance fixed contract consideration
(including any related to non-components) must be allocated based on fair values to the lease components and non-
lease components. Although separation of lease and non-lease components is required, certain practical expedients are
available. Entities may elect the practical expedient to not separate lease and non-lease components. Rather, they
would account for each lease component and the related non-lease component together as a single component. The
Company has elected to account for the lease and non-lease components of each of its operating leases as a single lease
component and allocate all of the contract consideration to the lease component only. The lease component results in
an operating right-of-use asset being recorded on the consolidated balance sheets and amortized on a straight-line basis
as lease expense.
Revenue recognition
The Company recognizes revenue when its customer obtains control of promised goods or services, in an
amount that reflects the consideration which the Company expects to receive in exchange for those goods or services
in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). To determine revenue
recognition for contracts with its customers, the Company performs the following five step assessment: (i) identify the
contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction
price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when
(or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it
is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers
to the customer. At contract inception and once the contract is determined to be within the scope of ASC 606, the
Company assesses the goods or services promised within each contract, determines which goods and services are
performance obligations, and assesses whether each promised good or service is distinct. The Company then
recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation
when (or as) the performance obligation is satisfied.
Table of Contents
F-17
Sales of intellectual property
For sales of license and intellectual property, that include sale-based royalties, including milestone payments
based on a level of sales, the Company evaluates whether the royalties and sales-based milestones are considered
probable of being achieved and estimates the amount of royalties to include over the contractual term using the
expected value method and estimates the sales-based milestones using the most likely amount method. If it is probable
that a significant revenue reversal would not occur, the associated royalty and milestone value is included in the
transaction price. Royalties and sales-based milestones for territories for which there is not regulatory approval are not
considered probable until such regulatory approval is achieved. The Company evaluates factors such as whether
consideration is outside of the Company’s control, timeline for when the uncertainty will be resolved and historical
sales of COPIKTRA if applicable. There is considerable judgment involved in determining whether it is probable that
a significant revenue reversal would not occur. At the end of each subsequent reporting period, the Company
reevaluates the probability of achievement of all milestones subject to constraint and amount of royalty revenue to be
received and, if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a
cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment.
Collaborative arrangements
Collaborative Arrangements: Contracts are considered to be collaborative arrangements when they satisfy the
following criteria defined in ASC Topic 808, Collaborative Arrangements: (i) the parties to the contract must actively
participate in the joint operating activity and (ii) the joint operating activity must expose the parties to the possibility of
significant risk and rewards, based on whether or not the activity is successful. Payments received from or made to a
partner that are the result of a collaborative relationship with a partner, instead of a customer relationship, such as co-
development activities, are recorded as a reduction or increase to research and development expense, respectively.
Income taxes
The Company accounts for income taxes under the asset and liability method. Deferred tax assets and
liabilities are recognized for the future tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax bases using enacted tax rates in effect for the
year in which the differences are expected to affect taxable income. Tax benefits are recognized when it is more likely
than not that a tax position will be sustained during an audit. Deferred tax assets are reduced by a valuation allowance
if current evidence indicates that it is considered more likely than not that these benefits will not be realized.
The Company recognizes the tax effects of an uncertain tax position only if it is more likely than not that it
will be sustained based solely on its technical merits as of the reporting date and only in an amount more likely than
not that it will be sustained upon review by the tax authorities. The Company evaluates uncertain tax positions on a
quarterly basis and adjust the liability for changes in facts and circumstances, such as new regulations or
interpretations by the taxing authorities, new information obtained during a tax examination, significant amendment to
an existing tax law, or resolution of an examination. To the extent that the final tax outcome of these matters is
different than the amounts recorded, such differences will impact the income tax provision in the period in which such
determination is made. The resolution of its uncertain income tax positions is dependent on uncontrollable factors such
as law changes, new case law, and the willingness of the income tax authorities to settle, including the timing thereof
and other factors. Although the Company does not anticipate significant changes to its uncertain income tax positions
in the next 12 months, items outside of its control could cause its uncertain income tax positions to change in the
future, which would be recorded in its statements of operations. Interest and/or penalties related to income tax matters
are recognized as a component of income tax expense.
Table of Contents
F-18
Net operating loss (“NOL”) and tax credit carryforwards are subject to review and possible adjustment by the
Internal Revenue Service and state tax authorities and may become subject to an annual limitation in the event of
certain cumulative changes in the ownership interest of significant stockholders over a three-year period in excess of
50%, as defined under Sections 382 and 383 of the Internal Revenue Code (“IRC”), as well as similar state provisions.
This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax
liabilities. The amount of the annual limitation is determined based on the value of the Company immediately prior to
the ownership change. Subsequent ownership changes may further affect the limitation in future years.
The Company experienced a greater than 50% change in ownership as defined under Section 382 and 383 of
the IRC as well as similar state provisions during the year ended December 31, 2020. For more details please refer to
Note 11. Income Taxes.
Net loss per share
Basic net loss per common share is calculated by dividing net loss applicable to common stockholders by the
weighted-average number of common shares outstanding during the period. For purposes of calculating net loss per
share, weighted-average number of common shares outstanding includes the weighted average effect of the pre-funded
warrants issued in June 2023 and July 2024, as the exercise of which requires little or no consideration for the delivery
of shares of common stock. Diluted net loss per common share is calculated by increasing the denominator by the
weighted-average number of additional shares that could have been outstanding from securities convertible into
common stock, such as the warrants issued in July 2024, stock options, restricted stock units, and ESPP (using the
“treasury stock” method), the Company’s 5.00% Convertible Senior Notes due 2048 (the “2018 Notes”), Series A
Convertible Preferred Stock, and Series B Convertible Preferred Stock (using the “if-converted” method), unless their
effect on net loss per share is antidilutive. Under the “if-converted” method, convertible instruments that are-in-the-
money, are assumed to have been converted as of the beginning of the period or when issued, if later. Additionally, the
effects of any interest expense and changes in fair value of any bifurcated derivatives shall be added back to the
numerator of the diluted net loss per share calculation. Refer to Note 10. Net Loss per share for further details related
to the calculation of net loss per share.
Recently Adopted Accounting Standards Updates
In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting
(Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which is intended to improve
reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment
expenses and by extending the disclosure requirements to entities with a single reportable segment. The guidance is
effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after
December 15, 2024. The Company adopted the guidance for the fiscal year ended December 31, 2024. There was no
impact to the Company’s reportable segments and additional required disclosures have been included in Note 9.
Segment Reporting.
Recently issued accounting standards updates
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income
Tax Disclosures (“ASU 2023-09”). The guidance in ASU 2023-09 improves the transparency of income tax
disclosures by greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by
jurisdiction. The standard is effective for public companies for fiscal years beginning after December 15, 2024, with
early adoption permitted. The Company is currently evaluating the impact that the adoption of ASU 2023-09 may have
on its consolidated financial statements.
Table of Contents
F-19
In November 2024, the FASB issued ASU No 2024-03—Income Statement—Reporting Comprehensive
Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses
(“ASU 2024-03”). The guidance in ASU 2024-03 is intended to require more detailed disclosures about specified
categories of expenses (including employee compensation, depreciation, and amortization) included in certain expense
captions presented on the face of the income statement. ASU 2024-03 is effective for annual periods beginning after
December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted.
The amendments may be applied either prospectively to financial statements issued for reporting periods after the
effective date of this ASU or retrospectively to all prior periods presented in the financial statements. The Company is
in the process of evaluating the impact of this new guidance on its consolidated financial statements.
Other recent accounting pronouncements issued, but not yet effective, are not expected to be applicable to the
Company or have a material effect on the consolidated financial statements upon future adoption.
3. Property and equipment, net
Property and equipment and related accumulated depreciation are as follows (in thousands):
December 31, December 31,
2024
2023
Leasehold improvements
$
146
$
146
Furniture and fixtures
839
811
Computer equipment
665
665
Assets not yet placed in service
—
7
1,650
1,629
Less: accumulated depreciation
(1,618)
(1,592)
Total property and equipment, net
$
32
$
37
The Company recorded less than $0.1 million, $0.1 million, and $0.1 million in depreciation expense for the
years ended December 31, 2024, 2023, and 2022, respectively.
4. Accrued expenses
Accrued expenses consist of the following (in thousands):
December 31, 2024
December 31, 2023
Accrued clinical trial expenses
$
10,915
$
6,518
Accrued contract manufacturing expenses
3,748
2,010
Accrued other research and development expenses
1,359
1,043
Accrued compensation and related benefits
6,245
4,796
Accrued professional fees
620
637
Accrued consulting fees
1,613
1,078
Accrued interest
316
316
Accrued commercialization costs
803
453
Accrued other
333
1,077
Total accrued expenses
$
25,952
$
17,928
Table of Contents
F-20
5. Long-term debt
Oxford
On March 25, 2022 (the “Loan Agreement Closing Date”), the Company entered into a loan and security
agreement (the “Loan Agreement”) with Oxford, as collateral agent and a lender, and Oxford Finance Credit Fund III
LP, as a lender (“OFCF III” and together with Oxford, the “Lenders”), pursuant to which the Lenders have agreed to
lend the Company up to an aggregate principal amount of $150.0 million in a series of term loans (the “Term Loans”).
On January 4, 2024, the Company amended the Loan Agreement to extend the date by which it may draw down the
Term C Loan from March 31, 2024 to March 31, 2025. In January 2025, the Company entered into a Note Purchase
Agreement pursuant to which the Company issued an initial sale of $75.0 million principal amount of Notes. The
Company used a portion of the initial sale of Notes to repay in full all principal, accrued and unpaid interest, fees and
expenses under the Loan Agreement with the Lenders. Refer to Note 16. Subsequent Events for further discussion.
Pursuant to the Loan Agreement, as amended, the Company received an initial Term Loan of $25.0 million on
the Loan Agreement Closing Date, and drew down the second term loan of $15.0 million (the “Term B Loan”) on
March 22, 2023. As of December 31, 2024 the Company was able to borrow an additional $110.0 million of Term
Loans at its option upon the satisfaction of certain conditions as follows:
i.
$25.0 million (the “Term C Loan”), when the Company has received accelerated or full approval from
the FDA of avutometinib for the treatment of LGSOC (the “Term C Milestone”). The Company may
draw the Term C Loan within 60 days after the occurrence the Term C Milestone, but no later than March
31, 2025.
ii.
$35.0 million (the “Term D Loan”), when the Company has achieved at least $50.0 million in gross
product revenue calculated on a trailing six-month basis (the “Term D Milestone”). The Company may
draw the Term D Loan within 30 days after the occurrence of the Term D Milestone, but no later than
March 31, 2025.
iii.
$50.0 million (the “Term E Loan”), at the sole discretion of the Lenders.
The Term Loans bear interest at a floating rate equal to (a) the greater of (i) the one-month CME Secured
Overnight Financing Rate and (ii) 0.13% plus (b) 7.37%, subject to an overall floor and cap. Interest on the
outstanding amounts was is payable monthly in arrears on the first calendar day of each calendar month. As a result of
the Term B Loan drawdown, beginning (i) April 1, 2025, or (ii) April 1, 2026, if either (A) avutometinib has received
FDA approval for the treatment of LGSOC or (B) COPIKTRA has received FDA approval for the treatment of PTCL,
the Company is required to repay the Term Loans in consecutive equal monthly payments of principal, together with
applicable interest, in arrears. All unpaid principal and accrued and unpaid interest with respect to each Term Loan was
due and payable in full on March 1, 2027.
The Company is required to make a final payment of 5.0% of the original principal amount of the Term Loans
that are drawn, payable at maturity or upon any earlier acceleration or prepayment of the Term Loans (the “Final
Payment Fee”). The Company may prepay all, but not less than all, of the Term Loans, subject to a prepayment fee
equal to (i) 3.0% of the principal amount of the applicable Term Loan if prepaid on or before the first anniversary date
of the funding date of such Term Loan, (ii) 2.0% of the principal amount of the applicable Term Loan if prepaid after
the first anniversary and on or before the second anniversary of the funding date of such Term Loan, and (iii) 1.0% of
the principal amount of the applicable Term Loan if prepaid after the second anniversary of the applicable funding date
of such Term Loan. All Term Loans are subject to a facility fee of 0.5% of the principal amount.
The Loan Agreement contains no financial covenants. The Loan Agreement included customary events of
default, including, among others, payment defaults, breach of representations and warrants, covenant defaults,
judgment defaults, insolvency and bankruptcy defaults, and a material adverse change. The occurrence of an event of
default could result in the acceleration of the obligations under the Loan Agreement, termination of the Term Loan
commitments and the right to foreclose on the collateral securing the obligations. Pursuant to the Loan Agreement,
during the existence of an event of default, the Term Loans will accrue interest at a rate per annum equal to 5.0%
above the otherwise applicable interest rate.
Table of Contents
F-21
In connection with the Loan Agreement, the Company granted Oxford a security interest in all of the
Company’s personal property now owned or hereafter acquired, excluding intellectual property (but including the right
to payments and proceeds of intellectual property), and a negative pledge on intellectual property.
The Company assessed all terms and features of the Loan Agreement in order to identify any potential
embedded features that would require bifurcation. As part of this analysis, the Company assessed the economic
characteristics and risks of the Loan Agreement, including put and call features. The Company determined that all
features of the Loan Agreement were clearly and closely associated with a debt host and did not require bifurcation as
a derivative liability, or the fair value of the feature was immaterial to the Company's financial statements. The
Company reassesses the features on a quarterly basis to determine if they require separate accounting. There have been
no changes to the Company’s assessment through December 31, 2024.
The debt issuance costs and the Final Payment Fee have been recorded as a debt discount which are being
accreted to interest expense through the maturity date of the Term Loan using the effective interest method. The
components of the carrying value of the debt as of December 31, 2024, and 2023 (in thousands):
December 31, 2024
December 31, 2023
Principal loan balance
$
40,000
$
40,000
Final Payment Fee
1,172
661
Debt issuance costs, net of accretion
(448)
(575)
Total Long-term debt, net of discount
40,724
40,086
The following table sets forth total interest expense for the years ended December 31, 2024, 2023, and 2022
(in thousands):
Year ended December 31,
2024
2023
2022
Contractual Interest
$
3,774
$
3,472
$
1,733
Amortization of debt discount and issuance costs
277
230
179
Amortization of Final Payment Fee
511
437
225
Total
$
4,562
$
4,139
$
2,137
As of December 31, 2024, future principal payments due were as follows (in thousands):
2025
15,000
2026
20,000
2027
5,000
Total principal payments
$
40,000
Table of Contents
F-22
6. Leases
On April 15, 2014, the Company entered into a lease agreement for approximately 15,197 square feet of
office and laboratory space in Needham, Massachusetts. The lease term commenced on April 15, 2014 and it was
scheduled to expire on September 30, 2019. Effective February 15, 2018, the Company amended its lease agreement to
relocate within the facility to another location consisting of 27,810 square feet of office space (the “February 2018
Amended Lease Agreement”). The February 2018 Amended Lease Agreement extended the expiration date of the
lease from September 2019 through June 2025. Pursuant to the February 2018 Amended Lease Agreement, the initial
annual base rent amount was approximately $0.7 million, which increased during the lease term to $1.1 million for the
last 12-month period. Effective November 1, 2024, the Company amended the February 2018 Amended Lease
Agreement to extend the expiration date from June 2025 to June 2026 (the “November 2024 Amended Lease
Agreement”). The payment terms of the November 2024 Amended Lease Agreement are $1.1 million per annum
through the expiration date in June 2026. As a result of the November 2024 Amended Lease Agreement, the Company
recorded an incremental $1.0 million right-of-use asset and corresponding lease liability during the year ended
December 31, 2024.
The Company has accounted for its Needham, Massachusetts office space as an operating lease. The
Company’s lease contains an option to renew and extend the lease terms and an option to terminate the lease prior to
the expiration date. The Company has not included the lease extension or the termination options within the right-of-
use asset and lease liability on the consolidated balance sheets as neither option is reasonably certain to be exercised.
The Company’s lease includes variable non-lease components (e.g., common area maintenance, maintenance,
consumables, etc.) that are not included in the right-of-use asset and lease liability and are reflected as an expense in
the period incurred. The Company does not have any other operating or finance leases.
As of December 31, 2024, a right-of-use asset of $1.4 million and lease liability of $1.5 million are reflected
on the consolidated balance sheets. The elements of lease expense were as follows (dollar amounts in thousands):
Year ended December 31,
2024
2023
2022
Lease Expense
Operating lease expense
$
906
$
885
$
885
Total Lease Expense
$
906
$
885
$
885
Other Information - Operating Leases
Operating cash flows paid for amounts included
in measurement of lease liabilities
$
1,081
$
1,060
$
1,019
December 31, 2024
Other Balance Sheet Information - Operating
Leases
Weighted average remaining lease term (in
years)
1.5
Weighted average discount rate
9.8%
Maturity Analysis
2025
1,092
2026
546
Total
$
1,638
Less: Present value discount
(108)
Lease Liability
$
1,530
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F-23
7. Capital Stock
Under the amended and restated certificate of incorporation, the Company’s board of directors has the
authority, without further action by the stockholders, to issue up to 5,000,000 shares of preferred stock in one or more
series, to establish from time to time the number of shares to be included in each such series, to fix the rights,
preferences and privileges of the shares of each wholly unissued series and any qualifications, limitations or
restrictions thereon and to increase or decrease the number of shares of any such series, but not below the number of
shares of such series then outstanding.
As of December 31, 2024 and 2023, the Company had reserved the following shares of common stock for the
issuance of common stock for vested restricted stock units, the exercise of stock options, employee stock purchase
plan, Series A Convertible Preferred Stock conversions to shares of common stock, the issuance and conversion of
Series B Convertible Preferred Stock, and exercise of warrants and pre-funded warrants (in thousands):
December 31,
2024
2023
Shares reserved under equity compensation plans
5,925
2,845
Shares reserved for inducement grants
802
810
Shares reserved for ESPP
59
75
Shares reserved for Series A Convertible Preferred Stock
833
833
Shares reserved for Series B Convertible Preferred Stock
—
7,570
Shares reserved for Warrants
18,083
—
Shares reserved for pre-funded warrants
5,000
1,539
Total shares reserved
30,702
13,672
Each share of common stock is entitled to one vote. The holders of the common stock are also entitled to
receive dividends whenever funds are legally available and when declared by the board of directors.
July 2024 Public Offering
On July 23, 2024, the Company entered into an underwriting agreement with Guggenheim Securities, LLC
and Cantor Fitzgerald & Co. (“Cantor”), as representatives of the several underwriters relating to the underwritten
offering, issuance and sale by the Company of: (i) 13,333,334 shares of the Company’s common stock, and
accompanying warrants (the “Warrants”) to purchase up to 13,333,334 shares of common stock; and (ii) to certain
investors, pre-funded warrants (the “July 2024 Pre-Funded Warrants”) to purchase up to 5,000,000 shares of common
stock and accompanying Warrants to purchase 5,000,000 shares of common stock (collectively, the “July 2024
Offering”). Each share of common stock was sold with an accompanying Warrant at a combined price of $3.00, and
each July 2024 Pre-Funded Warrant was sold together with an accompanying Warrant at a combined price of $2.999,
which is equal to the combined offering price per share of common stock and accompanying Warrant less the
$0.001 exercise price of each July 2024 Pre-Funded Warrant. The July 2024 Offering closed on July 25, 2024. The
Company received approximately $50.8 million in net proceeds, after deducting underwriting discounts and
commissions and offering expenses.
Each July 2024 Pre-Funded Warrant has an exercise price equal to $0.001 per underlying share of common
stock. The July 2024 Pre-Funded Warrants are exercisable as of July 25, 2024, do not expire and are exercisable in
cash or by means of a cashless exercise.
Each Warrant has an exercise price equal to $3.50. Each Warrant is exercisable for one share of the
Company’s common stock (or, in certain limited circumstances in lieu of a share of common stock, a pre-funded
warrant for one share of the Company’s common stock at the warrant exercise price less the exercise price of the pre-
funded warrant purchased). The Warrants are exercisable as of July 25, 2024 until their expiration on January 25, 2026.
The Warrants are exercisable in cash or, in certain limited circumstances only, by means of a cashless exercise.
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F-24
The exercise price and the number of shares of common stock issuable upon exercise of each Warrant or July
2024 Pre-Funded Warrant, as applicable, is subject to appropriate adjustment in the event of certain stock dividends
and distributions, stock splits, stock combinations, reclassifications or similar events affecting the Company’s common
stock as well as upon any distribution of assets, including cash, stock or other property, to the Company’s stockholders.
The Company may not effect the exercise of any Warrant or July 2024 Pre-Funded Warrant, and a holder will
not be entitled to exercise any portion of any Warrant or July 2024 Pre-Funded Warrant if, upon giving effect to such
exercise, the aggregate number of shares of common stock beneficially owned by the holder (together with its
affiliates) would exceed 4.99% (or such higher percentage up to 19.99%, at the election of the holder) of the number of
shares of the Company’s common stock outstanding immediately after giving effect to the exercise, which percentage
may be increased or decreased at the holder’s election upon 61 days’ notice to the Company subject to the terms of
such Warrants or July 2024 Pre-Funded Warrants, as applicable, provided that such percentage may in no event
exceed 19.99%. In the event that the exercise of a Warrant would cause the holder to beneficially own in excess
of 4.99% (or such higher percentage up to 19.99%, at the election of the holder) of the total number shares of the
Company’s common stock outstanding immediately after giving effect to such exercise, the holder of a Warrant may
elect to purchase a pre-funded warrant for one share of the Company’s common Stock, rather than a share of common
stock, at the Warrant exercise price less the exercise price of the pre-funded warrant purchased.
In addition, upon the consummation of an acquisition (as described in the Warrants agreements and July 2024
Pre-Funded Warrants agreements, as applicable), each Warrant and July 2024 Pre-Funded Warrant will automatically
be converted into the right of the holder of such Warrant or July 2024 Pre-Funded Warrant, as applicable, to receive the
kind and amount of securities, cash or other property that such holders would have received had they exercised such
Warrant or July 2024 Pre-Funded Warrant, as applicable, immediately prior to such acquisition, without regard to any
limitations on exercise contained in the Warrant agreements or July 2024 Pre-Funded Warrant agreements.
The Warrants meet the definition of a derivative pursuant to FASB Accounting Standard Codification
815, Derivatives and Hedging, and do not meet the derivative scope exception given the Warrants do not qualify under
the indexation guidance. As a result, the Warrants were initially recognized as liabilities and measured at fair value
using the Black-Scholes valuation model with subsequent changes in fair value recorded in earnings. The warrants
were recorded at a fair value of $39.6 million upon issuance and the Company allocated $39.6 million of the proceeds
to this liability and recorded this amount as warrant liability. On December 23, 2024, 250,000 Warrants were exercised
for shares of common stock. The fair value of the 250,000 Warrants at the exercise date was $0.5 million, which was
reclassified from warrant liability into additional paid-in-capital. On December 31, 2024, the fair value of the
remaining 18,083,334 Warrants was determined to be $58.2 million and the Company recorded this amount as warrant
liability on the consolidated balance sheets. The Company recorded the mark-to-market adjustment of $19.1 million
for the year ended December 31, 2024, under change in fair value of warrant liability within the consolidated
statements of operations and loss.
The July 2024 Pre-Funded Warrants cannot require cash settlement, are freestanding financial instruments
that are legally detachable and separately exercisable from the shares of common stock and Warrants with which they
were issued, are immediately exercisable, and do not embody an obligation for the Company to repurchase its common
stock shares and permit the holders to receive a fixed number of shares of common stock upon exercise. Additionally,
the July 2024 Pre-Funded Warrants do not provide any guarantee of value or return. Accordingly, the July 2024 Pre-
Funded Warrants are classified as a component of permanent equity. The Company allocated $15.4 million of the
proceeds to the July 2024 Pre-Funded Warrants and shares of common stock issued.
The Company incurred a total of $4.2 million in issuance costs, which the Company allocated to the Warrants,
and 2024 Pre-Funded Warrants and shares of common stock consistent with the allocation of proceeds. $3.0 million of
issuance costs were allocated to the Warrants and expensed within selling, general and administrative expenses in the
statements of operations and comprehensive loss for the year ended December 31, 2024. $1.2 million of the issuance
costs were allocated to the July 2024 Pre-Funded Warrants and shares of common stock and applied against additional
paid-in capital.
Table of Contents
F-25
June 2023 Public Offering
On June 15, 2023, the Company entered into an underwriting agreement (the “June 2023 Underwriting
Agreement”) with RBC Capital Markets, LLC and Cantor, as representatives of several underwriters (the “June 2023
Underwriters”) to offer 7,181,409 shares of the Company’s common stock, at a price to the public of $9.75 per share,
less the underwriting discounts and commissions, and, in lieu of shares of common stock to certain investors, pre-
funded warrants (the “June 2023 Pre-Funded Warrants”) to purchase up to an aggregate of 1,538,591 shares of
common stock at a price to the public of $9.749 per share of common stock underlying a pre-funded warrant, which
represents the per share public offering price for the shares of common stock less the $0.001 per share exercise price
for each such share of common stock underlying a June 2023 Pre-Funded Warrant (the “June 2023 Offering”). In
addition, the Company granted the June 2023 Underwriters an option to purchase, at the public offering price less
underwriting discounts and commissions, an additional 1,308,000 shares of common stock, exercisable for 30 days
from the date of the June 2023 Underwriting Agreement, which the June 2023 Underwriters exercised in full on
June 16, 2023. The June 2023 Offering closed on June 21, 2023.
The Company could not have effected the exercise of any June 2023 Pre-Funded Warrant, and a holder was
not entitled to exercise any portion of any June 2023 Pre-Funded Warrant if, upon giving effect to such exercise, the
aggregate number of shares of common stock beneficially owned by the holder (together with its affiliates) would have
exceeded 9.99% of the number of shares of common stock outstanding immediately after giving effect to the exercise,
which percentage could have been increased or decreased at the holder’s election upon 61 days’ notice to the Company
subject to the terms of such June 2023 Pre-Funded Warrant, provided that such percentage in no event exceeded
19.99%.
Each June 2023 Pre-Funded Warrant had an exercise price equal to $0.001 per share of common stock. The
exercise price and the number of shares of common stock issuable upon exercise of each June 2023 Pre-Funded
Warrant was subject to appropriate adjustment in the event of certain stock dividends and distributions, stock splits,
stock combinations, reclassifications or similar events affecting the Company’s common stock as well as upon any
distribution of assets, including cash, stock or other property, to the Company’s stockholders. The June 2023 Pre-
Funded Warrants were exercisable as of June 21, 2023, did not expire and were exercisable in cash or by means of a
cashless exercise. In addition, upon the consummation of an acquisition (as described in the June 2023 Pre-Funded
Warrant agreements), each June 2023 Pre-Funded Warrant would have automatically been converted into the right of
the holder of such June 2023 Pre-Funded Warrant to receive the kind and amount of securities, cash or other property
that such holders would have received had they exercised such June 2023 Pre-Funded Warrant immediately prior to
such acquisition, without regard to any limitations on exercise contained in the June 2023 Pre-Funded Warrants.
The June 2023 Pre-Funded Warrants could not have required cash settlement, were freestanding financial
instruments that were legally detachable and separately exercisable from the shares of common stock with which they
were issued, were immediately exercisable, and did not embody an obligation for the Company to repurchase its
common stock shares and permitted the holders to receive a fixed number of shares of common stock upon exercise.
Additionally, the June 2023 Pre-Funded Warrants did not provide any guarantee of value or return. Accordingly, the
June 2023 Pre-Funded Warrants were classified as a component of permanent equity. After deducting for commissions
and other offering expenses, the Company received net proceeds of approximately $91.4 million from the sale of
8,489,409 shares of common stock and June 2023 Pre-Funded Warrants to purchase up to 1,538,591 shares of common
stock.
During the year ended December 31, 2024, the holders exercised the June 2023 Pre-Funded Warrants
representing 1,538,591 underlying shares of common stock, exercise price $0.0001 per share, via cashless exercise
resulting in the issuance of 1,538,201 shares of common stock. As of December 31, 2024 there were no June 2023 Pre-
Funded Warrants outstanding.
Table of Contents
F-26
Series B Convertible Preferred Stock
On January 24, 2023, the Company entered into a Securities Purchase Agreement (the “Series B Convertible
Preferred Stock Securities Purchase Agreement”) with certain purchasers pursuant to which the Company agreed to
sell and issue to the purchasers in a private placement (the “Private Placement”) up to 2,144,160 shares of its Series B
convertible preferred stock, par value $0.0001 per share (the “Series B Convertible Preferred Stock”), in two tranches.
On January 24, 2023, the Company filed the Certificate of Designation of the Preferences, Rights and Limitations of
the Series B Convertible Preferred Stock (the “Series B Convertible Preferred Stock Certificate of Designation”)
setting forth the preferences, rights and limitations of the Series B Convertible Preferred Stock with the Secretary of
State of the State of Delaware. The Series B Convertible Preferred Stock Certificate of Designation became effective
upon filing.
Each share of the Series B Convertible Preferred Shares is convertible into 3.5305 shares of the Company’s
common stock, such conversion rate reflects an adjustment to account for the Reverse Stock Split, at the option of the
holders at any time, subject to certain limitations, including that the holder will be prohibited from converting Series B
Convertible Preferred Stock into common stock if, as a result of such conversion, the holder, together with its
affiliates, would beneficially own a number of shares of common stock above a conversion blocker, which is initially
set at 9.99% (the “Conversion Blocker”) of the total common stock then issued and outstanding immediately following
the conversion of such shares of Series B Convertible Preferred Stock. Holders of the Series B Convertible Preferred
Stock are permitted to increase the Conversion Blocker to an amount not to exceed 19.99% upon 60 days’ notice.
The Company agreed to sell and issue in the first tranche of the Private Placement 1,200,000 shares of Series
B Convertible Preferred Stock at a purchase price of $25.00 per share of Series B Convertible Preferred Stock
(equivalent to $7.0812 per share of common stock on a post-Reverse Stock Split basis). The first tranche of the Private
Placement closed on January 27, 2023. The Company received gross proceeds from the first tranche of the Private
Placement of approximately $30.0 million, before deducting fees to the placement agent and other offering expenses
payable by the Company (“Series B Convertible Preferred Stock Proceeds”).
In addition, the Company agreed to sell and issue in the second tranche of the Private Placement 944,160
shares of Series B Convertible Preferred Stock at a purchase price of $31.77 per share of Series B Convertible
Preferred Stock (equivalent to $9.00 per share of common stock on a post-Reverse Stock Split basis) if at any time
within 18 months following the closing of the first tranche the 10-day volume weighted average price of the
Company’s common stock (as quoted on Nasdaq and as calculated by Bloomberg) should reach at least $13.50 per
share, such threshold reflects an adjustment to account for the Reverse Stock Split (which may be further adjusted for
any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction as
needed) with aggregate trading volume during the same 10-day period of at least $25 million (the “Second Tranche
Right”). The second tranche of the Private Placement is expected to close within seven trading days of meeting the
second tranche conditions and will be subject to additional, customary closing conditions. If the Second Tranche Right
conditions are satisfied, the Company anticipates receiving gross proceeds from the second tranche of the Private
Placement of approximately $30.0 million, before deducting fees to the placement agent and other offering expenses
payable by the Company.
The Series B Convertible Preferred Stock ranks (i) senior to the common stock; (ii) senior to all other classes
and series of equity securities of the Company that by their terms do not rank senior to the Series B Convertible
Preferred Stock; (iii) senior to all shares of the Company’s Series A Convertible Preferred Stock the equity securities
described in (i)-(iii), the “Junior Stock”); (iv) on parity with any class or series of capital stock of the Company
hereafter created specifically ranking by its terms on parity with the Series B Convertible Preferred Stock (the “Parity
Stock”); (v) junior to any class or series of capital stock of the Company hereafter created specifically ranking by its
terms senior to any Series B Convertible Preferred Stock (“Senior Stock”); and (vi) junior to all of the Company’s
existing and future debt obligations, including convertible or exchangeable debt securities, in each case, as to
distributions of assets upon liquidation, dissolution or winding up of the Company, whether voluntarily or involuntarily
and as to the right to receive dividends.
Table of Contents
F-27
In the event of the liquidation, dissolution or winding up of the affairs of the Company, whether voluntary or
involuntary, after payment or provision for payment of the debts and other liabilities of the Company, and subject to
the prior and superior rights of any Senior Stock, each holder of shares of Series B Convertible Preferred Stock will be
entitled to receive, in preference to any distributions of any of the assets or surplus funds of the Company to the
holders of the common stock and any of the Company’s securities that are Junior Stock and pari passu with any
distribution to the holders of any Parity Stock, an amount equal to $1.00 per share of Series B Convertible Preferred
Stock, plus an additional amount equal to any dividends declared but unpaid on such shares, before any payments shall
be made or any assets distributed to holders of the common stock or any of our securities that Junior Stock.
So long as any shares of the Series B Convertible Preferred Stock remain outstanding, the Company cannot
without the affirmative vote or consent of the holders of majority of the shares of the Series B Convertible Preferred
Stock then-outstanding, in which the holders of the Series B Convertible Preferred Stock vote separately as a class: (a)
amend, alter, modify or repeal (whether by merger, consolidation or otherwise) the Series B Convertible Preferred
Stock Certificate of Designation, the Company’s certificate of incorporation, or the Company’s bylaws in any manner
that adversely affects the rights, preferences, privileges or the restrictions provided for the benefit of, the Series B
Convertible Preferred Stock; (b) issue further shares of Series B Convertible Preferred Stock or increase or decrease
(other than by conversion) the number of authorized shares of Series B Convertible Preferred Stock; (c) authorize or
issue any Senior Stock; or (d) enter into any agreement to do any of the foregoing that is not expressly made
conditional on obtaining the affirmative vote or written consent of the majority of then-outstanding Series B
Convertible Preferred Stock. Holders of Series B Convertible Preferred Stock are entitled to receive when, as and if
dividends are declared and paid on the common stock, an equivalent dividend, calculated on an as-converted basis.
Shares of Series B Convertible Preferred Stock are otherwise not entitled to dividends.
The Company initially classified the first tranche of the Series B Convertible Preferred Stock as temporary
equity in the consolidated balance sheets as the Company could have been required to redeem the Series B Convertible
Preferred Stock if the Company could not convert the Series B Convertible Preferred Stock into shares of common
stock for any reason including due to any applicable laws or by the rules or regulations of any stock exchange,
interdealer quotation system, or other self-regulatory organization with jurisdiction over the Company which is not
solely in the control of the Company. If the Company was required to redeem the Series B Convertible Preferred
Stock, it would have been based upon the volume-weighted-average price of common stock on an as converted basis
on the date the holders provided a conversion notice to the Company. On October 18, 2024, holders of the Series B
Convertible Preferred Stock elected to convert 1,200,000 shares of Series B Convertible Preferred Stock
for 4,236,568 shares of the Company’s common stock and consequently, the Company issued 4,236,568 shares of its
common stock to holders of the Series B Convertible Preferred Stock. During the year ended December 31, 2024,
the Company did not adjust the carrying value of the Series B Convertible Preferred Stock since it was not probable
the holders would be unable to convert the Series B Convertible Preferred Stock into shares of common stock due to
any reason including due to any applicable laws or by the rules or regulations of any stock exchange, interdealer
quotation system, or other self-regulatory organization with jurisdiction over the Company. Upon conversion, the
Company reclassified $21.2 million from Series B Convertible Preferred Stock to common stock and additional paid in
capital on the consolidated balance sheet. As of December 31, 2024, there are 0 shares of Series B Convertible
Preferred Stock outstanding.
Table of Contents
F-28
The Company evaluated the Second Tranche Right under ASC 480, Distinguishing Liabilities from Equity
(“ASC 480”) and determined that it met the requirements for separate accounting from the initial issuance of Series B
Convertible Preferred Stock as a freestanding financial instrument. The Company then determined the Second Tranche
Right should be liability classified pursuant to ASC 480. As a result, the Company classified the Second Tranche Right
as a non-current liability within the consolidated balance sheets and the Second Tranche Right was initially recorded at
fair value and is subsequently re-measured at fair value at the end of each reporting period. The fair value of the
Second Tranche Right on the date of issuance was determined to be $6.9 million based on a Monte-Carlo valuation and
the Company allocated $6.9 million of the Series B Convertible Preferred Stock Proceeds to this liability and recorded
this amount as preferred stock tranche liability. On December 31, 2023, the fair value of the Second Tranche Right was
determined to be $4.2 million and the Company recorded this amount as preferred stock tranche liability on the
consolidated balance sheets. The Second Tranche Right expired in July 2024 and is no longer outstanding. The
Company recorded the mark-to-market adjustment of $4.2 million for the year ended December 31, 2024, under
change in fair value of preferred stock tranche liability within the consolidated statements of operations and loss. The
Company recorded the mark-to-market adjustment of $2.8 million for the year ended December 31, 2023, under
change in fair value of preferred stock tranche liability within the consolidated statements of operations and loss.
The Company determined that all other features of the securities offered pursuant to the Series B Convertible
Preferred Stock Securities Purchase Agreement were clearly and closely associated with the equity host and did not
require bifurcation or the fair value of the feature was immaterial to the Company's consolidated financial statements.
The Company reassesses the features on a quarterly basis to determine if they require separate accounting. There have
been no changes to the Company’s original assessment through December 31, 2024.
Series A Convertible Preferred Stock
On November 4, 2022, the Company entered into an exchange agreement (the “Exchange Agreement”) with
Biotechnology Value Fund, L.P., Biotechnology Value Fund II, L.P., Biotechnology Value Trading Fund OS LP and
MSI BVF SPV, LLC (collectively referred to as “BVF”), pursuant to which BVF exchanged 833,333 shares of the
Company’s common stock (as adjusted to account for the Reverse Stock Split) for 1,000,000 shares of newly
designated Series A convertible preferred stock, par value $0.0001 per share (the “Series A Convertible Preferred
Stock”) (the “Exchange”).
Each share of the Series A Convertible Preferred Stock is convertible into 0.833 shares of the Company’s
common stock (as adjusted to account for the Reverse Stock Split) at the option of the holder at any time, subject to
certain limitations, including that the holder will be prohibited from converting Preferred Stock into common stock if,
as a result of such conversion, the holder, together with its affiliates, would beneficially own a number of shares of
common stock above the Conversion Blocker, initially set at 9.99%, of the total common stock then issued and
outstanding immediately following the conversion of such shares of Preferred Stock. Holders of the Series A
Convertible Preferred Stock are permitted to increase the Conversion Blocker to an amount not to exceed 19.99% upon
60 days’ notice.
Shares of Series A Convertible Preferred Stock generally have no voting rights, except as required by law and
except that the consent of a majority of the holders of the outstanding Series A Convertible Preferred Stock will be
required to amend the terms of the Series A Convertible Preferred Stock. In the event of the Company’s liquidation,
dissolution or winding up, holders of Series A Convertible Preferred Stock will participate pari passu with any
distribution of proceeds to holders of common stock. Holders of Series A Convertible Preferred Stock are entitled to
receive when, as and if dividends are declared and paid on the common stock, an equivalent dividend, calculated on an
as-converted basis. Shares of Series A Convertible Preferred Stock are otherwise not entitled to dividends.
Table of Contents
F-29
The Series A Convertible Preferred Stock (i) senior to any class or series of capital stock of the Company
hereafter created specifically ranking by its terms junior to the Series A Convertible Preferred Stock; (ii) on parity with
the common stock and any class or series of capital stock of the Company created specifically ranking by its terms on
parity with the Series A Convertible Preferred Stock; and (iii) junior to the Series B Convertible Preferred Stock and to
any class or series of capital stock of the Company created specifically ranking by its terms senior to any Series A
Convertible Preferred Stock, in each case, as to distributions of assets upon liquidation, dissolution or winding up of
the Company, whether voluntarily or involuntarily.
The Company evaluated the Series A Convertible Preferred Stock for liability or equity classification under
ASC 480 and determined that equity treatment was appropriate because the Series A Preferred Stock did not meet the
definition of the liability under ASC 480. Additionally, the Series A Preferred Stock is not redeemable for cash or
other assets (i) on a fixed or determinable date, (ii) at the option of the holder, or (iii) upon the occurrence of an event
that is not solely within control of the Company. As such, the Company recorded the Series A Convertible Preferred
Stock as permanent equity.
At-the-market equity offering programs
In August 2021, the Company entered into a sales agreement with Cantor pursuant to which the Company can
offer and sell up to $100.0 million of its common stock at the current market prices from time to time through Cantor
as sales agent (the “August 2021 ATM”). During the years ended December 31, 2024, 2023, and 2022, the Company
sold 0 shares, 0 shares, and 1,964,448 shares, respectively, under the August 2021 ATM for net proceeds of
approximately $0.0 million, $0.0 million, and $27.4 million, respectively, (after deducting commissions and other
offering expenses).
8. Stock-based compensation
Stock-based compensation expense as reflected in the Company’s consolidated statements of operations and
comprehensive loss was as follows (in thousands):
Year ended December 31,
2024
2023
2022
Research and development
$
2,134
$
1,987
$
1,766
Selling, general and administrative
5,208
3,873
4,281
Total stock-based compensation expense
$
7,342
$
5,860
$
6,047
All of the $7.3 million, $5.9 million, and $6.0 million of stock-based compensation expense recorded during
the years ended December 31, 2024, 2023 and 2022, respectively, was recorded to additional paid-in capital.
The Company has awards outstanding under two equity compensation plans, the Amended and Restated 2021
Equity Incentive Plan (the “Amended 2021 Plan”), and the Amended and Restated 2012 Incentive Plan (the “2012
Plan”), as well as the inducement award program. Terms of stock award agreements, including vesting requirements,
are determined by the board of directors, subject to the provisions of the individual plans.
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F-30
2021 Plan
During 2021, the Company’s stockholders approved the 2021 Equity Incentive Plan (the “Original 2021
Plan”). Upon effectiveness of the Original 2021 Plan, the Company ceased making awards under the 2012 Plan. At the
Company’s 2024 Annual General Meeting of Shareholders in May 2024, the Company’s shareholders approved the
Amended 2021 Plan. The Amended 2021 Plan provides for the grant of incentive stock options, non-statutory stock
options, stock appreciation rights, restricted stock awards, RSUs and other stock-based awards. The number of shares
of common stock initially reserved for issuance under the Original 2021 Plan was (i) 1,991,666 which is the sum of
1,104,177 shares plus the number of shares available for issuance under the 2012 Plan as of the date the Company’s
Board of Directors approved the 2021 Plan (887,489 shares) plus (ii) the number of shares of the Company’s common
stock underlying awards under the 2012 Plan and the 2010 Equity Incentive Plan (the “2010 Plan”) that expire,
terminate or are surrendered without delivery of shares, are forfeited to or repurchased by the Company, or otherwise
become available again for grant under the terms of the 2012 Plan or the 2010 Plan, as applicable. The Amended 2021
Plan increased the maximum number of shares available for issuance by 3,200,000 shares.
As of December 31, 2024, under the Original 2021 Plan and Amended 2021 Plan, the Company has granted
stock options for 2,198,923 shares of common stock, of which 323,349 have been forfeited and 21,978 have been
exercised, and granted RSUs for 1,219,720 shares of common stock, of which 47,679 have been forfeited and 172,697
have vested. As of December 31, 2024, 2,850,675 shares remain available for future issuance under the Amended
20221 Plan. The exercise price of each option has been equal to the closing price of a share of the Company’s common
stock on the grant date.
2012 Plan
The 2012 Plan became effective immediately upon the closing of the Company’s initial public offering in
February 2012. Upon effectiveness of the 2012 Plan, the Company ceased making awards under the 2010 Plan. The
2012 Plan initially allowed the Company to grant awards for up to 285,714 shares of common stock, plus the number
of shares of common stock available for grant under the 2010 Plan as of the effectiveness of the 2012 Plan (which was
an additional 2,508 shares), plus that number of shares of common stock related to awards outstanding under the 2010
Plan which terminate by expiration, forfeiture, cancellation or otherwise. The 2012 Plan included an “evergreen
provision” that allowed for an annual increase in the number of shares of common stock available for issuance under
the 2012 Plan. The annual increase was added on the first day of each year from 2013 through 2018 and was equal to
the lesser of 107,412 shares of common stock and 4.0% of the number of shares of common stock outstanding, or a
lesser amount as determined by the board of directors. On each of January 1, 2018, January 1, 2017 and January 1,
2016, the number of shares available for issuance under the 2012 Plan increased by 107,412 under this provision. On
December 18, 2018, the shareholders of the Company approved the Amended and Restated 2012 Incentive Plan which
increased the maximum number of shares available for issuance under the 2012 Plan to 1,385,702 and eliminated the
evergreen provision. On May 19, 2020, the shareholders of the Company approved the Amended and Restated 2012
Incentive Plan which increased the maximum number of shares available for issuance by 1,083,333 shares.
Awards under the 2012 Plan may include the following award types: incentive stock options, nonqualified
stock options, stock appreciation rights, restricted stock awards, RSUs, other stock-based or cash-based awards and
any combination of the foregoing. As of December 31, 2024, under the 2012 Plan, the Company has granted stock
options for 1,841,188 shares of common stock, of which 1,197,732 have been forfeited, 237,578 have expired, and
191,342 have been exercised, and granted RSUs for 556,432 shares of common stock, of which 87,547 have been
forfeited and 468,581 have vested. The exercise price of each stock option has been equal to the closing price of a
share of the Company’s common stock on the grant date. Upon adoption of the Original 2021 Plan, the Company
ceased issuing awards from the 2012 Plan.
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F-31
Inducement Award Program
In December 2014, the Company established an inducement award program (in accordance with Nasdaq
Listing Rule 5635(c)(4)) under which it may grant non-statutory stock options to purchase, and RSUs in respect of up
to an aggregate of 62,500 shares of common stock to new or prospective employees as inducement to enter into
employment with the Company. In December 2016, the Board of Directors authorized and reserved 48,333 additional
shares of common stock under this program. In December 2017, the Board of Directors authorized and reserved
208,333 additional shares of common stock under this program. In June and December 2018, the Board of Directors
authorized and reserved 141,666 and 104,166 additional shares of common stock under this program, respectively. In
February 2020, the Board of Directors authorized the reduction of 169,447 shares available for issuance under this
program. In September 2023, the Board of Directors authorized and reserved 500,000 additional shares of common
stock under this program. The program is governed by the terms of the 2021 Plan, but shares issued pursuant to the
program are not issued under the 2021 Plan. As of December 31, 2024, the Company had granted options for
1,097,105 shares of common stock under the program, of which 635,540 have been forfeited, 1,997 have expired and
48,663 have been exercised, and granted RSUs for 80,804 shares, of which 31,342 have been forfeited and 38,877
have vested. As of December 31, 2024, 380,255 shares remain available for future issuance.
Stock Options
Most options granted by the Company vest twenty-five percent (25%) one year from vesting start date and six
and a quarter percent (6.25%) for each successive three-month period, thereafter (subject to acceleration of vesting in
the event of certain change of control transactions) subject to the employee’s continued employment with, or service
to, the Company on such vesting date and are exercisable for a period of ten years from the date of grant.
Option Exchange Program
On January 17, 2024, the Company’s stockholders, upon recommendation of the board of directors, approved
a one-time stock option exchange program (the “Option Exchange Program”) for certain employees, executive officers
and non-employee directors of the Company who held certain underwater options and remained employed or
otherwise engaged by the Company through the completion of the Exchange Offer. The Company’s offer to participate
in the Option Exchange Program commenced on February 8, 2024, and expired on March 8, 2024 (the “Exchange
Offer”). Pursuant to the Exchange Offer, 42 eligible holders elected to exchange, and the Company accepted for
cancellation, eligible options to purchase an aggregate of 603,330 shares of the Company’s common stock (the
“Exchanged Options”). On March 11, 2024, promptly following the expiration of the Exchange Offer, the Company
granted new options to purchase 603,330 shares of common stock (the “New Options”), pursuant to the terms of the
Exchange Offer and the Amended 2021 Plan. The exercise price of the New Options granted was $11.44 per share,
which was the closing price of the Company’s common stock on the Nasdaq Capital Market on the grant date of the
New Options.
The exchange of stock options was treated as a modification for accounting purposes. As a result of the
Option Exchange Program, the Company will recognize incremental stock-based compensation expense of $1.7
million over the requisite service period of the New Options, which is two or four years depending on whether the
Exchanged Options were vested at the time of exchange. Since the Exchanged Options were not at-the-money on the
modification date, the Company was precluded from utilizing the simplified method as described in SEC Staff
Accounting Bulletin Topic 14.D.2 to calculate the expected term as a key assumption in the Black-Scholes pricing
model. Therefore, the Company utilized the binomial lattice model to calculate the fair value of the Exchanged
Options immediately prior to the exchange. The Company utilized the Black-Scholes option-pricing model to calculate
the fair value of the New Options on the modification date. The Company is recognizing the remaining unamortized
stock compensation expense for the Exchanged Options on the modification date over the original requisite service
period of the Exchanged Options. At December 31, 2024 there was $0.7 million of unrecognized compensation cost
related to Exchanged Options that the Company expects to recognize over a remaining weighted-average period of 0.9
years.
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F-32
A summary of the Company’s stock option activity and related information for the year ended December 31,
2024, is as follows:
Shares
Weighted-
average
exercise price per
share
Weighted-
average
remaining
contractual
term
(years)
Aggregate
intrinsic value
(in thousands)
Outstanding at December 31, 2023
2,270,359
$
19.81
7.8
$
559
Granted
468,374
4.17
Exercised/Released
(21,978)
7.84
Forfeited/cancelled
(214,041)
14.16
Expired
(23,677)
162.38
Cancelled under the Option Exchange Program
(603,330)
30.58
Granted under the Option Exchange Program
603,330
11.44
Outstanding at December 31, 2024
2,479,037
$
11.43
8.3
$
843
Vested at December 31, 2024
831,284
$
16.12
7.2
$
176
The fair value of each stock option was estimated using a Black-Scholes option-pricing model with the
following weighted-average assumptions:
Year ended December 31,
2024
2023
2022
Risk-free interest rate
4.07 %
3.77 %
3.13 %
Volatility
99 %
92 %
88 %
Dividend yield
—
—
—
Expected term (years)
5.8
6.1
5.8
The Company recorded stock-based compensation expense associated with employee and non-employee
stock options of $4.6 million, $4.2 million, and $4.2 million, for the years ended December 31, 2024, 2023, and 2022,
respectively. The weighted-average grant date fair value of stock options granted in the years ended December 31,
2024, 2023, and 2022 was $3.35, $6.16, and $8.28 per stock option, respectively. The fair value of stock options that
vested during the years ended December 31, 2024, 2023, and 2022 was $3.5 million, $3.1 million, and $4.4 million,
respectively. The aggregate intrinsic value of options exercised (i.e., the difference between the market price at
exercise and the price paid by employees to exercise the option) during the years ended December 31, 2024, 2023, and
2022 was $0.1 million, $0.0 million, and less than $0.1 million, respectively.
At December 31, 2024 there was $6.0 million of total unrecognized compensation cost related to unvested
stock options and the Company expects to recognize this cost over a remaining weighted-average period of 2.1 years.
Restricted Stock Units (“RSUs”)
Each RSU entitles the holder to receive one share of the Company’s common stock when the RSU vests. The
RSUs generally vest (i) twenty-five percent (25%) one year from vesting start date and six and a quarter percent
(6.25%) for each successive three-month period, thereafter, (ii) two tranches for 50% of the award with the second and
final vesting date on the one year anniversary of the vesting commencement date, (iii) 100 percent within two years of
the vesting commencement date and (iv) 33.3% of the RSUs on the first three anniversaries of the grant date. The
RSUs are subject to acceleration of vesting in the event of certain change of control transactions and subject to the
employee’s continued employment with, or service to, the Company on such vesting date. Compensation expense is
recognized on a straight-line basis.
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F-33
A summary of RSU activity during the year ended December 31, 2024, is as follows:
Shares
Weighted-
average grant
date fair value
per share
Outstanding at December 31, 2023
209,289
$
18.05
Granted
950,371
$
5.07
Vested
(113,782)
$
14.91
Forfeited/cancelled
(35,645)
$
15.43
Outstanding at December 31, 2024
1,010,233
$
6.29
The Company recorded stock-based compensation expense associated with employee and non-employee
RSUs of $2.7 million, $1.6 million, and $1.8 million, for the years ended December 31, 2024, 2023, and 2022,
respectively. The total fair value of restricted stock units that vested during the years ended December 31, 2024, 2023,
and 2022 was approximately $1.7 million, $1.7 million, and $2.3 million, respectively.
At December 31, 2024, there was $4.0 million of total unrecognized compensation cost related to unvested
RSUs and the Company expects to recognize this cost over a remaining weighted-average period of 2.3 years.
Employee stock purchase plan
At the special meeting of stockholders, held on December 18, 2018, the stockholders approved the 2018
Employee Stock Purchase Plan (“2018 ESPP”). On June 21, 2019, the board of directors of the Company amended and
restated the 2018 ESPP, to account for certain non-material changes to the plan’s administration (the “Amended and
Restated 2018 ESPP”). The Amended and Restated 2018 ESPP provides eligible employees with the opportunity,
through regular payroll deductions, to purchase shares of the Company’s common stock at 85% of the lesser of the fair
market value of the common stock (a) on the date the option is granted, which is the first day of the purchase period,
and (b) on the exercise date, which is the last business day of the purchase period. The Amended and Restated 2018
ESPP generally allows for two six-month purchase periods per year beginning in January and July, or such other
periods as determined by the compensation committee of the Company’s board of directors. The Company has
reserved 166,666 shares of common stock for the administration of the Amended and Restated 2018 ESPP. The fair
value of shares expected to be purchased under the Amended and Restated 2018 ESPP was calculated using the Black-
Scholes model with the following weighted-average assumptions:
Year ended December 31,
2024
2023
2022
Risk-free interest rate
5.31 %
5.16 %
1.56 %
Volatility
115 %
126 %
77 %
Dividend yield
—
—
—
Expected term (years)
0.5
0.5
0.5
For the years ended December 31, 2024, 2023, and 2022, the Company has recognized less than $0.1 million,
less than $0.1 million, and $0.1 million, respectively, of stock-based compensation expense under the Amended and
Restated 2018 ESPP. During the year ended December 31, 2024, 2023, and 2022, the Company issued 15,231 shares,
14,270 shares and 10,194 shares, respectively, of common stock for proceeds of $0.1 million, $0.1 million and $0.2
million, respectively under the Amended and Restated 2018 ESPP.
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F-34
9. Segment Reporting
The Company has one operating segment which is the business of researching, developing and
commercializing drugs for the treatment of patients with cancer. While the Company group consists of entities
incorporated in both the U.S. and Germany, the Company manages all business activities on a consolidated basis for
the purposes of assessing performance, making operating decisions, and allocating Company resources. The
Company’s Chief Operating Decision Maker (the “CODM”) is its President and Chief Executive Officer. The measure
of segment assets is the same as reported on the consolidated balance sheets as total assets. The CODM assesses
performance based on consolidated net loss that is also reported on the statements of operations and comprehensive
loss. The CODM uses net loss to monitor budget versus actual results and to determine how to allocate resources and
capital in line with the Company’s overall strategy and goals. The accounting policies of the Company's segment are
the same as those described in Note 2. Significant Accounting Policies.
The table below is a summary of segment net loss including significant segment expenses for the years ended
December 31, 2024, 2023 and 2022 (in thousands):
Year Ended December 31,
2024
2023
2022
Revenue:
Sale of COPIKTRA license and related assets(1)
$
10,000
$
—
$
2,596
Expenses:
Research and development expenses(2)
78,648
59,137
48,685
Commercial expenses(2)
10,934
4,164
2,138
Medical affairs expenses(2)
5,231
2,907
1,317
General and administrative expenses(2)
21,785
19,755
17,078
Stock-based compensation expense
7,342
5,860
6,047
Depreciation expense
26
62
119
Interest income
(4,149)
(6,214)
(1,215)
Interest expense
4,562
4,139
2,137
Change in fair value of preferred stock tranche liability
(4,189)
(2,751)
—
Change in fair value of warrant liability
19,149
—
—
Other segment items(3)
1,113
308
102
Income tax expense
185
—
—
Net loss
$ (130,637)
$ (87,367)
$ (73,812)
(1) The Company’s revenue is comprised of milestones and royalties received pursuant to the Secura APA for
which the Company has completed its performance obligations in 2020. See Note 13. License, collaboration
and commercial agreements for further discussion.
(2) This category is exclusive of non-cash stock-based compensation and severance expense.
(3) Other segment items primarily include severance expense and transactions losses and gains due to foreign
currency fluctuations.
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F-35
10. Net Loss per Share
ASC Topic 260, Earnings Per Share, requires the Company to calculate its net loss per share based on basic
and diluted net loss per share, as defined. Basic EPS excludes dilution and is computed by dividing net loss by the
weighted average number of shares outstanding for the period. For the years ended December 31, 2024, 2023, and
2022 net loss, basic and diluted EPS are the same as the assumed exercise of stock options, RSUs, ESPP, the 2018
Notes, Series A Convertible Preferred Stock, Series B Convertible Preferred Stock and Warrants are anti-dilutive.
The following potentially dilutive securities were excluded from the calculation of diluted net loss per share
due to their anti-dilutive effect:
Year Ended December 31,
2024
2023
2022
Outstanding stock options
2,479,037
2,270,359
1,168,105
Outstanding restricted stock units
1,010,233
209,289
172,909
2018 Notes
—
—
3,489
Warrants
18,083,334
—
—
Employee stock purchase plan
8,033
7,475
6,874
Series A Convertible Preferred Stock
833,333
833,333
833,333
Series B Convertible Preferred Stock
—
4,236,570
—
Total potentially dilutive securities
22,413,970
7,557,026
2,184,710
11. Income Taxes
Income tax expense of $0.2 million for the year ended December 31, 2024 was comprised of interest under
IRC section 453A related to the $10.0 million milestone payment from Secura because it was an installment sale.
Refer to Note. 11. License collaboration and commercial agreements for further discussion of the Secura APA.
For the years ended December 31, 2024, 2023, and 2022 income tax expense consisted of the following (in
thousands):
Year ended December 31,
2024
2023
2022
Current tax expense:
Federal
$
185
$
—
$
—
State
—
—
—
Current income tax expense
185
—
—
Deferred
Federal
—
—
—
State
—
—
—
Deferred income tax expense
—
—
—
Total income tax expense
$
185
$
—
$
—
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F-36
A reconciliation of income taxes computed using the U.S. federal statutory rate to that reflected in operations
follows:
December 31,
2024
2023
Income tax benefit using U.S. federal statutory rate
21.00 %
21.00 %
State tax benefit, net of federal benefit
2.92 %
2.82 %
Research and development tax credits
4.56 %
4.41 %
Stock-based compensation
(1.91)%
(0.98)%
Permanent items
(2.88)%
0.44 %
Change in the valuation allowance
14.59 % (21.17)%
Tax law change
6.20 %
(4.31)%
NOL and tax credit expiration under Section 382
(44.44)%
(2.07)%
Other
(0.18)%
(0.14)%
Effective income tax rate
(0.14)%
— %
On October 4, 2023, Massachusetts enacted tax law changes which included the adoption of a single sales
apportionment factor effective on January 1, 2025. On December 4, 2024, Massachusetts subsequently enacted
supplemental legislation modifying Massachusetts' single sales apportionment factor in certain circumstances. As
required under ASC 740, the Company has accounted for the deferred tax impacts of this tax law change in the period
the tax law was enacted. The impact of the tax law change is offset by a change in valuation allowance.
The principal components of the Company’s deferred tax assets and liabilities are as follows (in thousands):
December 31,
2024
2023
Deferred tax assets:
Net operating loss carryforwards
$
81,151
$ 110,152
Capitalized research and development
38,478
20,356
Research and development credits
2,786
11,192
Stock-based compensation
2,762
3,340
Installment sale
7,652
6,909
Lease liability
395
311
Other deferred tax assets
462
346
Total deferred tax assets
133,686
152,606
Deferred tax liabilities:
Right-of-use asset
(362)
(248)
Total deferred tax liabilities
(362)
(248)
Net deferred tax asset prior to valuation allowance
133,324
152,358
Valuation allowance
(133,324)
(152,358)
Net deferred tax asset
$
—
$
—
The Tax Cuts and Jobs Act (“TCJA”) requires taxpayers to capitalize and amortize research and development
(“R&D”) expenditures under section 174 for tax years beginning after December 31, 2021. This rule became effective
for the Company during 2022. The Company will amortize these costs for tax purposes over 5 years for R&D
performed in the U.S. and over 15 years for R&D performed outside the U.S.
The Company has recorded a valuation allowance against its deferred tax assets at December 31, 2024 and
2023 because the Company’s management believes that it is more likely than not that these assets will not be fully
realized. The decrease in the valuation allowance of approximately $19.0 million in the year ended December 31,
2024, primarily relates to the loss of NOL carryforwards and research and development credits which the Company
deemed would otherwise expire unused due to Section 382 of the IRC and similar provisions under state law discussed
in the next paragraph.
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F-37
As of December 31, 2024, the Company had federal and state NOL carryforwards of approximately $370.6
million and $56.7 million, respectively, which are available to reduce future taxable income. The Company also had
federal and state tax credits of $2.6 million and $0.2 million, respectively, which may be used to offset future tax
liabilities. The NOL and tax credit carryforwards will expire at various dates through 2044, except for $333.4 million
of federal NOL carryforwards which may be carried forward indefinitely. Section 382 and 383 of the IRC and similar
provisions under state law limit the utilization of U.S. NOL carryforwards, state NOL carryforwards, R&D credits, and
OD credits following certain cumulative changes in the ownership interest of significant stockholders over a three-year
period in excess of 50%. During 2024, the Company believes it triggered ownership changes under Section 382 of the
IRC and similar provisions under state law. Based on the Company’s analysis under Section 382, the Company
believes that its federal NOL carryforwards, its state NOL carryforwards, R&D credits, and OD credits are limited by
Section 382 and similar provisions under state law as of December 31, 2024. The portion of federal NOL
carryforwards, state NOL carryforwards, R&D credits, and OD credits that were determined to be limited have been
written off as of December 31, 2024. The remaining unused carryforwards and credits remain available for future
periods. The Company has approximately $346.4 million of federal NOLs generated prior to such ownership changes
inclusive of $309.3 million of federal NOLs which may be carried forward indefinitely. Since the $309.3 million of
federal NOLs may be carried forward indefinitely, these have not been written off as of December 31, 2024, but due to
the limitations under Section 382 generally the Company can only use $1.6 million per year against taxable income in
the future. Due to the Company’s full valuation allowance the write off of certain NOL carryforwards and R&D and
OD credits did not have any impact to the statements of operation and comprehensive loss.
The Company’s reserves related to taxes are based on a determination of whether and how much of a tax
benefit taken by the Company in its tax filings or positions is more likely than not to be realized following resolution
of any potential contingencies present related to the tax benefit. From inception and through December 31, 2024, the
Company had no unrecognized tax benefits or related interest, and penalties accrued. The Company has not conducted
a study of R&D credit and OD credit carryforwards. A future study may result in an adjustment to the Company’s
R&D credit carryforwards; however, until a study is completed and any adjustment is known, no amounts are being
presented as an uncertain tax position. A full valuation allowance has been provided against the Company’s R&D
credits and, if an adjustment is required, this adjustment would be offset by an adjustment to the valuation allowance.
Thus, there would be no impact to the consolidated balance sheet or statement of operations if an adjustment were
required. The Company would recognize both accrued interest and penalties related to unrecognized benefits in
income tax expense. The Company’s uncertain tax positions are related to years that remain subject to examination by
relevant tax authorities. Since the Company is in a loss carryforward position, the Company is generally subject to
examination by the U.S. federal, state and local income tax authorities for all tax years in which a loss carryforward is
available.
12. Commitments and contingencies
The Company entered into a lease agreement for approximately 27,810 square feet of office space in
Needham, Massachusetts. Please refer to Note 6. Leases for further details regarding the minimum aggregate future
lease commitments as of December 31, 2024. In conjunction with the execution of the February 2018 Amended Lease
Agreement and November 2024 Amended Lease Agreement, the Company has provided a security deposit in the form
of a letter of credit in the amount of $0.2 million as of December 31, 2024, and 2023. The amount is included in non-
current restricted cash on the consolidated balance sheets as of December 31, 2024, and 2023.
As of December 31, 2024, the Company has committed to spend approximately $60.0 million under the
IQVIA Master Services Agreement which the Company expects to spend in the next three to four years. As of
December 31, 2024, approximately $0.7 million of this commitment is included within accrued expenses. Pursuant to
the terms of various other agreements, the Company may be required to pay various development, regulatory and
commercial milestones. In addition, if any products related to these agreements are approved for sale, the Company
may be required to pay significant royalties on future sales. The payment of these amounts, however, is contingent
upon the occurrence of various future events, which have a high degree of uncertainty of occurring.
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F-38
13. License, collaboration and commercial agreements
GenFleet Therapeutics (Shanghai), Inc.
On August 24, 2023, the Company entered into a collaboration and option agreement (“GenFleet
Agreement”) with GenFleet, pursuant to which GenFleet granted the Company the option to obtain exclusive
development and commercialization rights worldwide outside of mainland China, Hong Kong, Macau, and Taiwan
(the “Territory”) for up to three oncology programs targeting RAS pathway driven cancers (the “GenFleet Options”).
The Company may exercise its GenFleet Options on a program-by-program basis. In January 2025, the Company
exercised its GenFleet Option with respect to VS-7375 and made a $6.0 million payment to GenFleet.
The Company made an upfront payment of $2.0 million to GenFleet in September 2023 and will provide $1.5
million of research support over the first three years of the GenFleet Agreement. In addition, pursuant to the GenFleet
Agreement, upon achievement of certain milestones, and upon the Company exercising its GenFleet Options, GenFleet
will be entitled to receive payments of up to $622.0 million, inclusive of (i) up to $154.0 million upon achievement of
certain development and commercialization milestones, (ii) up to $450.0 million upon achievement of certain sales
milestones, and (iii) up to $18.0 million upon exercise of all three GenFleet Options. The Company paid GenFleet a
$3.0 million milestone in the year ended December 31, 2024, upon GenFleet achieving a development milestone. The
Company has also agreed to pay GenFleet royalties on net sales of licensed products in the Territory ranging from the
mid to high single digits.
The Company may terminate the GenFleet Agreement in its entirety or on a program-by-program basis by
providing 90 days written notice to GenFleet. Either party may terminate the GenFleet Agreement in its entirety or on
a program-by-program and country-by-country basis, with 60 days’ written notice for the other party’s material breach
if such party fails to cure the breach. Either party may also terminate the GenFleet Agreement in its entirety upon
certain insolvency events involving the other party.
During the year ended December 31, 2024, the Company expensed $3.0 million related to the development
milestone payment made within research and development expense in the consolidated statements of operations and
comprehensive loss. During the year ended December 31, 2023, the Company expensed $2.0 million related to the
upfront payment within research and development expense in the consolidated statements of operations and
comprehensive loss. The future milestone payments are contingent in nature and will be recognized if and when the
respective contingencies are resolved. If the Company elects to exercise further GenFleet Options, the related expense
will be recognized if and when each respective GenFleet Option is elected.
Secura Bio, Inc.
On August 10, 2020, the Company and Secura signed the Secura APA and on September 30, 2020, the
transaction closed.
Pursuant to the Secura APA, the Company sold to Secura its exclusive worldwide license, including related
assets, for the research, development, commercialization, and manufacture in oncology indications of products
containing duvelisib. The sale included certain intellectual property related to duvelisib in oncology indications,
certain existing duvelisib inventory, claims and rights under certain contracts pertaining to duvelisib. Pursuant to the
Secura APA, Secura assumed all operational and financial responsibility for activities that were part of the Company’s
duvelisib oncology program, including all commercialization efforts related to duvelisib in the United States and
Europe, as well as the Company’s ongoing duvelisib clinical trials. Further, Secura assumed all obligations with
existing collaboration partners developing and commercializing duvelisib, which include Yakult, Honsha Co., Ltd.
(“Yakult”), CSPC Pharmaceutical Group Limited (“CSPC”) and Sanofi. Additionally, Secura assumed all royalty
payment obligations due under the amended and restated license agreement with Infinity.
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F-39
Pursuant to the terms of the Secura APA, Secura has paid the Company an up-front payment of $70.0 million
in September 2020 and has agreed to pay the Company (i) regulatory milestone payments up to $45.0 million,
consisting of a payment of $35.0 million upon receipt of regulatory approval of COPIKTRA in the United States for
the treatment of peripheral T-cell lymphoma and a payment of $10.0 million upon receipt of the first regulatory
approval for the commercial sale of COPIKTRA in the European Union for the treatment of peripheral T-cell
lymphoma, (ii) sales milestone payments of up to $50.0 million, consisting of $10.0 million when total worldwide net
sales of COPIKTRA exceed $100.0 million, $15.0 million when total worldwide net sales of COPIKTRA exceed
$200.0 million and $25.0 million when total worldwide net sales of COPIKTRA exceed $300.0 million, (iii) low
double-digit royalties on the annual aggregate net sales above $100.0 million in the United States, European Union,
and the United Kingdom of Great Britain and Northern Ireland and (iv) 50% of all royalty, milestone and sublicense
revenue payments payable to Secura under the Company’s existing license agreements with Sanofi, Yakult, and CSPC,
and 50% of all royalty and milestone payments payable to Secura under any license or sublicense agreement entered
into by Secura in certain jurisdictions.
The Company evaluated the Secura APA in accordance with ASC 606 as the Company concluded that the
counterparty, Secura, is a customer. The Company identified a bundled performance obligation consisting of delivery
of the duvelisib global license and intellectual property, certain existing duvelisib inventory, certain duvelisib contracts
and clinical trials, certain regulatory approvals, and certain regulatory documentation and books and records (the
“Bundled Secura Performance Obligation”).
The Company concluded that the duvelisib global license and intellectual property were not distinct within
the context of the contract (i.e. separately identifiable) because the other assets including certain existing duvelisib
inventory, certain duvelisib contracts and clinical trials, certain regulatory approval, and certain regulatory
documentation and books and records do not have stand-alone value from other duvelisib global license and
intellectual property and Secura could not benefit from them without the duvelisib global license and intellectual
property. Consistent with the guidance under ASC 606-10-25-16A, the Company disregarded immaterial promised
goods and services when determining performance obligations.
During the year ended December 31, 2024, Secura achieved $100.0 million of total worldwide net sales of
COPIKTRA which triggered a $10.0 million sales milestone payment to the Company under the Secura APA. The
Company received the $10.0 million milestone payment in July 2024. During the year ended December 31, 2024, the
Company recognized $10.0 million of sale of COPIKTRA license and related assets revenue within the consolidated
statements of operations and comprehensive loss.
The Company determined that all other future potential milestones and royalties were excluded from the
transaction price, as all other milestone amounts were fully constrained under the guidance as of December 31, 2024.
As part of the Company’s evaluation of the constraint, the Company considered several factors in determining whether
there is significant uncertainty associated with the future events that would result in the milestone payments. Those
factors included: the likelihood and magnitude of revenue reversals related to future milestones, the amount of variable
consideration that is highly susceptible to factors outside of the Company’s influence, the uncertainty about the
consideration is not expected to be resolved for an extended period of time, and lack of significant history of selling
COPIKTRA outside of the United States. All future potential milestone and royalty payments were fully constrained as
the risk of significant revenue reversal related to these amounts has not yet been resolved.
During the year ended December 31, 2023, the Company determined all future potential milestones were
excluded from the transaction price, as all other milestone amounts were fully constrained under the guidance as of
December 31, 2023.
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F-40
During the year ended December 31, 2022, the Company recognized $2.6 million of sale of COPIKTRA
license and related assets revenue within the statements of operations and comprehensive loss. The sale of COPIKTRA
license and related assets revenue for the year ended December 31, 2022 related to one regulatory milestone for
$2.5 million achieved by Secura’s sublicensee, CSPC, and $0.1 million related to royalties on COPIKTRA sales in the
year ended December 31, 2022, and future royalties expected to be received pursuant to the Secura APA that were not
constrained. The Company determined all other future potential milestones were excluded from the transaction price,
as all other milestone amounts were fully constrained under the guidance as of December 31, 2022.
14. Notes Payable
In February 2024, the Company entered into a finance agreement with AFCO. Pursuant to the terms of the
agreement, AFCO loaned the Company the principal amount of $1.3 million, which accrued interest at 8.3% per
annum, to fund a portion of the Company’s insurance policies. The Company was required to make monthly payments
of $0.1 million through October 2024 including principal and interest. The agreement assigned AFCO a security
interest in (i) all unearned premiums and dividends which may have become payable under the insurance policies
financed pursuant to this agreement, (ii) loss payments which reduce the unearned premiums, and (iii) the Company’s
interest in any state insurance guarantee fund related to any of the insurance policies financed pursuant to this
agreement. The outstanding balance at December 31, 2024 was $0.0 million.
15. Employee benefit plan
In June 2011, the Company adopted a 401(k) retirement and savings plan (the 401(k) Plan) covering all
employees. The 401(k) Plan allows employees to make pre-tax or post-tax contributions up to the maximum allowable
amount set by the Internal Revenue Service. Under the 401(k) Plan, the Company may make discretionary
contributions as approved by the board of directors. The Company made contributions to the 401(k) Plan of
approximately $1.0 million, $0.8 million and $0.8 million in each of the years ended December 31, 2024, 2023, and
2022.
16. Subsequent events
The Company reviews all activity subsequent to year end but prior to the issuance of the consolidated
financial statements for events that could require disclosure or that could impact the carrying value of assets or
liabilities as of the consolidated balance sheet date. The Company is not aware of any material subsequent events other
than the following:
Note Purchase Agreement
On January 13, 2025, (the “Note Purchase Agreement Closing Date”), the Company entered into the Note
Purchase Agreement, pursuant to which the Company may sell to the Note Purchase Agreement Purchasers, and the
Note Purchase Agreement Purchasers may buy from the Company, notes (“Notes”) in an aggregate principal amount
not to exceed $150.0 million. On January 13, 2025, the Company issued an initial sale of $75.0 million principal
amount of Notes and may issue an additional $75.0 million consisting of the following:
●
at the option of the Company, the Second Sale of $25.0 million principal amount of Notes, at any time prior
to December 31, 2025, upon the FDA’s approval sufficient for the promotion and sale of avutometinib and
defactinib for the treatment of LGSOC and subject to certain other customary conditions precedent; and
●
at the option of the Company, the Third Sale of up to $50.0 million principal amount of Notes, at any time
prior to December 31, 2026, provided that trailing six-month worldwide net sales of avutometinib and
defactinib are at least $55.0 million and subject to certain other customary conditions precedent.
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F-41
Pursuant to the Note Purchase Agreement, on the Note Purchase Agreement Closing Date the Company sold
Notes in an aggregate principal amount of $75.0 million and received net proceeds of approximately $32.3 million
after repaying the balance of its obligations under its Loan Agreement, but before payment of certain expenses payable
by the Company.
The outstanding principal amount of the Notes bear interest at a rate per annum equal to the sum of (i) the
greater of the Term SOFR (as defined in the Note Purchase Agreement) and 4.29%, and (ii) 3.71%, subject to
adjustment in certain circumstances set forth in the Note Purchase Agreement and an overall cap of 9.75%, payable
quarterly in arrears until the seventh anniversary of the Note Purchase Agreement Closing Date or the date on which
all amounts owing to the Note Purchase Agreement Purchasers under the Note Purchase Agreement have been paid in
full (the “Note Purchase Agreement Maturity Date”). For the first eight quarters following the Note Purchase
Agreement Closing Date, at the Company’s option, up to 50% of the interest due may be paid-in-kind and added to the
then-outstanding principal balance of the Notes. Upon the occurrence and during the continuance of an Event of
Default (as defined in the Note Purchase Agreement) under the Note Purchase Agreement, the then-applicable interest
rate on all outstanding obligations may be increased by an additional 5.00%.
Beginning on January 13, 2025 and continuing until the Note Purchase Agreement Maturity Date, the Note
Purchase Agreement Purchasers will receive 1.00% of the first $100.0 million of net sales of each Included Product (as
defined in the Note Purchase Agreement) by the Company or its affiliates or licensees in each calendar year, payable
quarterly. “Included Products” is defined in the Note Purchase Agreement to include (a) avutometinib and defactinib,
including any product that contains either one of the foregoing in combination with any other active ingredient(s), and
(b) all other compounds, chemical entities or pharmaceutical products being designed, developed, licensed,
manufactured or commercialized by the Company or its subsidiaries from time to time. The Revenue Participation
Percentage will increase pro rata immediately upon the occurrence of the Second Sale and the Third Sale, such that the
Revenue Participation Percentage shall increase to a maximum of 2.00% in the event that $150 million in aggregate
principal amount of Notes has been purchased pursuant to the Note Purchase Agreement following the Third Sale. The
outstanding principal amount of the Notes, interest accrued thereon and any other amounts owing to the Note Purchase
Agreement Purchasers under the Note Purchase Agreement will be due in two equal instalments on (a) the sixth
anniversary of the Note Purchase Agreement Closing Date, and (b) the Note Purchase Agreement Maturity Date.
All of the Notes may be redeemed prior to the Note Purchase Agreement Maturity Date at the option of the
Company, subject to payment of the Repayment Amount (as defined in the Note Purchase Agreement). The Note
Purchase Agreement Purchasers may demand redemption of the Notes prior to the Note Purchase Agreement Maturity
Date in the event of a Change of Control (as defined in the Note Purchase Agreement) of the Company or an Event of
Default (as defined in the Note Purchase Agreement) under the Note Purchase Agreement, subject to payment of the
Repayment Amount. If redeemed prior to the Note Purchase Agreement Maturity Date, the Repayment Amount will
be: (a) 135% of the principal amount of the Notes if redemption occurs before the second anniversary of the Note
Purchase Agreement Closing Date upon a Change of Control; (b) if the preceding clause (a) does not apply, 175% of
the principal amount of the Notes if redemption occurs prior to the third anniversary the Note Purchase Agreement
Closing date; and (c) thereafter, 195% of the principal amount of the Notes if redemption occurs after the third
anniversary the Note Purchase Agreement Closing Date, minus, in each case, the sum of regularly scheduled interest
paid in cash, payments of principal in cash, and payments of revenue participation in cash prior to such redemption
date.
The Note Purchase Agreement contains no financial covenants. The Company’s obligations under the Note
Purchase Agreement are subject to customary covenants, including limitations on the Company’s ability to dispose of
assets, undergo a change of control, merge with or acquire other entities, incur debt, incur liens, pay dividends or other
distributions to holders of its capital stock, repurchase stock and make investments, in each case subject to certain
exceptions. The Company’s obligations under the Note Purchase Agreement are secured by a security interest on
substantially all of the Company’s and its subsidiaries’ assets, including its intellectual property related to
avutometinib and defactinib, and a negative pledge on intellectual property related to the GenFleet Agreement, subject
to certain exceptions relating to the Company’s development of its intellectual property.
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F-42
Stock Purchase Agreement
In connection with the Note Purchase Agreement, on January 13, 2025, the Company entered into a Stock
Purchase Agreement (the “Stock Purchase Agreement”) with the certain funds managed by Oberland and affiliates
thereof (the “SPA Investors”), pursuant to which the SPA Investors purchased an aggregate of 1,416,939 shares of the
Company’s common stock, $0.0001 par value per share, at a price of $5.2931 per share, based on the trailing 30-
trading day volume-weighted average price of the Company’s stock. The Company received gross proceeds of $7.5
million. In addition, pursuant to the Stock Purchase Agreement, the Company granted the SPA Investors, for a period
of three years following the closing on January 13, 2025, a right to participate in any equity offerings consummated by
the Company in an amount up to $2.5 million, subject to certain limitations and exclusions set out in the Stock
Purchase Agreement.
Repayment of Loan Agreement
Substantially concurrently with the closing of the Note Purchase Agreement, on January 13, 2025, the
Company terminated its Loan Agreement and repaid in full the balance of its obligations under the Loan Agreement of
approximately $42.7 million (the “Payoff Amount”). The Payoff Amount included the Final Payment Fee, which was
due at the earlier of prepayment or loan maturity, and certain prepayment fees as set forth in the Loan
Agreement. Effective upon the Lender’s receipt of the Payoff Amount, the Loan Agreement has been terminated along
with the Lender’s commitment to provide funding under any future term loans.
Exercise of GenFleet Option
In January 2025, the Company exercised early its GenFleet Option with respect to VS-7375 and
consequently made a payment of $6.0 million to GenFleet.
At-the-market equity offering program issuance
In January 2025, the Company sold 4,000,000 shares under the August 2021 ATM for net proceeds of
approximately $22.7 million (after deducting commissions and other offering expenses).
Exhibit 4.2
DESCRIPTION OF THE REGISTRANT’S SECURITIES
DESCRIPTION OF CAPITAL STOCK
General
The following is a summary of information concerning the capital stock of Verastem, Inc. (“Verastem” or “the Company”). The
summaries and descriptions below do not purport to be complete and are subject to and qualified in their entirety by
reference to the Delaware General Corporation Law, the Company’s Restated Certificate of Incorporation, as amended (the
“Certificate of Incorporation”), and Amended and Restated Bylaws (the “Bylaws”) each of which are incorporated by reference
as an exhibit to the Annual Report on Form 10-K of which this exhibit is a part.
Common Stock
Under the Certificate of Incorporation, Verastem has authority to issue up to 300,000,000 shares of common stock, par value
$0.0001 per share. As of February 28, 2025, 50,308,553 of common stock were issued and outstanding.
Holders of common stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders and
do not have cumulative voting rights. An election of directors by the Company’s stockholders shall be determined by a
plurality of the votes cast by the stockholders entitled to vote on the election. Holders of common stock are entitled to
receive proportionately any dividends as may be declared by the Company’s board of directors, subject to any preferential
dividend rights of outstanding preferred stock.
In the event of the Company’s liquidation or dissolution, the holders of common stock are entitled to receive
proportionately all assets available for distribution to stockholders after the payment of all debts and other liabilities and
subject to the prior rights of any outstanding preferred stock. Holders of common stock have no preemptive, subscription,
redemption or conversion rights. The rights, preferences and privileges of holders of common stock are subject to and may
be adversely affected by the rights of the holders of shares of any series of preferred stock that the Company may designate
and issue in the future.
On May 30, 2023, the Company filed a Certificate of Amendment to the Company’s Restated Certificate of Incorporation, as
amended to date, with the Secretary of State of the State of Delaware to effect a reverse stock split of the Company’s issued and
outstanding common stock at a ratio of 1-for-12 (the “Reverse Stock Split”), as authorized at the Company’s 2023 annual meeting
of stockholders held on May 15, 2023. The Company effected the Reverse Stock Split on May 31, 2023. No fractional shares were
issued in connection with the Reverse Stock Split. Stockholders who otherwise were entitled to a fractional share of common stock
were entitled to receive a price equal to the closing price of the common stock on the Nasdaq Capital Market on the date
immediately preceding the Reverse Stock Split, as adjusted by the ratio of one share of common stock for every 12 shares of
common stock, multiplied by the applicable fraction of a share. The number of shares of common stock that the Company is
authorized to issue remains at 300,000,000 shares and the par value of its common stock remains unchanged at $0.0001 per share.
Preferred Stock
Under the Certificate of Incorporation, Verastem has authority to issue up to 5,000,000 shares of preferred stock,
$0.0001 par value per share and the Company’s board of directors is authorized to establish, from the authorized shares of
preferred stock, one or more classes or series of shares, to designate each such class and series, and fix the rights and
preferences of each such class of preferred stock, which shall have voting powers, preferences, participating, optional or other
special rights, qualifications and limitations or restrictions as adopted by the board of directors prior to the issuance of any
such preferred shares. As of December 31, 2024, there were 1,000,000 shares of Series A convertible preferred stock, par value
$0.0001 per share (the “Series A Preferred Stock”) and 944,160 shares of Series B convertible preferred stock, par value $0.0001
per share (the “Series B Preferred Stock”) designated, respectively. As of December 31, 2024, there were 1,000,000 shares of Series
A Preferred Stock issued and outstanding and no shares of Series B Preferred Stock issued and outstanding.
Series A Preferred Stock
The Series A Preferred Stock have the following rights and preferences:
●
Each share of Series A Preferred Stock is convertible into 0.833 shares of common stock (as adjusted to account for the Reverse
Stock Split). No fractional shares of common stock shall be issued upon conversion of the Series A Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, Verastem, at its option, shall yentas (A) pay cash equal to the
product of such fraction multiplied by the average of the closing bid prices of the common stock for the five (5) consecutive trading
immediately preceding the applicable conversion date, or (B) issue one whole share of common stock to the holder.
●
The Series A Preferred Stock generally has no voting rights, except as required by law and except that the consent
of a majority of the holders of the outstanding Series A Preferred Stock will be required to amend the terms of the Series
A Preferred Stock.
●
In the event of the Company’s liquidation, dissolution or winding up, holders of Series A Preferred Stock will
participate pari passu with any distribution of proceeds to holders of common stock.
●
Holders of Series A Preferred Stock are entitled to receive when, as and if dividends are declared and paid on
●
the common stock, an equivalent dividend, calculated on an as-converted basis. Shares of Series A Preferred
Stock are otherwise not entitled to dividends.
●
The Series A Preferred Stock ranks:
a.
senior to any class or series of capital stock of the Company hereafter created specifically ranking by its
terms junior to the Series A Preferred Stock;
b.
on parity with the common stock and any class or series of capital stock of the Company created
specifically ranking by its terms on parity with the Series A Preferred Stock; and
c.
junior to any class or series of capital stock of the Company created specifically ranking by its terms senior to
any Series A Preferred Stock, in each case, as to distributions of assets upon liquidation, dissolution or winding
up of the Company, whether voluntarily or involuntarily.
Series B Preferred Stock
The Series B Preferred Stock have the following rights and preferences:
●
Each share of Series B Preferred Stock is convertible into 3.5305 shares of common stock (as adjusted to account for the Reverse
Stock Split). No fractional shares of common stock shall be issued upon conversion of the Series B Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, Verastem, at its option, shall yentas (A) pay cash equal to the
product of such fraction multiplied by the average of the closing bid prices of the common stock for the five (5) consecutive trading
immediately preceding the applicable conversion date, or (B) issue one whole share of common stock to the holder.
●
The Series B Preferred Stock generally has no voting rights. The Company shall not, without the affirmative vote or
consent of the holders of majority of the shares of the Series B Preferred Stock then- outstanding, given in person or by
proxy, either in writing or at a meeting, in which the holders of the Series B Preferred Stock vote separately as a class:
a.
amend, alter, modify or repeal (whether by merger, consolidation or otherwise) the certificate of designation of
the preference rights, and limitations of Series B Preferred Stock, the Certificate of Incorporation, or the
Bylaws in any manner that adversely affects the rights, preferences, privileges or the restrictions provided for
the benefit of, the Series B Preferred Stock;
b.
issue further shares of Series B Preferred Stock or increase or decrease (other than by conversion) the
number of authorized shares of Preferred Stock;
c.
authorize or issue any class or series of capital stock hereafter creating specifically ranking by its terms
senior to the Series B Preferred Stock (“Senior Stock”) or;
d.
enter into any agreement to do any of the foregoing that is not expressly made conditional on obtaining the
affirmative vote or written consent of the majority of then-outstanding Series B Preferred Stock.
●
In the event of the Company’s liquidation, dissolution or winding up, holders of Series B Preferred Stock will
be entitled to an amount equal to $1.00 per share of Series B Preferred Stock, plus an additional amount equal
to any dividends declared but unpaid on such shares, before any distributions or payments are made to holders of
common stock or other classes ranking junior to the Series B Preferred Stock.
●
Holders of Series B Preferred Stock are entitled to receive when, as and if dividends are declared and paid on the
common stock, an equivalent dividend, calculated on an as-converted basis. Shares of Series B Preferred Stock are
otherwise not entitled to dividends.
●
The Series B Preferred Stock rank:
a.
senior to common stock;
b.
senior to all other classes and series of equity securities of the Company that by their terms do not rank
senior to the Series B Preferred Stock;
c.
senior to all shares of the Series A Preferred Stock;
d.
on parity with any class or series of capital stock of the Company hereafter created specifically ranking
by its terms on parity with the Series B Preferred Stock;
e.
junior to any class or series of capital stock of the Company hereafter created specifically ranking by its
terms senior to the Series B Preferred Stock; and
f.
junior to all of the Company’s existing and future debt obligations, including convertible or exchangeable debt
securities, in each case, as to distributions of assets upon liquidation, dissolution or winding up of the
Corporation, whether voluntarily or involuntarily and as to the right to receive dividends.
Delaware Anti-Takeover Law and Certain Charter and Bylaw Provisions
Delaware law
Verastem is subject to Section 203 of the Delaware General Corporation Law. Subject to certain exceptions, Section 203
prevents a publicly-traded Delaware corporation from engaging in a “business combination” with any “interested
stockholder” for three years following the date that the person became an interested stockholder, unless either the
interested stockholder attained such status with the approval of a corporation’s board of directors, the business combination
is approved by a corporation’s board of directors and stockholders in a prescribed manner or the interested stockholder
acquired at least 85% of the outstanding voting stock of the corporation in the transaction in which it became an interested
stockholder. A “business combination” includes, among other things, a merger or
consolidation involving the Company and an “interested stockholder” and the sale of more than 10% of the Company’s
assets. In general, an “interested stockholder” is any entity or person beneficially owning 15% or more of the Company’s
outstanding voting stock and any entity or person affiliated with or controlling or controlled by such entity or person.
Staggered board
Verastem’s Certificate of Incorporation and Bylaws divide its board of directors into three classes with staggered three-year terms.
In addition, the Certificate of Incorporation and Bylaws provide that directors may be removed only for cause and only by the
affirmative vote of the holders of 75% of the shares of capital stock present in person or by proxy and entitled to vote.
Under the Certificate of Incorporation and Bylaws, any vacancy on the Company’s board of directors, including a vacancy
resulting from an enlargement of the board of directors, may be filled only by vote of a majority of the directors then in office.
Furthermore, the Certificate of Incorporation provides that the authorized number of directors may be changed only by the
resolution of the board of directors. The classification of the board of directors and the limitations on the ability of the
Company’s stockholders to remove directors, change the authorized number of directors and fill vacancies could make it
more difficult for a third party to acquire, or discourage a third party from seeking to acquire, control of the Company.
Stockholder action; special meeting of stockholders; advance notice requirements for stockholder proposals and director
nominations
Verastem’s Certificate of Incorporation and Bylaws provide that any action required or permitted to be taken by its
stockholders at an annual meeting or special meeting of stockholders may only be taken if it is properly brought before such
meeting and may not be taken by written action in lieu of a meeting. The Certificate of Incorporation and Bylaws also provide
that, except as otherwise required by law, special meetings of the stockholders can be called only by the Company’s
chairman of the board, president or chief executive officer or the board of directors. In addition, the Company’s Bylaws
establish an advance notice procedure for stockholder proposals to be brought before an annual meeting of stockholders,
including proposed nominations of candidates for election to the board of directors. Stockholders at an annual meeting may
consider only proposals or nominations specified in the notice of meeting or brought before the meeting by or at the direction
of the board of directors, or by a stockholder of record on the record date for the meeting who is entitled to vote at the meeting
and who has delivered timely written notice in proper form to the Company’s secretary of the stockholder’s intention to bring
such business before the meeting. These provisions could have the effect of delaying until the next stockholder meeting
stockholder actions that are favored by the holders of a majority of the Company’s outstanding voting securities. These
provisions also could discourage a third party from making a tender offer for the Company’s common stock, because even if it
acquired a majority of the outstanding voting stock, it would be able to take action as a stockholder, such as electing new
directors or approving a merger, only at a duly called stockholders meeting and not by written consent.
Super-majority voting
The Delaware General Corporation Law provides generally that the affirmative vote of a majority of the shares entitled to vote on
any matter is required to amend a corporation’s certificate of incorporation or bylaws, unless a corporation’s certificate of
incorporation or bylaws, as the case may be, requires a greater percentage. Verastem’s bylaws may be amended or repealed by
a majority vote of the Company’s board of directors or the affirmative vote of the holders of at least 75% of the votes that the
Company’s stockholders would be entitled to cast in any annual election of directors. In addition, the affirmative vote of the
holders of at least 75% of the votes that the Company’s stockholders would be entitled to cast in any election of directors is
required to amend or repeal or to adopt any provisions inconsistent with any of the provisions of Verastem’s Certificate of
Incorporation described above.
Transfer Agent and Registrar
The transfer agent and registrar for the common stock is Computershare Trust Company, N.A.
Listing
The Company’s common stock is listed on The Nasdaq Capital Market under the symbol “VSTM.”
Exhibit 10.13
SECOND AMENDMENT TO LEASE AGREEMENT
THIS SECOND AMENDMENT TO LEASE AGREEMENT (this “Amendment”) is made as of the 1st day of November, 2024
(the “Effective Date”) by and between 117 Kendrick DE, LLC, a Delaware limited liability company (“Landlord”), and Verastem,
Inc., a Delaware corporation (“Tenant”).
Recitals
A.
Landlord, as the successor-in-interest to Intercontinental Fund III 117 Kendrick Street, LLC, a Massachusetts
limited liability company, and Tenant are parties to a Lease Agreement dated as of April 15, 2014, as amended by a First Amendment
of Lease dated as of February 15, 2018 (collectively, “Lease”), pursuant to which Landlord has leased to Tenant approximately 27,810
rentable square feet of space (the “Premises”) on the first (1st) floor of the building located at and commonly known as 117 Kendrick
Street, Needham, Massachusetts (the “Building”). All capitalized terms used in this Amendment which are defined in the Lease and
not otherwise defined in this Amendment shall have the meanings given in the Lease.
B.
Landlord and Tenant desire to amend the Lease to: (i) extend the Lease Term expiration date from June 30, 2025 to
June 30, 2026, (ii) adjust the Fixed Rent; and (iii) make certain other changes to the Lease on and subject to the terms and conditions
set forth below.
Statement of Amendment
For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and
Tenant hereby agree as follows:
1.
Extension of Lease Term. The Lease Term of the Lease is extended for one (1) year beyond June 30, 2025 to June
30, 2026 (the period from July 1, 2025 through June 30, 2026 being called the “Extended Term”) on the same terms and conditions set
forth in the Lease, except to the extent inconsistent herewith or as otherwise provided herein.
2.
Fixed Rent. During the Extension Term, Fixed Rent shall be as set forth in the schedule below but otherwise in
accordance with the terms and conditions of the Lease:
Period:
Annual Fixed Rent:
Monthly Fixed Rent:
Per RSF:
July 1, 2025 through June 30,
2026
$1,091,542.50
$90,961.88
$39.25
3.
Specific Amendments of Lease. In furtherance of the above provisions of this Amendment, the Lease is amended as
follows:
(a)
Lease Term. Effective as of January 1, 2025, Article 3 of the Lease (Lease Term) is deleted in its entirety
and the following substituted in place thereof:
“3. LEASE TERM. The lease term for the Premises (the “Lease Term”) shall commence on April 15, 2014 (the
“Lease Commencement Date”) and shall expire on June 30, 2026 (the “Expiration Date”).”
(b)
Notices. Section 28 of the Lease is deleted in their entirety and the following substituted in place
thereof:
-2-
“28 NOTICES. Any notice, demand, request or statement required or intended to be given or delivered under the
terms of this Lease shall be in writing, shall be addressed to the party to be notified at the address or addresses set
forth below or at such other address in the continental United States as each party may designate for itself from time
to time by notice hereunder, and shall be deemed to have been given, delivered or served upon the earliest of (a)
three days following deposit in the U.S. Mail, with proper postage prepaid, certified or registered, return receipt
requested, (b) the next Business Day after delivery to a nationally recognized overnight delivery carrier with delivery
fees either prepaid or an arrangement, satisfactory with such carrier, made for the payment of such fees, or (c) any
notice sent by electronic mail as a PDF or similar attachment to an electronic mail message shall be deemed to be
effective the day of receipt, provided that the sender did not receive a notice of error, and provided that a copy of
such notice is sent via nationally recognized overnight delivery carrier with delivery fees either prepaid or an
arrangement, satisfactory with such carrier, made for the payment of such fees.
“28.1
If to Landlord:
117 Kendrick DE, LLC
c/o The Bulfinch Companies, Inc. 116 Huntington Ave.,
Suite 600
Boston, MA 02116 Attention: Robert A Schlager
Telephone: (781) 707-4000 Email:
ras@bulfinch.com
28.2
With a copy to: The Bulfinch Companies, Inc.
116 Huntington Avenue, Suite 600
Boston, MA 02116 Attention: Legal Department
Email: legal@bulfinch.com
and
Vorys, Sater, Seymour and Pease LLP 301 East Fourth Street,
Suite 3500 Great American Tower
Cincinnati, OH 45202
Attention: Kristin L. Woeste, Esq. Email:
klwoeste@vorys.com “
28.3
If to Tenant:
Verastem, Inc.
117 Kendrick Street, Suite 500
Needham, MA 02492 Attention: Dan Calkins
Telephone: (781)267-5560
Email: dcalkins@verastem.com
28.4
With a copy to:
Goulston &Storrs, PC One Post Office
Square Boston, MA 02109
Attention: Jean Bowe, Esq. Telephone: (617) 574-7918
Email: jbowe@goulstonstorrs.com
-3-
“Period
Payable RSF
Rate Per RSF
Annual Fixed Rent
Monthly Fixed Rent
Month 85 – Month 96
27,810
$39.25
$1,091,542.50
$90,961.88”
4.
Condition of Premises. Landlord shall have no obligation whatsoever to make any improvements, modifications or
alterations to the Premises by reason of the extension of the Lease Term contemplated by this Amendment.
5.
Brokers. Each party represents that it has not dealt with any broker or other commissionable agent in connection
with this Amendment except for Newmark. Each party shall indemnify and save harmless the other from and against all claims,
liabilities, costs and expenses incurred as a result of any breach of the foregoing representation.
6.
Inconsistencies; Continuing Effect of Lease. To the extent that the provisions of this Amendment are inconsistent
with the provisions of the Lease, the provisions of this Amendment will control and the Lease will be deemed to be amended hereby.
Except as amended by this Amendment, the provisions of the Lease remain in full force and effect.
7.
Multiple Counterparts. This Amendment may be executed in multiple counterparts, each of which will be an
original, but all of which, taken together, will constitute one and the same Amendment. Delivery of this Amendment bearing a
signature by facsimile transmission or by electronic mail in "PDF" format shall have the same effect as physical delivery of this
Amendment bearing the original signatures. An email transmission of a .pdf format copy of this Amendment or any related instrument
bearing original signature(s), or of such instrument bearing signature(s) affixed through “DocuSign,” “Dotloop,” or another
recognized signature verification service, shall have the same force and effect as delivery of a hard copy thereof bearing original such
signature(s); and any such signature of either party, whether upon this Amendment or any related instrument, shall be valid and binding
and admissible by either party against the other all as if the same were an original ink signature.
[Signature Page Follows]
-4-
Landlord and Tenant have executed this Amendment as of the date first set forth above.
117 KENDRICK DE, LLC
By:
/s/ Robert A. Shlager
Name:
Robert A. Shlager
Title:
Vice President
VERASTEM, INC.
By:
/s/ Dan Paterson
Name:
Dan Paterson
Title:
CEO
[Signature Page]
Exhibit 10.18
CERTAIN INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS NOT MATERIAL
AND IS THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL. THE OMITTED
PORTIONS OF THIS DOCUMENT ARE INDICATED BY [***]
1st Amendment to LICENSE AGREEMENT FOR CKI27
This 1st Amendment to License Agreement for CKI27 (“Agreement”) is made and entered into as of the date of last
signature below (the “1st Amendment Effective Date”) by and between
Verastem, Inc., a Delaware corporation with its principal place of business at 117 Kendrick St., Suite 500, Needham,
MA 02494, the United States of America (“VERASTEM”),
And
CHUGAI PHARMACEUTICAL CO., LTD, a corporation duly established under the laws of Japan, having its principal
place of business at 2-1-1, Nihonbashi-Muromachi, Chuo-ku, Tokyo 108-8324, Japan (“CHUGAI”)
(each individually, a “Party” and collectively, the “Parties”).
WITNESSETH:
WHEREAS, the Parties entered into the License Agreement for CKI27 effective as of January 7, 2020 (LICENSE
AGREEMENT”); and
WHEREAS, the Parties wish to amend certain terms and conditions of the LICENSE AGREEMENT;
NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements hereinafter set
forth, VERASTEM and CHUGAI enter into this Agreement as follows:
1.
DEFINITIONS
All capitalized terms used in this Amendment shall have the same meanings set forth in the LICENSE
AGREEMENT, unless otherwise defined herein.
2.
Manufacturing and Supply
(a) The Parties agree to delete Article 3.6.2 of the LICENSE AGREEMENT in its entirety a replace with new
Article 3.6.2 as follows:
“3.6.2 Notwithstanding Article 3.6.1, CHUGAI, directly or through its designee, shall supply
VERASTEM with, and VERASTEM shall make a one- time purchase from CHUGAI of, the materials
listed on Appendix VI (“Inventory”) within the timelines to be agreed by the Parties. CHUGAI shall
deliver the Inventory to VERASTEM at 117 Kendrick St., Suite 500, Needham, MA 02494, the United
States of America, unless otherwise specified, from EXW CHUGAI’s facilities in Japan (INCOTERMS
2010). VERASTEM shall pay to CHUGAI [***] for the Inventory within [***] days after CHUGAI
delivers the Inventory to VERASTEM.”
3.
Replacement of Appendix VI
The Parties agree to delete Appendix VI of the LICENSE AGREEMENT in its entirety and replace with the new
Appendix VI attached hereto.
4.
Others
This Amendment shall become effective as from the 1st Amendment Effective Date. Except as provided in the
foregoing Articles, the provisions of the LICENSE AGREEMENT shall remain in full force and effect.
IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed by their duly authorized
representatives as of the 1st Amendment Effective Date.
VERASTEM, INC.:
CHUGAI PHARMACEUTICAL CO., LTD.:
/s/ Dan Paterson
/s/ Mark Noguchi
Name: Dan Paterson
Name: Mark Noguchi
Title: President & Chief Operating
Title: Senior Vice President
Officer
Head of Business Development
Date: April 19, 2020
Date: April 19, 2020
APPENDIX VI
Inventory
[***]
Exhibit 10.19
CERTAIN INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS NOT MATERIAL
AND IS THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL. THE OMITTED
PORTIONS OF THIS DOCUMENT ARE INDICATED BY [***]
Verastem, Inc.,
and
Chugai Pharmaceutical Co., Ltd.
SECOND AMENDMENT TO LICENSE AGREEMENT
1
THIS SECOND AMENDMENT TO LICENSE AGREEMENT (this “Amendment”) is
effective as of the 12th day of August 2021 (“Effective Date”)
BETWEEN:
Verastem, Inc., a Delaware Corporation with its principal place of business at 117 Kendrick St., Suite 500,
Needham, MA 02494 (“Verastem”);
and
Chugai Pharmaceutical Co., Ltd., a Japanese Corporation with its principal place of business at 1-1
Nihonbashi-Muromachi 2-chome, Chuo-ku, Tokyo, 103-8324, Japan (“Chugai”).
Verastem and Chugai are collectively referred to herein as the “Parties”.
WHEREAS:
A)
The Parties have entered into the LICENSE AGREEMENT FOR CK127 effective as of the 7th day of
January 2020 and as amended on April 19, 2020 whereby Verastem licensed from Chugai the
intellectual property rights in and to the compound designated by CHUGAI as “CKI27(2)” or “CH5126766
(RO5126766)” (collectively, the “License Agreement”).
B)
The Parties are parties to the [***] (collectively, the “Sponsor Research Agreement”) whereby the
Sponsor conducts research and clinical testing and acts as the Sponsor for a clinical research trial which
the Parties provide support.
C)
The Parties desire to, simultaneously and in conjunction with this Amendment, enter into that certain
novation agreement whereby Verastem will be substituted for Chugai for all purposes under the Sponsor
Research Agreement (which for the purposes of this Amendment shall be referred to as the “Sponsor
Research
2
Novation Agreement”) as of the effective date of the Sponsor Research Novation Agreement. As a part
of the Sponsor Research Novation Agreement, the Parties will also amend the Sponsor Research
Agreement to reflect the effect of the terms of the Sponsor Research Novation Agreement.
D)
Chugai, [***] are parties to a [***] (collectively, the “Clinical Trial Agreement”)
E)
The Parties desire to, simultaneously and in conjunction with this Amendment, enter into that certain
novation agreement whereby Verastem will be substituted for Chugai for all purposes under the Clinical
Trial Agreement (which shall be referred to in this Amendment as the “Clinical Trial Novation
Agreement”) as of the effective date of the Clinical Trial Novation Agreement. As a part of the Clinical
Trial Novation Agreement, the Parties will also amend the Clinical Trial Agreement to reflect the terms of
the Clinical Trial Novation Agreement.
F)
The Parties desire to amend the License Agreement, and enter into this Amendment, simultaneously
and in conjunction with, the Sponsor Research Novation Agreement and Clinical Trial Novation
Agreement (collectively, the “Novation Agreements”) to reflect the terms and conditions of the
Novation Agreements and the amended Sponsor Research Agreement and amended Clinical Trial
Agreement.
NOW THEREFORE, in consideration of the mutual covenants contained in this Amendment, and other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties,
intending to be legally bound, agree as follows:
1.
AMENDMENTS
1.1 Amendment to Article 1.1 Definitions
The Term Clinical Trial Agreement is added to Article 1.1 as follows:
3
“Clinical Trial Agreement” shall have the meaning set forth in Appendix II.
1.2 Amendment to Article 1.1 Definitions
The current definition of “Improvements” is deleted in its entirety and replaced with the following:
“Improvements” means data, inventions, discoveries and know-how, whether patentable or not, and
any intellectual property rights thereof, which are necessary or useful to exploit the Chugai Compound
and/or the Product and which are acquired or developed by the relevant Party or its Affiliates on or after
the Effective Date during the course of its/their activities under this Agreement or, with respect to
CHUGAI, during the course of activities under the license agreement to be entered into between
CHUGAI and VERASTEM upon exercise by CHUGAI of any Opt-Back Right.
1.3 The term “Memorandum” is added to Article 1.1 as follows: “Memorandum” shall have the meaning set
forth in Appendix II.”
1.4 The term “the Novation Agreement is added to Article 1.1 as follows: “Novation Agreement” shall have
the meaning set forth in Appendix II.”
1.5 Amendment to Article 1.1 Definitions
The current definition of “On-going Agreement” is deleted in its entirety.
1.6 Amendment to Article 1.1 Definitions
The current definition of “On-going Agreement 2” is deleted in its entirety.
1.7 The term “Sponsor Research Agreement is added to Article 1.1 as follows: “Sponsor Research
Agreement” shall have the meaning set forth in Article 2.3
4
and in Appendix II.”
1.8 Amendment to Article 2.1.2 Relationship with On-going Agreements
The title to Article 2.1.2 shall be deleted and replaced with the following title: “2.1.2 Relationship with
Clinical Trial Agreement”
Additionally, Article 2.1.2 shall be deleted in its entirely and replaced with the following:
“With respect to [***] as Licensed Patents, which were acquired or developed during the course of the
Clinical Trial Agreement, the license granted from CHUGAI to VERASTEM hereunder is subject to the
rights and obligations under the Memorandum.
1.9
Amendment to Article 2.3 Exclusivity as to CHUGAI
The final paragraph of Article 2.3 shall be deleted in its entirety and replaced with the following:
“Notwithstanding anything to the contrary herein, CHUGAI may continue to support the investigator
initiated studies for which CHUGAI is providing support as of the Effective Date pursuant to the [***]
and the MTA Study Agreement. CHUGAI may provide any financial, technical or other support and the
Product or Chugai Compound to such investigator-initiated studies as required pursuant to the terms
and conditions of the [***]. Further, CHUGAI shall conduct stability test for the Product or Chugai
Compound which Chugai provided to investigator-initiated studies listed in Appendix II (the “Sponsor
Research Agreement and the Clinical Trial Agreement”) before the effective date of respective
Sponsor Research Novation Agreement and Clinical Trial Novation Agreement, provided however,
Verastem is responsible for the proper use of such Product or Chugai Compound based on such result
of the stability test”
1.10 Amendment to Article 2.4.1 VERASTEM Improvements
5
The following sentence shall be added at the end of Article 2.4.1 VERASTEM Improvements:
For clarity, any and all Improvements acquired by VERASTEM through the Sponsor Research
Agreement or the Clinical Trial Agreement shall be included as a VERASTEM Improvement. In addition
any and all Improvements arising from the Sponsor Research Agreement or the Clinical Trial Agreement
before the Novation (defined in each Novation Agreement), which are transferred to VERASTEM under
the Novation Agreement shall be included as a VERASTEM Improvements.
1.11 Amendment to Article 2.4.2(a)
The current Article 2.4.2(a) is deleted in its entirety and replaced with the following:
“Any and all Improvements solely acquired or developed by CHUGAI, and/or by any third parties on
behalf of CHUGAI, or otherwise Controlled by CHUGAI, including through the terms of the [***] and the
MTA Study Agreement, shall be solely owned or Controlled by CHUGAI (hereinafter “CHUGAI
Improvements”). Subject to the terms and conditions herein contained, CHUGAI hereby grants to
VERASTEM with respect to CHUGAI Improvements arising from the [***] or Patents covering CHUGAI
Improvements arising from the MTA Study Agreement, a non-exclusive, fully-paid up and royalty- free
license, with the right to grant sublicense as provided in Article 2.2, to use such CHUGAI Improvements
to develop, have developed, register, have registered, make, have made, manufacture, have
manufactured, use, have used, distribute, have distributed, market and have marketed (including the
right to detail and promote), offer to sell, have offered to sell, sell, have sold, import and have imported
the Chugai Compound and/or the Product in the Field in the Territory. The foregoing licenses are subject
to the rights and obligations under the [***] and the MTA Study Agreement, respectively, and CHUGAI
grants such licenses only to the extent CHUGAI is granted or entitled under the applicable [***] or MTA
Study Agreement.”
6
1.12
Amendment to Article 2.4.2(b)
The current Article 2.4.2(b) is deleted in its entirety and replaced with the following:
“If CHUGAI exercises its [***], then the Study IPR (as defined in the Sponsor Research Agreement), for
use with the Chugai Compound or the Product, shall be included as a CHUGAI Improvement. The
license of such CHUGAI Improvement is subject to the rights and obligations under the Sponsor
Research Agreement, and CHUGAI grants such license only to the extent CHUGAI is granted or entitled
under the applicable Sponsor Research Agreement.”
1.13
Amendment to Article 2.4.2(c)
The words “an On-going Agreement” are deleted and replaced with “the Sponsor Research Agreement
and Clinical Trial Agreement.”
1.14 Amendment to Article 3.5.1 Ongoing Research Data Transfer
The current Article 3.5.1 is deleted in its entirety and replaced with the following:
“CHUGAI shall conduct activities to transfer to VERASTEM the data of the on- going research relating to
the Chugai Compound or the Product conducted in accordance with the [***], subject to the rights and
obligations under such agreements (such activities of CHUGAI, the “On-going Research Data
Transfer”). All materials and information provided by CHUGAI to VERASTEM in connection with the On-
going Research Data Transfer shall be provided on an “AS IS” basis, provided that CHUGAI shall
provide all such materials and information in the English language.”
1.15 Amendment to Article 3.5.2
The words “the On-going Agreements” shall be deleted and replaced with the
7
words “the Sponsor Research Agreement and the Clinical Trial Agreement”.
1.16
Amendment to Article 3.7 Development Reports
The last sentence of Article 3.7 is deleted in its entirety and replaced with the following“
“No less frequently than [***], VERASTEM shall provide CHUGAI with written reports summarizing its, its
Affiliates’, and its sublicensees’ development of Product, including a summary of the data, timelines and
results of such development, and an overview of future development activities reasonably contemplated
by VERASTEM, which reports shall be provided in English. Such reports shall be the Confidential
Information of VERASTEM pursuant to Article 10. VERASTEM shall respond to CHUGAI’s reasonable
requests for information regarding significant development activities, including, as appropriate.
VERASTEM shall also provide Chugai with the relevant data and results from the Sponsor Research
Agreement and the Clinical Trial Agreement, including the study data and results from the Sponsor
Research Agreement necessary for Chugai’s [***] (b), as CHUGAI may reasonably request from time to
time.”
1.17 Amendment to Article 6.3.3 Third Party Payments
The following sentence shall be added at the end of Article 6.3.3 Third Party Payments:
“For the avoidance of doubt, any payments made by Verastem under the Sponsor Research Agreement
or the Clinical Trial Agreement shall not be included as a Third-Party Payment under this Article 6 of the
Agreement.”
1.18Addition of Article 7.1.4 Prosecution and Maintenance of the Sponsor Research Agreement Patent
The following shall be added as Article 7.1.4:
Notwithstanding Article 7.1.1, with respect to [***] as an
8
application number, or a priority number and any Intellectual Property Rights derived, claiming priority,
issued or granted from it (for example, [***] (the “Sponsor Research Agreement Patent”), VERASTEM
shall have control regarding the filing, prosecution and maintenance of the Sponsor Research
Agreement Patent in the Territory, including, but not limited to, filing applications for, and obtaining,
patent term extensions, supplemental protection certificates and the like in each country where it is
appropriate to do so in VERASTEM’s reasonable judgment. Such costs for the filing, prosecution and
maintenance shall be borne by [***].
VERASTEM shall provide CHUGAI with the following information with respect to the Sponsor Research
Agreement Patent:
(i) a territorial scope for foreign filings before the national phase, and
(ii)a copy of all written communications regarding a substantial examination
and/or decision received from or filed in the filing countries’ patent offices and copies of all granted
patents claims of the Sponsor Research Agreement Patent in English, and CHUGAI shall be given [***]
to comment. Depending on the content of the communications the parties may agree to a different time
period for review.
Any material decision (e.g., decisions resulting in a limitation of the scope of the claims, abandonment of
the Sponsor Research Agreement Patent in any countries, and the like) to be made in connection with
filing, prosecution and maintenance of the Sponsor Research Agreement Patent shall be made by
VERASTEM after consultation with CHUGAI. VERASTEM shall reasonably consider CHUGAI's
comments.
VERASTEM and CHUGAI shall discuss and agree on countries to be filed in (“Mutually Agreed
Countries”). Mutually Agreed Countries shall include [***]
If VERASTEM and/or CHUGAI wish to apply for an extension of the term of any Sponsor Research
Agreement Patent available under any Applicable Law for any country in the Territory, the Parties shall
cooperate in such application (e.g., by
9
providing the other Party with all information and documents in each Party’s possession which may be
necessary or desirable for such application).
1.19 Amendment to Article 10.4
The words “the On-going Agreements” shall be deleted and replaced with the words “the Sponsor
Research Agreement and the Clinical Trial Agreement”.
1.20 Amendment to Article 11.2 Publication by VERASTEM
The words “On-going Agreement 2” shall be deleted and replaced with the words “the Sponsor
Research Agreement or the Clinical Trial Agreement”.
The final sentence of Article 11.2 Publication by VERASTEM shall be deleted in its entirety and replaced
with the following:
Upon each publication under this Article 11.2, prior to any publication and/or presentation, all Data and
results which relate directly to the Chugai Compound and/or Product shall be submitted to CHUGAI for review
and comment. VERASTEM shall notify CHUGAI and provide a copy of such proposed publication/presentation,
including publication or presentation by the investigator who initiated study(ies) under and parties to the
Sponsor Research Agreement or the Clinical Trial Agreement, at least [***] prior to submission for publication or
presentation of an abstract or a manuscript, provided that for the case of publication or presentation under
Clinical Trial Agreement, [***] prior to submission for publication or presentation of an abstract. Any such copy
shall provide sufficient details to enable CHUGAI to ascertain whether it contains Confidential Information of
CHUGAI or whether other protections need to be sought. CHUGAI shall review and make any comments on
such proposed publication or presentation of an abstract or a manuscript to VERASTEM within [***] of receipt
and/or shall review and make any comments on such proposed
10
publication or presentation of an abstract under Clinical Trial Agreement within [***] of receipt. Furthermore,
independent investigators, hospitals and academic institutions that are entrusted by VERASTEM with the
conduct of sponsored research, preclinical studies or clinical trials of the Chugai Compound or the Product are
understood to operate in an academic environment and shall be allowed to release data and information
regarding such sponsored research, preclinical or clinical trials in a manner consistent with academic standards.
VERASTEM shall use reasonable efforts to promptly notify CHUGAI of such publication as a courtesy to
Chugai. For the avoidance of doubt, all data and results not related directly to the Chugai Compound and/or the
Product shall not be subject to prior review and approval by Chugai.
1.21 Amendment to Article 11.3 Publication by the Investigator
The current Article 11.3 is deleted in its entirety and replaced with the following:
“Prior to submission of the Data or results relating to the Chugai Compound or the Product for
publication or presentation by the investigator who initiated study(ies) under and is a party to the MTA
Study Agreement, or [***], CHUGAI shall provide at least [***] prior to the intended submission, a copy of
such proposed publication or presentation to VERASTEM, who shall have [***] to inform CHUGAI
whether it contains patentable matter which requires protection. If such publication or presentation
contains such patentable matter, CHUGAI will have the investigator delay such publication or
presentation for an additional [***] so that the appropriate Party may file for patent protection or to delete
such patentable matter from such proposed publication or presentation.
1.22 Replacement of Appendix
11
Appendix (table of contents) and Appendix Ⅱ to the License Agreement are hereby replaced in their
entirety as attached hereto.
2.
The Parties agree and acknowledge that the amendments of the License Agreement under Article 1 of
this Amendment shall become effective when all Novation (defined in each Novation Agreement)
Agreements are effective.
3.
NO OTHER CHANGES
Except as changed by Clause 1 of this Amendment, the provisions of the Agreement including all
Exhibits and prior Amendments thereto shall remain unchanged.
In this Amendment, terms used but not changed herein shall have the same meaning as defined in the
License Agreement.
12
IN WITNESS WHEREOF, this Amendment has been executed by duly authorised officers of the Parties as of
the date of final signature below.
Signed by:
/s/ Dan Paterson
Name:
Dan Paterson
Title:
President and Chief Operating Officer
For and on behalf of
Verastem, Inc.
Date:
8/12/2021
Signed by:
/s/ Mark Noguchi
Name:
Mark Noguchi
Title:
Senior Vice President, Head of Partnering
For and on behalf of
Chugai Pharmaceutical Co., LTD.
Date:
8/12/2021
13
APPENDIX:
APPENDIX I(A):
Licensed Patents
APPENDIX I(B):
[***]
APPENDIX II:
Sponsor
Research
Agreement,
the
Clinical
Trial
Agreement,
Memorandum and Novation Agreement
APPENDIX III:
Technical Transfer
APPENDIX IV:
Opt-back Rights
APPENDIX V:
[***]
APPENDIX VI:
Inventory
APPENDIX VII:
[***]
APPENDIX II
[***]
Exhibit 10.20
CERTAIN INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS NOT MATERIAL
AND IS THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL. THE OMITTED
PORTIONS OF THIS DOCUMENT ARE INDICATED BY [***]
THIRD AMENDMENT TO LICENSE AGREEMENT FOR CKI27
This Third Amendment to License Agreement for CKI27 (this “Amendment”), effective as of May 10, 2023 (the
“Amendment Effective Date”), is made by and between Verastem, Inc., a Delaware corporation (“Verastem”) with
its place of business at 117 Kendrick St., Suite 500, Needham, MA 02494, and Chugai Pharmaceutical Co., Ltd., a
Japanese Corporation (“Chugai”) with its place of business at 1-1 Nihonbashi-Muromachi 2-chome, Chuo-ku,
Tokyo, 103-8324, Japan (each individually, a “Party” and collectively, the “Parties”).
WHEREAS, Verastem and Chugai previously entered into the License Agreement for CKI27 dated January 7th,
2020 (as amended on April 19th, 2020 by FIRST AMENDMENT and further amended on August 12th, 2021 by
SECOND AMENDMENT), pursuant to which Verastem licensed from Chugai the intellectual property rights in and
to the compound designated by Chugai as “CKI27(2)” or “CH5126766 (RO5126766)” (the “Agreement”);
WHEREAS, pursuant to written notification received on December 26, 2022 from Chugai, Chugai has elected not
to exercise and to waive its opt-back rights and [***] in the European Union, Japan and Taiwan, as provided in
Sections 5.1 and 5.2 of the Agreement;
WHEREAS, pursuant to Section 3.7 of the Agreement, Verastem is obligated to provide Chugai with certain written
development reports at least [***];
WHEREAS, pursuant to Section 4.1 of the Agreement, Verastem and Chugai have established a Joint Committee
(or JC), which JC lasts until the earlier of (a) a First Commercial Sale, or (b) the Parties mutually agreeing in writing
to disband; and
WHEREAS, Verastem and Chugai wish to amend certain terms and conditions of the Agreement related to the
frequency of such reports and the continuation of the JC.
NOW THEREFORE, in consideration of the foregoing premises and the mutual covenants and conditions
contained in this Amendment, the Parties hereby agree as follows:
1.
Capitalized terms used in this Amendment but not defined shall have the meanings set forth in the
Agreement.
2.
Amendment to the Agreement.
2.1.
The first sentence of Section 3.7 of the Agreement is hereby deleted in its entirety and replaced with
the following:
“No less frequently than [***], VERASTEM shall provide CHUGAI with written reports summarizing its,
its Affiliates’, and its sublicensees’ development of Product, including a publication plan, a summary of the
data, timelines and results of such development, and an overview of future development activities reasonably
contemplated by VERASTEM, which reports shall be provided in English.”
2.2.
The Parties hereby mutually agree that, as of the Amendment Effective Date, the JC is disbanded and
Section 4 of the Agreement is hereby deleted in its entirety and intentionally left blank.
3.
Conflicting Terms. Where there is any conflict between the terms of this Amendment and the terms of the
Agreement or any other agreement between the Parties (or their respective Affiliates), the terms of this Amendment
shall prevail.
4.
No Other Changes. Except as changed or amended hereby, the Agreement shall remain unchanged.
5.
Governing Law. This Amendment shall be governed by, and enforced in accordance with, the federal laws of
the United States and the internal laws of the State of New York, including its statutes of limitations, but without
regard to conflict of law principles thereof.
6.
Binding Effect. This Amendment shall be binding upon, and shall inure to the benefit of, the Parties and
their respected successors and permitted assigns.
[Signature page follows]
IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed by their duly authorized
representatives as of the date of the last signature set forth below.
VERASTEM, INC.
CHUGAI PHARMACEUTICAL CO., LTD.
By:
/s/ Dan Paterson
By:
/s/ Yumiko Asano
Name:
Dan Paterson
Name:Yumiko Asano
Title:
President and Chief Operating Officer
Title: Head of Partnering
Date:
5/11/2023
Date: 5/11/2023
Exhibit 10.44
CERTAIN INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS NOT MATERIAL
AND IS THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL. THE OMITTED
PORTIONS OF THIS DOCUMENT ARE INDICATED BY [***].
COLLABORATION AND OPTION AGREEMENT
by and between
VERASTEM, INC.
and
GENFLEET THERAPEUTICS (SHANGHAI), INC.
dated as of August 24, 2023
i
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS
1
ARTICLE 2 LICENSES AND OPTION
17
2.1.
Discovery Period License Grant
17
2.2.
Option
17
2.3.
Exclusivity
19
2.4.
Sublicensing
19
2.5.
No Implied Licenses; Retained Rights
19
2.6.
Third Party Technology
19
ARTICLE 3 TECHNOLOGY TRANSFER
21
3.1.
Initial Technology Transfer
21
3.2.
Manufacturing Technology Transfer
22
3.3.
Continuing Technology Transfer
22
3.4.
Cooperation and Assistance
22
3.5.
Costs of Technology Transfer
22
ARTICLE 4 GOVERNANCE
22
4.1.
Alliance Managers
22
4.2.
Joint Steering Committee.
23
ARTICLE 5 DEVELOPMENT
27
5.1.
Selection of Additional Targets
27
5.2.
Replacement Targets
27
5.3.
Development Prior to the Option Effective Date
27
5.4.
Development Following the Option Effective Date
28
5.5.
Development Records
29
ARTICLE 6 REGULATORY
30
6.1.
Regulatory Responsibility
30
6.2.
Communications with Regulatory Authorities
30
6.3.
Ownership and Transfer of Regulatory Materials
30
6.4.
Regulatory Assistance.
31
6.5.
No Harmful Actions
31
6.6.
Right of Reference; Access to Data; HGRAC
31
6.7.
Adverse Event Reporting
32
6.8.
Remedial Actions
33
ARTICLE 7 MANUFACTURING AND SUPPLY
33
ii
7.1.
Manufacturing by GenFleet
33
7.2
Manufacturing Compliance
33
7.3.
Manufacturing by Verastem
34
ARTICLE 8 COMMERCIALIZATION
34
8.1.
Responsibility for Commercialization
34
8.2.
Commercialization Diligence Obligations
34
8.3.
Commercialization Reports
34
8.4.
Diversion
35
ARTICLE 9 FINANCIALS
35
9.1.
Upfront Payment
35
9.2.
Development Costs
35
9.3.
Option Exercise Fee
35
9.4.
Milestone Payments
35
9.5.
Royalties
38
9.6.
Sublicense Fee
40
9.7.
Payment Reports
41
9.8.
Additional Payment Terms
41
ARTICLE 10 INTELLECTUAL PROPERTY
43
10.1. Intellectual Property Ownership
43
10.2. Prosecution and Maintenance
45
10.3. Enforcement
47
10.4. Defense and Settlement of Third Party Claims
48
10.5. Settlement
49
10.6. Product Marks
49
10.7. Patent Marking
50
10.8. Patent Right Term Extension
50
10.9. Regulatory Exclusivity
50
10.10. CREATE Act
50
ARTICLE 11 REPRESENTATIONS, WARRANTIES, AND COVENANTS
50
11.1.
Representations and Warranties Verastem
50
11.2.
Representations and Warranties of GenFleet
51
11.3.
Covenants of GenFleet
55
11.4.
Mutual Covenants
56
11.5.
NO OTHER REPRESENTATIONS OR WARRANTIES
56
ARTICLE 12 INDEMNIFICATION
57
iii
12.1. Indemnification by GenFleet
57
12.2. Indemnification by Verastem
57
12.3. Indemnification Procedures
58
12.4. Limitation of Liability
58
12.5. Insurance
59
ARTICLE 13 CONFIDENTIALITY
59
13.1. Confidentiality
59
13.2. Exceptions.
59
13.3. Permitted Disclosure
60
13.4. Terms of this Agreement
61
13.5. Press Releases
62
13.6. Use of Names
62
13.7. Publications
62
ARTICLE 14 TERM AND TERMINATION
63
14.1. Term
63
14.2. Termination at Will
63
14.3. Termination for Material Breach
63
14.4. Termination for Insolvency
64
14.5. Verastem’s Alternative Remedy in Lieu of Termination
64
14.6. Effects of Expiration or Termination
64
ARTICLE 15 DISPUTE RESOLUTION
66
15.1. Resolution by Executive Officers
66
15.2. Arbitration
66
15.3. Patent Right and Trademark Disputes
68
15.4. Injunctive Relief
68
ARTICLE 16 MISCELLANEOUS
68
16.1. Entire Agreement; Amendment
68
16.2. Assignment
68
16.3. Force Majeure
68
16.4. Notices
69
16.5. No Strict Construction; Headings
69
16.6. Interpretation
70
16.7. Performance by Affiliates
70
16.8. Language; Translations
70
iv
16.9. Further Actions
70
16.10. Choice of Law
70
16.11. Severability
70
16.12. No Waiver
71
16.13. Independent Contractors
71
16.14. Counterparts
71
Schedules
Schedule 1.15
Available Targets
Schedule 1.46
Discovery Development Plan
Schedule 1.69
GenFleet Patent Rights
Schedule 1.103
Option Data Package
Schedule 6.6.3
Access to Data; HGRAC
Schedule 11.2
Exceptions to Representations and Warranties of GenFleet
Schedule 11.2.13 Existing In-Licenses
Schedule 13.5.1
Form of Press Release
COLLABORATION AND OPTION AGREEMENT
This COLLABORATION AND OPTION AGREEMENT (this “Agreement”) is entered into as of August 24,
2023 (the “Effective Date”) by and between Verastem, Inc., a corporation organized and existing under the laws
of Delaware, with offices at 117 Kendrick St., Suite 500, Needham, MA 02494 (“Verastem”), and GenFleet
Therapeutics (Shanghai), Inc., a corporation organized and existing under the laws of China with offices at 1206
Zhangjiang Road, Suite A, Shanghai, China (“GenFleet”). Verastem and GenFleet are referred to herein
individually as a “Party” and collectively as the “Parties.”
RECITALS
WHEREAS, Verastem is a biopharmaceutical company engaged in the Development and
Commercialization of new medicines for the treatment of cancer;
WHEREAS, GenFleet is a clinical-stage biotechnology company with expertise in the Development of
oncology and immunology therapies; and
WHEREAS, the Parties desire to collaborate to Develop and Commercialize Compounds and Products,
and GenFleet desires to grant, and Verastem desires to obtain, an exclusive Option to acquire an exclusive license
under the GenFleet Technology to Develop and Commercialize Compounds and Licensed Products in the Territory,
in accordance with the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements set forth below, and
for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1.
“AAA-ICDR” has the meaning set forth in Section 15.2.1 (Arbitration).
1.2.
“Accounting Standard” means, with respect to a Party or its Affiliate or Sublicensee, International Financial
Reporting Standards (IFRS) or Generally Acceptable Accounting Principles (GAAP), as used by such Party,
Affiliate, or Sublicensee for its financial reporting obligations, in each case, consistently applied.
1.3.
“Additional Program” means, on an Additional Target-by-Additional Target basis, the program of activities
undertaken for such Additional Target. For clarity, there will be no more than two Additional Programs under this
Agreement.
1.4.
“Additional Target” means a target (other than the Initial Target) that will be the subject of a Collaboration
Program, which target will be selected by Verastem in accordance with Section 5.1 (Selection of Additional
Targets) or Section 5.2 (Replacement Targets).
1.5.
“Affiliate” means, with respect to a Party, a Person, corporation, partnership, or other entity that controls, is
controlled by, controlling or is under common control with such Party, but only for so long as such control will
continue. For the purposes of this definition, the word “control” (including, with correlative meaning, the terms
“controlled by”, “controlling,” or “under the common control with”) means the actual power, either directly or
indirectly through one or more intermediaries, to direct or cause the direction of the management and policies of
such entity, whether by the ownership of more than 50% of the voting stock of such entity, or by contract or
otherwise.
2
1.6.
“Agreement” has the meaning set forth in the Preamble.
1.7.
“Alliance Manager” has the meaning set forth in Section 4.1 (Alliance Managers)
1.8.
“Annual Development Report” has the meaning set forth in Section 5.4.4 (Development Reports).
1.9.
“Annual Net Sales” means the total Net Sales of Licensed Products by Verastem and its Affiliates in the Territory
in a particular Calendar Year, calculated in accordance with the Accounting Standards of Verastem or its Affiliate
(as applicable).
1.10.
“Assigned Technology” has the meaning set forth in Section 10.1.7 (Covenants in Support of Assignment).
1.11.
“Assigning Party” has the meaning set forth in Section 10.1.7 (Covenants in Support of Assignment).
1.12.
“Audited Party” has the meaning set forth in Section 9.9.2 (Audit Rights).
1.13.
“Auditing Party” has the meaning set forth in Section 9.9.2 (Audit Rights).
1.14.
“Auditor” has the meaning set forth in Section 9.9.2 (Audit Rights).
1.15.
“Available Targets” means the list of targets set forth on Schedule 1.15 (Available Targets) hereto, which targets
have not, as of the Effective Date, been licensed, partnered, or otherwise committed by GenFleet to a Third Party in
the Field in the Territory.
1.16.
“Bankruptcy Code” means Section 365(n) of Title 11 of the United States Code (as amended or any replacement
thereof).
1.17.
“Business Day” means a day other than a Saturday, Sunday, or a day on which banking institutions in Boston,
Massachusetts, and Shanghai, China are required by applicable law to remain closed.
1.18.
“Buying Party” has the meaning set forth on Section 1.100 (Definition of Net Sales).
1.19.
“Calendar Year” means a period of 12 consecutive months beginning on January 1 and ending on December 31.
1.20.
“Chairperson” has the meaning set forth in Section 4.2.1 (Formation; Composition).
1.21.
“Change of Control” means, with respect to a Party, from and after the Effective Date: (a) a merger or
consolidation in which (i) such Party is a constituent party or (ii) an Affiliate of such Party that directly or
indirectly controls such Party is a constituent party, except in the case of either clause (i) or (ii), any such merger or
consolidation involving such Party or such Affiliate in which the shares of capital stock of such entity outstanding
immediately prior to such merger or consolidation continue to represent, or are converted into or are exchanged for
shares of capital stock which represent, immediately following such merger or consolidation, more than 50% by
voting power of the capital stock of (A) the surviving or resulting corporation or (B) a parent corporation of such
surviving or resulting corporation, whether direct or indirect; (b) the sale, lease, transfer, exclusive license or other
disposition, in a single transaction or series of related transactions, by such Party or an Affiliate of such Party of all
or substantially all of the assets of such Party or such Affiliate taken as a whole and whether owned directly or
indirectly through Affiliates (except where such sale, lease, transfer, exclusive license or other disposition is to an
Affiliate of such Party existing prior to such time); or (c) any “person” or “group”, as such terms are defined in
Sections 13(d) and 14(d) of the U.S. Securities Exchange Act of 1934, in a single transaction or series of related
transactions, becomes the
3
beneficial owner as defined under the U.S. Securities Exchange Act of 1934, directly or indirectly, whether by
purchase or acquisition or agreement to act in concert or otherwise, of 50% or more by voting power of the then-
outstanding capital stock or other equity interests of such Party or a subsidiary of such Party.
1.22.
“Clinical Trial” means any clinical investigation conducted on human subjects, as that term is defined in FDA
regulations at 21 C.F.R. § 312.3, or a similar clinical investigation conducted on human subjects, as defined under
applicable law outside the United States. Without limiting the foregoing, “Clinical Trial” includes any Phase 1
Clinical Trial, Phase 1/2 Clinical Trial, Phase 2 Clinical Trial, Phase 3 Clinical Trial, and Phase 4 Clinical Trial.
1.23.
“CMO” means a contract manufacturing organization.
1.24.
“Collaboration Compounds” means, with respect to a Collaboration Program and the applicable Collaboration
Target, (a) all compounds that are directed to such Collaboration Target that are Developed by or on behalf of the
Parties (either solely or jointly) under this Agreement, and (b) any fragments, variants, modifications, or derivatives
of the foregoing (a).
1.25.
“Collaboration Know-How” means any Know-How that is first generated, conceived, created, invented, or
otherwise made during the Term by or on behalf of either or both Parties or their respective Affiliates in the
performance of activities under this Agreement.
1.26.
“Collaboration Patent Rights” means any Patent Rights that Cover any Collaboration Know-How.
1.27.
“Collaboration Product” means any product that includes a Collaboration Compound, alone or in combination
with one or more other active ingredients in any and all (current and future) forms, formulations, dosages,
strengths, and delivery modes. For clarity, a Collaboration Product that contains the same Collaboration
Compound, but is in a different form, formulation, dosage, strength, presentation, or delivery mode shall be
considered the same Collaboration Product.
1.28.
“Collaboration Programs” means (a) the Initial Program, (b) the first Additional Program, and (c) the second
Additional Program (each individually, a “Collaboration Program”).
1.29.
“Collaboration Targets” means (a) the Initial Target, (b) the first Additional Target, and (c) the second Additional
Target (each individually, a “Collaboration Target”).
1.30.
“Combination Product” means a product (a) containing a Compound and one or more Other Components, or (b)
that is defined as a “combination product” by the FDA pursuant to 21 C.F.R. §3.2(e) or its foreign equivalent, in
each case ((a) or (b)), whether combined in a single formulation or package, as applicable, or formulated or
packaged separately but sold together for a single price.
1.31.
“Commercialization” means, with respect to a pharmaceutical or biologic product (whether in monotherapy or as
part of a Combination Product), any and all activities directed to the marketing, promotion, importation,
distribution, pricing, Pricing and Reimbursement Approval, offering for sale, or sale of such pharmaceutical or
biologic product, and interacting with Regulatory Authorities regarding the foregoing. “Commercialize,”
“Commercializing,” and “Commercialized” will be construed accordingly.
1.32.
“Commercially Reasonable Efforts” means, with respect to the efforts to be expended by Verastem with respect
to the Development or Commercialization of Licensed Compounds and Licensed Products, those efforts consistent
with the efforts and resources normally used by Verastem in the exercise of its reasonable business discretion for a
similar product of similar market potential at a similar stage of development or commercialization, and taking into
account all relevant factors including technical, legal, intellectual
4
property, competition, scientific and medical factors, intellectual property coverage, safety and efficacy, stage of
development, product profile, competitiveness of the marketplace, supply chain, proprietary position, regulatory
exclusivity, anticipated or approved labeling, present and future market and commercial potential, the likelihood of
receipt of Regulatory Approval, profitability (including pricing and reimbursement status achieved or likely to be
achieved), payments due to GenFleet under this Agreement, alternative products in the marketplace or in
development, based on conditions then prevailing. Commercially Reasonable Efforts will be determined on a
country-by-country basis, and it is anticipated that the level of effort will change over time, reflecting changes in
the stage of development of the Licensed Compounds and Licensed Products.
1.33.
“Competing Product” means any therapeutic or other product (other than a Product) that includes a molecule or
compound (other than a Collaboration Compound or Licensed Compound) that is primarily directed to a
Collaboration Target.
1.34.
“Compound” means, as applicable, a Collaboration Compound or Licensed Compound.
1.35.
“Confidential Information” has the meaning set forth in Section 13.1 (Confidentiality).
1.36.
“Continuing Technology Transfer” has the meaning set forth in Section 3.3 (Continuing Technology Transfer).
1.37.
“Control” or “Controlled” means (a) the possession by a Party (whether by ownership, license, or otherwise other
than pursuant to this Agreement) of, (i) with respect to any tangible Know-How, the legal authority or right to
physical possession of such tangible Know-How, with the right to provide such tangible Know-How to the other
Party on the terms set forth herein, or (ii) with respect to Patent Rights, Regulatory Approvals, Regulatory
Materials, intangible Know-How, or other intellectual property rights, the legal authority or right to grant a license,
sublicense, access, or right to use (as applicable) to the other Party under such Patent Right, Regulatory Approval,
Regulatory Material, intangible Know-How, or other intellectual property right on the terms set forth herein, in
each case ((i) and (ii)), without breaching or otherwise violating the terms of any arrangement or agreement with a
Third Party in existence as of the time such Party or its Affiliates would first be required hereunder to grant the
other Party such access, right to use, license, or sublicense; and (b) with respect to any product, the possession by a
Party of the ability (whether by sole or joint ownership, license, or otherwise, other than pursuant to this
Agreement) to grant a license or sublicense of Patent Rights that claim such product or proprietary Know-How that
is used in connection with the Exploitation of such product.
1.38.
“Cover” means, with respect to any particular subject matter at issue and any relevant Patent Right or individual
claim in such Patent Right, as applicable, that the Manufacture, use, sale, offer for sale, importation, or other
Exploitation of such subject matter would fall within the scope of one or more claims in such Patent Right.
1.39.
“Cure Period” has the meaning set forth in Section 14.3.1 (Termination Right).
1.40.
“Damages” means all losses, costs, claims, damages, judgments, liabilities, and expenses (including reasonable
attorneys’ fees and other reasonable out-of-pocket costs in connection therewith).
1.41.
“Development” means, with respect to any Compound or Product, any and all development or regulatory activities
that relate to obtaining, maintaining or expanding Regulatory Approval (other than Pricing and Reimbursement
Approval) of such Compound or Product, including any and all activities related to the research, discovery,
profiling, characterization, pre-clinical development, or nonclinical studies of such Compound or Product, clinical
drug development activities conducted before or after obtaining Regulatory
5
Approval (other than Pricing and Reimbursement Approval) for such Compound or Product that are reasonably
related to or leading to the development, preparation, or submission of data and information to a Regulatory
Authority for the purpose of obtaining, supporting, expanding or maintaining Regulatory Approval (other than
Pricing and Reimbursement Approval) of such Compound or Product, together with all activities related to
pharmacokinetic profiling, design and conduct of Clinical Trials (including Phase 4 Clinical Trials and Clinical
Trials pertaining to additional presentations for a Compound or Product, and statistical analysis and report writing)
of such Compound or Product, pharmacovigilance activities, adverse event reporting, and regulatory affairs,
statistical analysis, report writing, and the creation and submission of Regulatory Materials related to the foregoing
(including the services of outside advisors and consultants in connection therewith); but excluding, in each case,
any activities directed to Commercialization or Manufacturing. “Develop,” “Developing,” and “Developed” will
be construed accordingly.
1.42.
“Development and Commercialization Milestone Event” has the meaning set forth in Section 9.4.2(a)
(Development and Commercialization Milestone Payments).
1.43.
“Development and Commercialization Milestone Payment” has the meaning set forth in Section 9.4.2(a)
(Development and Commercialization Milestone Payments).
1.44.
“Diligence Milestone” has the meaning set forth in Section 5.4.3(b) (Diligence Milestones).
1.45.
“Diligence Milestone Event 1” has the meaning set forth in Section 5.4.3(b) (Diligence Milestones).
1.46.
“Discovery Development Plan” means, with respect to (a) the Initial Program, a synopsis of the initial planned
IND-enabling study and optimization process, together with a protocol synopsis for the planned Phase 1 Clinical
Trial of the Licensed Product in KRASG12D mutant advanced cancer patients, and (b) each Additional Program, a
high-level timeline for the initial Development activities for such Additional Program, in each case ((a) and (b)), in
the form of Schedule 1.46 (Discovery Development Plan) attached hereto, as amended from time to time.
1.47.
“Discovery Period” means the period commencing on the Effective Date and ending upon the earliest of:
(a) the third anniversary of the Effective Date; provided that Verastem may extend such period for additional
consecutive one-year periods by providing GenFleet with written notice no later than 30 days prior to such
expiration date; or (b) the termination or expiration of the last Option Exercise Period for the last Collaboration
Program.
1.48.
“Effective Date” has the meaning set forth in the Preamble.
1.49.
“EMA” has the meaning set forth in Section 1.130 (Definition of Regulatory Authority).
1.50.
“European Union” or “EU” means the economic, scientific, and political organization of member states of known
as the European Union, as its membership may be altered from time to time, and any successor thereto.
1.51.
“Executive Officer” means (a) in the case of Verastem, the Chief Executive Officer of Verastem, and (b) in the
case of GenFleet, the Chairman of GenFleet.
1.52.
“Existing Regulatory Materials” has the meaning set forth in Section 6.3.1 (Existing Regulatory Materials).
1.53.
“Expert” has the meaning set forth in Section 15.2.3 (Arbitration).
6
1.54.
“Exploit” and “Exploitation” means to make, have made, use, sell, offer for sale, distribute, import, export, and
otherwise exploit.
1.55.
“FCPA” means the United States Foreign Corrupt Practices Act (15 U.S.C. § 78dd-1, et seq.).
1.56.
“FDA” has the meaning set forth in Section 1.130 (Definition of Regulatory Authority).
1.57.
“Field” means any and all uses.
1.58.
“First Commercial Sale” means, on a Licensed Product-by-Licensed Product and country-by-country basis, the
first sale by Verastem or its Affiliates to an end user or prescriber for use, consumption, or resale of such Licensed
Product in such country after Regulatory Approval (including separate Pricing and Reimbursement Approval,
where required) has been obtained for such Licensed Product in such country; provided, however, that the
following will not constitute a First Commercial Sale: (a) any sale to any of Verastem’s Affiliates, unless such
Affiliate is the last Person in the distribution chain of the Licensed Product; (b) any use by or on behalf of Verastem
or its Affiliates of such Licensed Product in Clinical Trials or non-clinical Development activities; or (c) any
disposal or transfer of such Licensed Product for a bona fide charitable purpose, as bona fide samples, as donations,
for any expanded or early access program, for any compassionate sales or use program (including as part of a
named patient program or single patient program), for any indigent program, or for any similar purpose in
accordance with applicable law.
1.59.
“FTE” means a qualified full-time person, or more than one person working the equivalent of a full-time person,
where “full time” is based upon a total of [***] working hours per Calendar Year of scientific or technical work
carried out by one or more duly qualified employees of GenFleet. For clarity, overtime, and work on weekends,
holidays, and the like will not be counted with any multiplier (e.g. time-and-a-half or double time) toward the
number of hours that are used to calculate the FTE contribution.
1.60.
“GCP” means all applicable then-current good clinical practice standards for the design, conduct, performance,
monitoring, auditing, recording, analysis, and reporting of Clinical Trials as are promulgated by applicable
Regulatory Authorities in the relevant country that provide for, among other things, assurance that the clinical data
and reported results are credible and accurate and protect the rights, integrity, and confidentiality of trial subjects,
including, as applicable: (a) as set forth in the International Conference on Harmonization of Technical
Requirements for Registration of Pharmaceuticals for Human Use Harmonized Tripartite Guideline for Good
Clinical Practice (CPMP/ICH/135/95), as may be amended and applicable from time to time; (b) as set forth in the
Declaration of Helsinki (2004), as last amended at the 52nd World Medical Association in October 2000, as may be
amended and applicable from time to time; (c) as set forth in the U.S. Code of Federal Regulations Title 21, Parts
50 (Protection of Human Subjects), 56 (Institutional Review Boards), and 312 (Investigational New Drug
Application), as may be amended and applicable from time to time; and (d) the equivalent practices, standards and
regulations promulgated or endorsed by the applicable Regulatory Authorities elsewhere in the Territory or
Retained Territory, as applicable, as may be amended and applicable from time to time, to the extent such standards
are not less stringent than United States GCP.
1.61.
“Generic Product” means, with respect to a Product, any product that is approved, or is sought to be approved in a
country or other regulatory jurisdiction in the Territory or Retained Territory (as applicable), in reliance, in whole
or in part, on the prior approval (or on safety or efficacy data submitted in support of the prior approval) of such
Product as determined by the applicable Regulatory Authority in such country or regulatory jurisdiction, including
any product authorized for sale (a) in the U.S. pursuant to Section 505(b)(2) or Section 505(j) of the FFDCA (21
U.S.C. 355(b)(2) and 21 U.S.C. 355(j), respectively), (b) in the European Union pursuant to a provision of Articles
10, 10a or 10b of Parliament and Council Directive 2001/83/EC as amended (including an application under
Article 6.1 of Parliament
7
and Council Regulation (EC) No 726/2004 that relies for its content on any such provision), or (c) in any other
country or other regulatory jurisdiction in the Territory or Retained Territory (as applicable) pursuant to all
equivalents of such provisions, including any amendments and successor statutes with respect to any of the
foregoing.
1.62.
“GenFleet” has the meaning set forth in the Preamble.
1.63.
“GenFleet Collaboration Know-How” means any Collaboration Know-How that is first generated, conceived,
discovered, created, invented, or otherwise made during the Term solely by or on behalf of GenFleet or its
Affiliates in the performance of activities under this Agreement.
1.64.
“GenFleet Collaboration Patent Rights” means any Collaboration Patent Right that Covers GenFleet
Collaboration Know-How.
1.65.
“GenFleet Collaboration Technology” means GenFleet Collaboration Know-How and GenFleet Collaboration
Patent Rights.
1.66.
“GenFleet Indemnitee” has the meaning set forth in Section 12.2 (Indemnification by Verastem).
1.67.
“GenFleet Know-How” means any Know-How (including GenFleet Collaboration Know-How and GenFleet’s
interest in any Joint Collaboration Know-How) Controlled by GenFleet or any of its Affiliates as of the Effective
Date or during the Term that is necessary or useful to Exploit any Compound or Product in the Field in the
Territory.
1.68.
“GenFleet Manufacturing Technology” has the meaning set forth in Section 3.2 (Manufacturing Technology
Transfer).
1.69.
“GenFleet Patent Rights” means any Patent Right Controlled by GenFleet or any of its Affiliates as of the
Effective Date or during the Term that (a) Covers any GenFleet Know-How, or (b) is otherwise necessary or useful
to Exploit any Compound or Product in the Field in the Territory. All GenFleet Patent Rights existing as of the
Effective Date are listed on Schedule 1.69 (GenFleet Patent Rights).
1.70.
“GenFleet Technology” means GenFleet Know-How, GenFleet Patent Rights, and GenFleet’s interest in any Joint
Collaboration Technology.
1.71.
“Global Brand Elements” has the meaning set forth in Section 10.6.1 (Global Brand Elements).
1.72.
“GLP” means all applicable then-current good laboratory practice standards as are promulgated by applicable
Regulatory Authorities in the relevant country, including: (a) in the United States, those promulgated or endorsed
by the FDA in U.S. 21 C.F.R. Part 58, as may be amended and applicable from time to time; and (b) the equivalent
practices, standards and regulations promulgated or endorsed by the applicable Regulatory Authorities outside the
United States, as may be amended and applicable from time to time, to the extent such practices, standards and
regulations are not less stringent than United States GLP.
1.73.
“GMP” means all applicable then-current good manufacturing practice standards as are promulgated by applicable
Regulatory Authorities in the relevant country, including, as applicable, as promulgated under and in accordance
with: (a) the principles detailed in the U.S. Current Good Manufacturing Practices, 21 C.F.R. Parts 4, 210, 211, 601,
610 and 820, as may be amended and applicable from time to time; (b) European Directive 2003/94/EC and
Eudralex 4, as may be amended and applicable from time to time; (c) the principles detailed in the International
Conference on Harmonization’s Q7 Guideline, as may be amended and applicable from time to time; and (d) the
equivalent practices, standards and regulations
8
promulgated or endorsed by the applicable Regulatory Authorities elsewhere in the Territory or Retained Territory,
as applicable, as may be amended and applicable from time to time, to the extent such practices, standards and
regulations are not less stringent than United States GMP.
1.74.
“HGRAC” means the Human Genetic Resources Administration of China, and any successor entity thereto.
1.75.
“HGRAC Approval” means any and all necessary record filings with, notification to, and approvals, licenses or
permits issued by, HGRAC or any other governmental authority in the People’s Republic of China required for any
activities involving the collection, retention, use and outbound transfer of biological materials from human subjects
enrolled in Clinical Trials in China and data sharing (including without limitation, Clinical Trial data) under this
Agreement. For clarity, “HGRAC Approval” includes any required filings with HGRAC, regardless of whether an
approval is required to be issued by HGRAC.
1.76.
“ICDR” has the meaning set forth in Section 15.2.2 (Arbitration).
1.77.
“IND” means: (a) an Investigational New Drug Application as defined in the United States Federal Food, Drug and
Cosmetic Act, as amended and applicable regulations promulgated thereunder by the FDA; or (b) the equivalent
application to the equivalent Regulatory Authority in any other country or regulatory jurisdiction, the filing of
which is necessary to initiate or conduct clinical testing of a pharmaceutical or biologic product in humans in such
country or regulatory jurisdiction.
1.78.
“Indemnified Party” has the meaning set forth in Section 12.3 (Indemnification Procedures).
1.79.
“Indemnifying Party” has the meaning set forth in Section 12.3 (Indemnification Procedures).
1.80.
“Indication” means a specific disease or medical condition in humans that is approved by a Regulatory Authority
to be included as a discrete claim (as opposed to a variant or subdivision or subset of a claim) in the labeling of a
Licensed Product based on the results of one or more separate Phase 2 or Phase 3 Clinical Trials sufficient to
support Regulatory Approval of such claim. For clarity, the following will be part of the same Indication: (a)
different lines of therapy (e.g., first line and second line treatments, etc.); (b) different stages of the same disease;
(c) biomarker status with respect to a disease; (d) variants, subdivisions, or subclassifications of a disease, or
medical condition; (e) treatment, modulation, and prophylaxis of a disease or medical condition; or (f) treatment as
monotherapy and treatment in combination with another product.
1.81.
“Infringement” has the meaning set forth in Section 10.3.1 (Notification of Infringement).
1.82.
“Initial Program” means the Collaboration Program for the Initial Target.
1.83.
“Initial Target” means KRAS G12D.
1.84.
“Initial Technology Transfer” has the meaning set forth in Section 3.1 (Initial Technology Transfer).
1.85.
“Initiation” or “Initiate” means, with respect to any Clinical Trial, first dosing of the fifth human subject in such
Clinical Trial.
1.86.
“In-License” has the meaning set forth in Section 11.3.2 (In-Licenses).
1.87.
“Insolvency Event” has the meaning set forth in Section 14.4 (Termination for Insolvency).
9
1.88.
“Joint Collaboration Know-How” means any Collaboration Know-How that is first generated, conceived,
discovered, created, invented, or otherwise made during the Term jointly by or on behalf of GenFleet or its
Affiliates, on the one hand, and by or on behalf of Verastem or its Affiliates, on the other hand, in the performance
of activities under this Agreement.
1.89.
“Joint Collaboration Patent Rights” means any Patent Right that Covers Joint Collaboration Know-How.
1.90.
“Joint Collaboration Technology” means Joint Collaboration Know-How and Joint Collaboration Patent Rights.
1.91.
“Joint Publication Strategy” has the meaning set forth in Section 13.7 (Publications).
1.92.
“Joint Steering Committee” and “JSC” have the meaning set forth in Section 4.2.1 (Formation; Composition).
1.93.
“Know-How” means any data, results, and information of any type whatsoever, in any tangible or intangible form,
including trade secrets, practices, techniques, methods, processes, inventions, discoveries, developments,
specifications, formulations, formulae, materials or compositions of matter of any type or kind (patentable or
otherwise), software, algorithms, marketing reports, clinical and non-clinical study reports, clinical and non-
clinical data, regulatory filings and regulatory submission documents and summaries (including Regulatory
Materials), technology, test data including pharmacological, biological, chemical, biochemical, toxicological, and
clinical test data, analytical and quality control data, stability data, safety materials, studies and procedures, and
any other know-how, and any physical embodiments of any of the foregoing.
1.94.
“Licensed Compound” means any Collaboration Compound under a Collaboration Program for which Verastem
has exercised an Option in accordance with Section 2.2.3 (Option Exercise).
1.95.
“Licensed Product” means any (a) Collaboration Product under a Collaboration Program for which Verastem has
exercised the applicable Option in accordance with Section 2.2.3 (Option Exercise) or (b) any pharmaceutical or
biological product that includes a Licensed Compound, alone or in combination with one or more other active
ingredients in any and all (current and future) forms, formulations, dosages, strengths, and delivery modes. For
clarity, a Licensed Product that contains the same Licensed Compound, but is in a different form, formulation,
dosage, strength, presentation, or delivery mode shall be considered the same Licensed Product.
1.96.
“Licensed Program” means any Collaboration Program for which Verastem has exercised the applicable Option in
accordance with Section 2.2.3 (Option Exercise).
1.97.
“Manufacture” or “Manufacturing” means, as applicable, all activities associated with the production,
manufacture, process of formulating, processing, filling, finishing, packaging, labeling, shipping, importing or
storage of pharmaceutical compounds or materials, including process development, process validation, stability
testing, manufacturing scale-up, pre-clinical, clinical, and commercial manufacture and analytical development,
product characterization, quality assurance and quality control development, testing, and release.
1.98.
“Manufacturing Technology Transfer” has the meaning set forth in Section 3.2 (Manufacturing Technology
Transfer).
1.99.
“NDA” means a new drug application that is submitted to the FDA for marketing approval for a Product, pursuant
to 21 C.F.R. § 314.3.
10
1.100. “Net Sales” means, with respect to a Licensed Product, the aggregate gross sales of such Licensed Product sold by
Verastem or any of its Affiliates or Sublicensees (each, a “Selling Party”) to a Third Party (including distributors,
resellers, wholesalers, hospitals, and end users) (each, a “Buying Party”) in the Territory, less the following
deductions, in each case, to the extent actually allowed and taken by any such Buying Party and not otherwise
recovered by or reimbursed to the applicable Selling Party, all determined from the books and records of Selling
Party maintained in accordance with the applicable Accounting Standard of the applicable Selling Party:
(a)
reasonable and customary discounts, including trade, quantity, or cash discounts and
rebates, and patient discount programs;
(b)
rebates, reimbursements, fees, clawbacks, discounts, allowances, chargebacks, and
retroactive price reductions, including those granted to wholesalers, buying groups,
retailers, managed health care organizations, governmental agencies, reimbursers, and
trade customers;
(c)
any amount paid or credited by reasons of defects, rejections, recalls, outdating, or returns,
such as unrecoverable damaged goods or rejections and including Licensed Product
returned in connection with recalls or withdrawals;
(d)
transportation, freight, postage charges, and other charges, such as insurance, relating
thereto, in each case paid or incurred by Selling Party and any other governmental charges
or taxes imposed with respect to the sale, transportation, delivery, use, exportation, or
importation of such Licensed Product;
(e)
taxes, duties, tariffs, excises, or other governmental charges or levies charged or imposed
with respect to the import, export, production, sale, transportation, delivery, or use of
goods (other than income taxes);
(f)
amounts written off by reason of uncollectible debt if and when actually written off or
allowed in accordance with the Selling Party’s accounting policies, as consistently applied;
provided that such amounts will be added back to Net Sales if and when collected; and
(g)
other specifically identifiable amounts that have been credited against or deducted from
gross sales of such Licensed Product to the extent such amounts are customary deductions
permitted under the applicable Accounting Standard from net sales calculations for reasons
substantially equivalent to those listed above.
Net Sales will be calculated only once for the first bona fide arm’s length sale of the Licensed Product to a
Third Party that is not a Selling Party.
Net Sales excludes: (i) transfers of Licensed Product to Third Parties for bona fide charitable purposes, as
bona fide samples, as donations, for the performance of Clinical Trials or non-clinical Development
activities, for any expanded or early access program, for any compassionate sales or use program
(including named patient program or single patient program), for any indigent program, or for any similar
purpose in accordance with applicable law; and (ii) transfers or sales by Sublicensees.
In the case of any Combination Product sold in a given country and reporting period, Net Sales for the
purpose of determining royalties and Sales Milestone Events of the Combination Product in
11
such country will be calculated by [***].
1.101. “New License Agreement” has the meaning set forth in Section 14.6.2 (Sublicense Survival).
1.102. “Option” has the meaning set forth in Section 2.2.1 (Option Grant to Verastem).
1.103. “Option Data Package” means [***]
1.104. “Option Effective Date” has the meaning set forth in Section 2.2.3 (Option Exercise).
1.105. “Option Exercise Fee” has the meaning set forth in Section 9.2 (Option Exercise Fee).
1.106. “Option Exercise Notice” has the meaning set forth in Section 2.2.3 (Option Exercise).
12
1.107. “Option Exercise Period” means, with regard to a Collaboration Program, the period commencing on the
Effective Date and ending [***] days after GenFleet provides Verastem with the Option Data Package for such
Collaboration Program pursuant to Section 2.2.2 (Option Data Package); provided that such period may be
extended pursuant to Section 2.2.2(b) (Incomplete Option Data Packages and Right to Ask Questions).
1.108. “Other Component” means any (a) therapeutically active ingredient that is not a Compound (including any
product of Verastem, other than a Product), (b) delivery device or component therefor, (c) companion diagnostic, or
(d) other product, process, or service that is sold with a Compound for a fixed price.
1.109. “Owning Party” has the meaning set forth in Section 10.1.7 (Covenants in Support of Assignment).
1.110.
“Party” and “Parties” have the meaning set forth in the Preamble.
1.111.
“Patent Right” means: (a) any national, regional, or international patent or patent application, including any
provisional patent application; (b) any patent application filed either from such a patent, patent application, or
provisional application or from an application claiming priority from any of these, including any divisional,
continuation, continuation-in-part, provisional, converted provisional, and continued prosecution application; (c)
any patent that has issued or in the future issues from any of the foregoing patent applications ((a) and (b)),
including any utility model, petty patent, design patent, and certificate of invention; (d) any extension or restoration
by existing or future extension or restoration mechanisms, including any revalidation, reissue, re-examination and
extension (including any supplementary protection certificate and the like) of any of the foregoing patents or patent
applications ((a), (b), and (c)); and (e) any similar rights, including so-called pipeline protection, or any
importation, revalidation, confirmation or introduction patent or registration patent or patent of additions to any
such foregoing patent application or patent.
1.112.
“Payment Report” has the meaning set forth in Section 9.7 (Payment Reports).
1.113.
“Person” means any individual, partnership, joint venture, limited liability company, corporation, firm, trust,
association, unincorporated organization, Regulatory Authority, or any other entity not specifically listed in this
definition.
1.114.
“Pharmacovigilance Agreement” has the meaning set forth in Section 6.7.1 (Adverse Event Reporting).
1.115.
“Phase 1 Clinical Trial” means a Clinical Trial of a product, the principal purpose of which is a determination of
initial tolerance or safety of such product in healthy volunteers or the target patient population, as described in 21
CFR 312.21(a) (as amended or any replacement thereof), or a similar clinical trial prescribed by the Regulatory
Authority in a country other than the United States. For purposes of this Agreement, “Phase 1 Clinical Trial” will
exclude in all cases any Phase 1/2 Clinical Trial.
1.116.
“Phase 1/2 Clinical Trial” means a Clinical Trial of a product that combines both a Phase 1 Clinical Trial and a
Phase 2 Clinical Trial into a single protocol, where the Phase 1 Clinical Trial portion is performed first to establish
initial tolerance or safety of such product, and the Phase 2 Clinical Trial portion is performed second to further
evaluate safety and/or efficacy of such product.
1.117.
“Phase 2 Clinical Trial” means a Clinical Trial of a product, the principal purpose of which is a determination of
safety and efficacy in the target patient population, as described in 21 C.F.R. 312.21(b) (as amended or any
replacement thereof), or a similar Clinical Trial prescribed by the Regulatory Authority in a country other than the
United States. For purposes of this Agreement, “Phase 2 Clinical Trial” will exclude in all cases any Phase 1/2
Clinical Trial.
13
1.118.
“Phase 3 Clinical Trial” means a Clinical Trial of a product, the design of which is acknowledged by the FDA to
be sufficient for such clinical trial to satisfy the requirements of 21 C.F.R. 312.21(c) (as amended or any
replacement thereof), or a similar Clinical Trial prescribed by the Regulatory Authority in a country other than the
United States, the design of which is acknowledged by such Regulatory Authority to be sufficient for such Clinical
Trial to satisfy the requirements of a pivotal efficacy and safety Clinical Trial.
1.119.
“Phase 4 Clinical Trial” means a Clinical Trial for a product in a particular Indication that is commenced after
receipt of the initial Regulatory Approval for such Indication in the country for which such Clinical Trial is being
conducted and that is conducted within the parameters of the Regulatory Approval for the product for such
Indication (and which may include investigator-sponsored Clinical Trials) in such country, including a Clinical
Trial conducted due to the request or requirement of a Regulatory Authority in such country or as a condition of a
previously granted Regulatory Approval in such country.
1.120. “PMDA” has the meaning set forth in Section 1.130 (Definition of Regulatory Authority).
1.121. “Pre-Option Development Milestone Event” has the meaning set forth in Section 9.4.1(a) (Pre-Option
Development Milestone Payments).
1.122. “Pre-Option Development Milestone Payment” has the meaning set forth in Section 9.4.1(a) (Pre-Option
Development Milestone Payments).
1.123. “Pricing and Reimbursement Approval” means any approval, agreement, determination, or decision establishing
prices that can be charged to consumers for a pharmaceutical or biological product or that will be reimbursed by
Regulatory Authorities for a pharmaceutical or biological product, in each case, in a country where Regulatory
Authorities approve or determine pricing for pharmaceutical or biological products for reimbursement or otherwise.
1.124. “Product” means, as applicable, a Collaboration Product or Licensed Product.
1.125. “Product Mark” has the meaning set forth in Section 10.6.2 (Selection of Product Marks in the Territory).
1.126. “Public Official or Entity” means: (a) any officer, employee (including physician, hospital administrator, or other
healthcare professional), agent, representative, department, agency, de facto official, representative, corporate
entity, instrumentality, or subdivision of any government, military, or public international organization, including
any ministry or department of health or any state-owned or affiliated company or hospital; (b) any candidate for
political office, any political party, or any official of any political party; or
(c) any other person acting in an official capacity for or on behalf of any of the foregoing.
1.127. “Quality Agreement” has the meaning set forth in Section 7.1.2 (Supply Agreement).
1.128. “R&D FTE Fee” has the meaning set forth in Section 9.2 (Development Costs).
1.129. “Regulatory Approval” means all approvals, licenses, and authorizations of the applicable Regulatory Authority
necessary for the marketing and sale of a pharmaceutical or biological product for a particular Indication in a
country (including separate Pricing and Reimbursement Approvals where applicable for the Commercialization of
any product in such country), and including the approvals by the applicable Regulatory Authority of any expansion
or modification of the label for such Indication. Regulatory Approvals include HGRAC Approvals and approvals
by Regulatory Authorities of INDs and NDAs.
1.130. “Regulatory Authority” means any national or supranational governmental authority, including the U.S. Food and
Drug Administration (and any successor entity thereto) (the “FDA”) in the U.S., the European
14
Medicines Agency (and any successor entity thereto) (the “EMA”) in the European Union, the Pharmaceutical and
Medical Device Agency in Japan (and any successor entity thereto) (the “PMDA”), or any health regulatory
authority in any country that is a counterpart to the foregoing agencies, in each case, that holds responsibility for
development, manufacture, commercialization or other exploitation of, and the granting of Regulatory Approval
(including Pricing and Reimbursement Approval where applicable for the Commercialization of any product in
such country) for a pharmaceutical or biological product in such country.
1.131. “Regulatory Exclusivity” means, with respect to a Licensed Product, any rights or protections which are
recognized, afforded or granted by the FDA or any other Regulatory Authority in any country in the Territory, in
association with the Regulatory Approval of the Licensed Product, providing the Licensed Product: (a) a period of
marketing exclusivity, during which a Regulatory Authority recognizing, affording or granting such marketing
exclusivity will refrain from either reviewing or approving a NDA or similar regulatory submission, submitted by a
Third Party seeking to market a Generic Product of such Licensed Product; or (b) a period of data exclusivity,
during which a Third Party seeking to market a Generic Product of such Licensed Product is precluded from either
referencing or relying upon, without an express right of reference from the dossier holder, the Licensed Product’s
clinical dossier, or relying on previous Regulatory Authority findings of safety or effectiveness with respect to such
Licensed Product to support the submission, review, or approval of an NDA or similar regulatory submission
before the applicable Regulatory Authority.
1.132. “Regulatory Materials” means regulatory applications, submissions, notifications, registrations, or other filings
made to or with a Regulatory Authority that are necessary or reasonably desirable in order to Develop,
Manufacture, Commercialize, or otherwise Exploit a Licensed Product in a particular Indication and country or
regulatory jurisdiction. Regulatory Materials include INDs and NDAs (as applications, but not the approvals with
respect thereto).
1.133. “Remedial Action” has the meaning set forth in Section 6.8 (Remedial Actions).
1.134. “Replacement Target Notice” has the meaning set forth in Section 5.2 (Replacement Targets).
1.135. “Retained Territory” means the People’s Republic of China, Hong Kong Special Administrative Region, Macao
Special Administrative Region, and Taiwan Region.
1.136. “Retained Territory Development Plan” means a mutually agreed upon written development plan for a Licensed
Program detailing, at a high level, GenFleet’s Development activities for each Licensed Compound and Licensed
Product in the Retained Territory, as amended from time to time.
1.137. “Royalty Term” means, on a Licensed Product-by-Licensed Product and country-by-country basis, the period of
time that commences upon the First Commercial Sale of such Licensed Product in such country in the Territory and
ends upon the latest of: (a) the expiration of the last GenFleet Patent Right containing a Valid Claim Covering such
Licensed Product in such country in the Territory that would be infringed by the sale of such Licensed Product in
such country in the Territory; (b) the expiration of Regulatory Exclusivity for such Licensed Product in such
country in the Territory; or (c) 10 years after the First Commercial Sale of such Licensed Product in such country
in the Territory.
1.138. “Sales Milestone Event” has the meaning set forth in Section 9.4.3(a) (Sales Milestone Payments).
1.139. “Sales Milestone Payment” has the meaning set forth in Section 9.4.3(a) (Sales Milestone Payments).
1.140. “Securities Regulator” has the meaning set forth in Section 13.3.1 (Permitted Disclosure).
15
1.141. “Segregate” means, with respect to a Competing Product, to segregate the research, Development, Manufacture
and Commercialization strategy, decisions and activities relating to such Competing Product from the research,
Development, Manufacture or Commercialization strategy, decisions and activities with respect to the Licensed
Compounds and Licensed Products, including ensuring that: (a) no personnel involved in overseeing, directing or
performing the research, Development, Manufacture, Commercialization or other Exploitation, as applicable, of
such Competing Product have access to non- public plans or non-public information or data relating to the research,
Development, Manufacture, Commercialization or other Exploitation of Licensed Compounds or Licensed
Products or any other relevant Confidential Information of either Party; (b) no personnel involved in overseeing,
directing or performing the research, Development, Manufacture, Commercialization or other Exploitation of
Licensed Compounds and Licensed Products have access to non-public plans or information relating to the
research, Development, Manufacture, Commercialization or other Exploitation of such Competing Product; and (c)
sufficient technical and administrative safeguards are instituted to ensure the requirement set forth in the foregoing
clauses (a) and (b) are met, including by creating “firewalls” between the personnel teams charged with working on
any such Competing Products and any personnel teams charged with working on Licensed Compounds or Licensed
Products; provided that, in each case ((a)-(c)), personnel at the level of (or comparable to) vice-president and above
may review and evaluate plans and information regarding the research, Development, Manufacture,
Commercialization or other Exploitation of such Competing Product solely in connection with monitoring the
progress of products, including portfolio decision-making among product opportunities.
1.142. “Selection Period” means the period commencing on the Effective Date and ending upon the earlier of (a) [***]
months following the Effective Date, or (b) if earlier, the date on which Verastem selects the second Additional
Target.
1.143. “Selling Party” has the meaning set forth on Section 1.100 (Definition of Net Sales).
1.144. “Subcommittee” has the meaning set forth in Section 4.2.3 (Subcommittees).
1.145. “Sublicensee” means, as the context indicates, any Third Party granted a sublicense by (a) Verastem under the
rights licensed to Verastem under Section 2.2.4(b) (License Grant to Verastem) or Section 2.2.1 (Option Grant to
Verastem), or (b) GenFleet under the rights licensed to GenFleet under Section 2.2.4(c) (License Grant to
GenFleet).
1.146. “Sublicense Fee” has the meaning set forth in Section 9.6.1 (Payment of Sublicense Fee).
1.147. “Supply Agreement” has the meaning set forth in Section 7.1.2 (Supply Agreement).
1.148. “Term” has the meaning set forth in Section 14.1 (Term).
1.149. “Terminated Country” means: (a) in the case of the expiration or termination of this Agreement with respect to
one or more countries in the Territory pursuant to Article 14 (Term and Termination), all such countries; (b) in the
case of termination or expiration of this Agreement with respect to one or more Licensed Products pursuant to
Article 14 (Term and Termination), all countries in the Territory with respect to such Licensed Product; or (c) in the
case of termination or expiration of this Agreement in its entirety pursuant to Article 14 (Term and Termination),
all countries in the Territory.
1.150. “Terminated Product” means: (a) in the case of the expiration or termination of this Agreement with respect to
one or more Licensed Products pursuant to Article 14 (Term and Termination), all such Licensed Products; (b) in
the case of termination or expiration of this Agreement with respect to one or more countries in the Territory
pursuant to Article 14 (Term and Termination), all Licensed Products with respect to such
16
countries; or (c) in the case of expiration or termination of this Agreement in its entirety pursuant to Article 14
(Term and Termination), all Licensed Products.
1.151. “Territory” means all countries and territories throughout the world, except for the Retained Territory.
1.152. “Territory Development Plan” means a mutually agreed upon written development plan for a Licensed Program
detailing, at a high level, Verastem’s Development activities for each Licensed Compound and Licensed Product in
the Territory, as amended from time to time.
1.153. “Territory-Specific Payments” has the meaning set forth in Section 2.6.2 (Prior to Option Exercise).
1.154. “Third Party” means any entity other than GenFleet or Verastem or their respective Affiliates.
1.155. “Third Party Claim” means any suit, claim, action, proceeding, or demand brought by a Third Party.
1.156. “Third Party Technology” has the meaning set forth in Section 2.6.1 (Identification of Third Party Technology).
1.157. “Trademark” means any trademark, trade dress, brand mark, service mark, trade name, brand name, logo,
business symbol, or domain name, or any word, name, symbol, color, designation or device, or any combination
thereof that functions as a source identifier, whether or not registered, and any registrations thereof or any pending
applications relating thereto.
1.158. “United States” or “U.S.” means the United States of America and all of its territories and possessions.
1.159. “Upfront Payment” has the meaning set forth in Section 9.1 (Upfront Payment).
1.160. “Valid Claim” means [***].
1.161. “VAT” has the meaning set forth in Section 9.10.4 (VAT).
1.162. “Verastem” has the meaning set forth in the Preamble.
1.163. “Verastem Collaboration Know-How” means any Collaboration Know-How that is first generated, conceived,
discovered, created, invented, or otherwise made during the Term solely by or on behalf of Verastem or its
Affiliates in the performance of activities under this Agreement.
1.164. “Verastem Collaboration Patent Rights” means any Collaboration Patent Rights that Cover Verastem
Collaboration Know-How.
1.165. “Verastem Collaboration Technology” means Verastem Collaboration Know-How and Verastem Collaboration
Patent Rights.
1.166. “Verastem Indemnitee” has the meaning set forth in Section 12.1 (Indemnification by GenFleet).
1.167. “Verastem Product Know-How” means any Know-How (including Verastem Collaboration Know-How and
Verastem’s interest in any Joint Collaboration Know-How) (a) Controlled by Verastem as of the Effective Date or
during the Term, and (b) actually used by Verastem or its Affiliates or Sublicensees in the Exploitation of the
Licensed Products in the Field in the Territory.
17
1.168. “Verastem Product Patent Rights” means any Patent Right Controlled by Verastem as of the Effective Date or
during the Term that Covers any Verastem Product Know-How.
1.169. “Verastem Product Technology” means Verastem Product Know-How and Verastem Product Patent Rights.
ARTICLE 2
LICENSES AND OPTION
2.1.
Discovery Period License Grant. Subject to the terms and conditions of this Agreement, on a Collaboration
Program-by-Collaboration Program basis, GenFleet (on behalf of itself and its Affiliates) hereby grants and agrees
to grant to Verastem and its Affiliates during the applicable Option Exercise Period, an exclusive as to the Territory,
non-sublicensable, transferable (in accordance with Section 16.2 (Assignment)), royalty-free license, under the
GenFleet Technology solely to evaluate the reports and Option Data Packages delivered to Verastem hereunder and
to evaluate whether to exercise the applicable Option for such Collaboration Program.
2.2.
Option.
2.2.1.
Option Grant to Verastem. On a Collaboration Program-by-Collaboration Program basis, GenFleet
hereby grants to Verastem during the applicable Option Exercise Period an exclusive (including with
respect to GenFleet and its Affiliates) option, with the right to sublicense through multiple tiers (in
accordance with Section 2.3 (Sublicensing)), to obtain the exclusive license set forth in Section 2.2.4(b)
(License Grant to Verastem) (each, an “Option”). For clarity, Verastem shall have three Options in total
(i.e., one Option for each Collaboration Program).
2.2.2.
Option Data Package.
(a)
Delivery of Option Data Package. GenFleet will provide Verastem with an Option Data
Package for each Collaboration Program by [***].
(b)
Incomplete Option Data Packages and Right to Ask Questions. Following Verastem’s
receipt of an Option Data Package, Verastem will have [***] days to notify GenFleet if
such Option Data Package is missing any information that Verastem reasonably requires in
order to evaluate whether to exercise its Option for the applicable Collaboration Program,
which notice will describe the information that Verastem believes is missing from such
Option Data Package. If and to the extent in GenFleet’s Control, GenFleet will provide
Verastem with the missing information identified in such notice no later than [***]
Business Days after the date of Verastem’s request thereof (or such longer period as the
Parties may
18
mutually agree) and in such case, the Option Exercise Period will be extended to the extent
necessary such that there are [***] Business Days from the date of receipt of such
information remaining prior to the expiration of the Option Exercise Period. In addition,
until expiry of the applicable Option Exercise Period, Verastem will have the right to
submit reasonable inquiries to GenFleet relating to the Option Data Package, and GenFleet
will respond to all such inquiries in a timely manner.
2.2.3.
Option Exercise. Verastem may exercise an Option for a Collaboration Program at any time during the
applicable Option Exercise Period by delivering to GenFleet written notice of such exercise (each, an
“Option Exercise Notice”). Such Option shall become effective upon GenFleet’s receipt of the applicable
Option Exercise Fee paid in accordance with Section 9.2 (Option Exercise Fee) (each such date, an
“Option Effective Date”).
2.2.4.
Effects of Option Exercise.
(a)
Licensed Programs. From and after the Option Effective Date, (i) such optioned
Collaboration Program will become a Licensed Program, and (ii) any Collaboration
Compounds and Collaboration Products for such Licensed Program will become Licensed
Compounds and Licensed Products, respectively, in each case ((i) and (ii)), for all intents
and purposes hereunder.
(b)
License Grant to Verastem. Subject to the terms and conditions of this Agreement,
GenFleet (on behalf of itself and its Affiliates) hereby grants to Verastem and its Affiliates,
from and after the Option Effective Date, an exclusive (even as to GenFleet and its
Affiliates, except as required for completion of activities pursuant to Article 3 (Technology
Transfer)), royalty-bearing license, with the right to sublicense through multiple tiers (in
accordance with Section 2.4 (Sublicensing)), under the GenFleet Technology to Develop,
Manufacture, Commercialize, and otherwise Exploit the Licensed Compounds and
Licensed Products in the Field in the Territory.
(c)
License Grant to GenFleet. Subject to the terms and conditions of this Agreement, on a
Licensed Program-by-Licensed Program basis, Verastem (on behalf of itself and its
Affiliates) hereby grants to GenFleet and its Affiliates, from and after the Option Effective
Date, an exclusive (including as to Verastem and its Affiliates), royalty-free license, with
the right to sublicense through multiple tiers (in accordance with Section 2.4
(Sublicensing)), under the Verastem Product Technology under such Licensed Program to
Develop, Commercialize, and otherwise Exploit the Licensed Compounds and Licensed
Products in the Field in the Retained Territory.
2.2.5.
Termination of an Option. On a Collaboration Program-by-Collaboration Program basis, if (a) Verastem
does not deliver to GenFleet the Option Exercise Notice for a Collaboration Program prior to the
expiration of the Option Exercise Period for such Collaboration Program, (b) Verastem exercises the
Option for a Collaboration Program but does not pay the applicable Option Exercise Fee in accordance
with Section 9.3 (Option Exercise Fee), or (c) Verastem notifies GenFleet in writing that it does not wish to
exercise the Option for a Collaboration Program, then in each case ((a) – (c)), the Option with respect to
such Collaboration Program will terminate and the Parties will no longer have any rights under this
Agreement with respect to such terminated Collaboration Program. For clarity, the termination of an
Option for a Collaboration Program will not affect the Parties’ rights under this Agreement with respect to
any other Collaboration Program.
19
2.3.
Exclusivity.
2.3.1.
Genfleet Exclusivity. Subject to Section 2.3.3 (Applicable Law Restrictions), during the Term, GenFleet
will not, and will cause its Affiliates and Sublicensees not to, directly or indirectly, conduct any
Development or Commercialization of any Competing Product in the Territory (or license or otherwise
grant any right to authorize any Third Party to do any of the foregoing).
2.3.2.
Verastem Exclusivity. Subject to Section 2.3.3 (Applicable Law Restrictions), during the Term, Verastem
will not, and will cause its Affiliates and Sublicensees not to, directly or indirectly, conduct any
Development or Commercialization of any Competing Product in the Territory.
2.3.3.
Applicable Law Restrictions. The restrictions set forth in this Section 2.3 (Exclusivity) shall, at all times,
be subject to applicable law, such that if it is determined that such restrictions would be unenforceable
under applicable law, including with respect to the duration, geographic scope, or the restricted phase of
Exploitation, then such restrictions shall be deemed null and void and Section 16.11 (Severability) shall
apply.
2.3.4.
Exceptions for Change of Control. Notwithstanding any provision in this Section 2.3 (Exclusivity)
to the contrary, if (a) Verastem undergoes a Change of Control and (b) on the date of the closing of such
Change of Control, the acquiring entity(ies) are researching, Developing, Manufacturing, Commercializing
or otherwise Exploiting a Competing Product, then Verastem will not be in breach of Section 2.3.2
(Verastem Exclusivity) as a result of such Change of Control or the continuation of such activities by such
acquiring entity(ies) thereafter, provided that such acquiring entity(ies): (i) provide written notice to
GenFleet no later than [***] calendar days following the closing of such Change of Control which
identifies such Competing Product and (ii) promptly Segregate such Competing Product.
2.4.
Sublicensing. The licenses granted in Section 2.2.4(b) (License Grant to Verastem) and Section 2.2.4(c) (License
Grant to GenFleet) and the Option granted in Section 2.2.1 (Option Grant to Verastem) may be sublicensed by
Verastem or GenFleet, as applicable, through multiple tiers to any Third Party; provided that GenFleet must obtain
Verastem’s prior written consent before granting any such sublicense under Section 2.2.4(c) (License Grant to
GenFleet). Verastem shall provide GenFleet with a copy of each sublicense agreement within [***] days following
the execution thereof, which copy may be redacted with respect to (i) any confidential information of Verastem or
its Sublicensee or (ii) any information not needed to verify compliance with this Agreement. Each sublicense
granted by a Party will be consistent with the terms of this Agreement and require each Sublicensee to comply with
the terms of this Agreement that are applicable to such Sublicensee. Each Party will remain primarily liable to the
other Party for the performance of all its obligations under this Agreement, including those performed by an
Affiliate or Sublicensee.
2.5.
No Implied Licenses; Retained Rights. Except as explicitly set forth in this Agreement, neither Party grants to
the other Party any license or other rights, express or implied, under any intellectual property rights (whether by
implication, estoppel, or otherwise). Further, GenFleet expressly retains the rights to practice and Exploit the
GenFleet Technology in the Field in the Territory to the extent necessary to perform its obligations under this
Agreement. For clarity, and without limiting the foregoing, but subject in all cases to Section 2.3.1 (GenFleet
Exclusivity), GenFleet retains the exclusive right to practice, license, and otherwise Exploit the GenFleet
Technology outside the scope of the rights granted hereunder (i.e., outside of the Field or in the Retained Territory).
2.6.
Third Party Technology.
20
2.6.1.
Identification of Third Party Technology. During the Term, if either Party identifies any Know- How or
Patent Right owned, controlled, or otherwise held for use by a Third Party in a particular country that is
necessary or useful (as determined by such Party acting in good faith) to Exploit any Compound or Product
in the Field in the Territory (“Third Party Technology”), then it will so notify the other Party.
2.6.2.
Prior to Option Exercise.
Prior to the applicable Option Effective Date with respect to a Collaboration
Program, as between the Parties, GenFleet will have the sole right, but not the obligation, to acquire rights
under such Third Party Technology to Exploit the Collaboration Compounds or Collaboration Products for
the applicable Collaboration Program in the Field within or outside of the Territory; provided that GenFleet
will ensure that such Third Party Technology is fully sublicensable (through multiple tiers) to Verastem to
the extent of the licenses granted to Verastem in Section 2.1 (Discovery Period License Grant) and Section
2.2.4(b) (License Grant to Verastem). If GenFleet enters into any agreement to acquire rights (whether by
license or otherwise) to any Third Party Technology pursuant to this Section 2.6.2 (Prior to Option
Exercise): (a) GenFleet will disclose the terms and conditions of any such agreement to Verastem promptly
after execution of such agreement; and (b) such Third Party Technology will be deemed part of the
GenFleet Technology and GenFleet will be responsible for all payments payable to such Third Party
thereunder.
2.6.3.
Following Option Exercise.
(a)
Verastem’s First Right. Following the applicable Option Effective Date for a Licensed
Program, as between the Parties, Verastem will have the first right, but not the obligation,
to acquire rights under such Third Party Technology to Exploit the Licensed Compounds
or Licensed Products for such Licensed Program in the Field (i) solely in the Territory (or
any country therein), or (ii) both within and outside the Territory, if such Third Party is
only offering rights for the Territory together with rights outside the Territory; provided
that Verastem will use reasonable efforts to ensure that such Third Party Technology is
fully sublicensable (through multiple tiers) to GenFleet to the extent of the license granted
to GenFleet in Section 2.2.4(c) (License Grant to GenFleet). If Verastem enters into any
agreement to acquire rights (whether by license or otherwise) to any Third Party
Technology pursuant to this Section (a) (Verastem’s First Right): (A) Verastem will
disclose the terms and conditions of any such agreement to GenFleet promptly after
execution of such agreement; (B) following the disclosure of such terms and conditions,
such Third Party Technology will be deemed part of the Verastem Product Technology
only if GenFleet provides Verastem with written notice that GenFleet consents to adding
such Third Party Technology to the definition of Verastem Product Technology; (C) if
GenFleet so consents to adding such Third Party Technology to the definition of Verastem
Product Technology, then GenFleet will reimburse Verastem for all payments payable to
such Third Party thereunder that solely pertain to, or arise solely as a result of, the
Exploitation of the Licensed Compounds or Licensed Products for such Licensed Program
in the Retained Territory (for example, royalty payments that are solely attributable to sales
of such Licensed Products in the Retained Territory or milestone payments payable upon
achievement of events solely in the Retained Territory); and (D) Verastem will be
responsible for all payments payable to such Third Party thereunder that solely pertain to,
or arise solely as a result of, Verastem’s Exploitation of the Licensed Compounds or
Licensed Products for the such Licensed Program in the Territory (for example, royalty
payments that are solely
21
attributable to sales of Licensed Products in the Territory or milestone payments payable
upon achievement of events solely in the Territory) (the “Territory- Specific Payments”),
and will have the right to offset such Territory-Specific Payments in accordance with
Section 9.5.3(c) (Blocking Third Party Technology).
(b)
GenFleet’s Second Right. Following the applicable Option Effective Date for a Licensed
Program, in the event (i) Verastem notifies GenFleet that it does not intend to acquire
rights (whether by license or otherwise) under such Third Party Technology, or (ii)
GenFleet has notified Verastem of such Third Party Technology in accordance with
Section 2.6.1 (Identification of Third Party Technology) and Verastem does not respond
within [***] days after receiving such notice from GenFleet, then, in each case ((i) or (ii)),
GenFleet will have the right (but not the obligation) to acquire rights (whether by license
or otherwise) under such Third Party Technology to Exploit Licensed Compounds or
Licensed Products for such Licensed Program in the Field (A) solely in the Retained
Territory (or any country therein), or (B) both within and outside of the Retained Territory,
if such Third Party is only offering rights for the Retained Territory together with rights
outside the Retained Territory; provided that GenFleet will use reasonable efforts to ensure
that such Third Party Technology is fully sublicensable (through multiple tiers) to
Verastem to the extent of the license granted to Verastem in Section 2.1 (Discovery Period
License Grant) and Section 2.2.4(b) (License Grant to Verastem). If GenFleet enters into
any agreement to acquire rights (whether by license or otherwise) to any Third Party
Technology pursuant to this Section 2.6.3(b) (GenFleet’s Second Right): (I) GenFleet will
disclose the terms and conditions of any such agreement to Verastem promptly after
execution of such agreement; (II) following the disclosure of such terms and conditions,
such Third Party Technology will be deemed part of the GenFleet Technology only if
Verastem provides GenFleet with written notice that Verastem consents to adding such
Third Party Technology to the definition of GenFleet Technology; (III) if Verastem so
consents to adding such Third Party Technology to the definition of GenFleet Technology,
then Verastem will reimburse GenFleet for all Territory- Specific Payments thereunder, and
will have the right to offset such Territory- Specific Payments in accordance with Section
9.5.3(c) (Blocking Third Party Technology); and (IV) GenFleet will be responsible for all
payments payable to such Third Party thereunder that solely pertain to, or arise solely as a
result of, the Exploitation of such Licensed Compounds or Licensed Products for such
Licensed Program in the Retained Territory (for example, royalty payments that are solely
attributable to sales of such Licensed Products in the Retained Territory or milestone
payments payable upon achievement of events solely in the Retained Territory).
ARTICLE 3
TECHNOLOGY TRANSFER
3.1.
Initial Technology Transfer. Within [***] following the applicable Option Effective Date, GenFleet will provide
to Verastem copies (translated to English, as necessary) of all Know-How included within the GenFleet Know-How
existing as of such date (the “Initial Technology Transfer”). In connection with such Initial Technology Transfer,
Verastem may request in writing any Know-How that Verastem reasonably believes is included within the scope of
the foregoing, and GenFleet will provide copies of such Know-How to Verastem. GenFleet will obtain all approvals
(including HGRAC Approvals), consents,
22
permits and licenses and complete all necessary security assessment or data protection impact assessment to allow
Verastem’s access to all GenFleet Know-How in connection with the Initial Technology Transfer.
3.2.
Manufacturing Technology Transfer. On a Licensed Program-by-Licensed Program basis, upon Verastem’s
request following the applicable Option Effective Date, GenFleet will promptly (but in any event no later than
[***] days thereafter) conduct a transfer of all Know-How reasonably necessary or useful to Manufacture the
Licensed Compounds and Licensed Products under such Licensed Program (“GenFleet Manufacturing
Technology”) to Verastem or its designee to enable Verastem or its designee to assume the Manufacturing of such
Licensed Compounds and Licensed Products (the “Manufacturing Technology Transfer”). For clarity, as part of
a Manufacturing Technology Transfer, GenFleet shall disclose and transfer to Verastem all GenFleet Know-How
and all unpublished GenFleet Patent Rights, if any, related to any such GenFleet Manufacturing Technology
(regardless of whether actually used) Controlled by GenFleet as of the date of the Manufacturing Technology
Transfer that is necessary or useful to Manufacture the applicable Licensed Compounds and Licensed Products.
3.3.
Continuing Technology Transfer. During the Term, (a) after the completion of the Initial Technology Transfer,
GenFleet will transfer to Verastem any additional Collaboration Know-How that has not been previously
transferred to Verastem promptly after (i) such additional GenFleet Know-How is first generated, conceived,
created, invented, or otherwise made, or (ii) a previous failure to transfer such GenFleet Know- How is discovered,
and (b) after the completion of a Manufacturing Technology Transfer, GenFleet will promptly transfer to Verastem
any additional GenFleet Manufacturing Technology that has not been previously transferred to Verastem pursuant
to Section 3.2 (Manufacturing Technology Transfer) ((a) and (b), the “Continuing Technology Transfer”).
GenFleet will obtain all approvals (including HGRAC Approvals), consents, permits and licenses and complete all
necessary security assessment or data protection impact assessment to allow Verastem’s access to all such
Collaboration Know-How in connection with the Continuing Technology Transfer.
3.4.
Cooperation and Assistance. GenFleet will provide Verastem and its designees reasonable assistance with respect
to the Initial Technology Transfer, Manufacturing Technology Transfers, and Continuing Technology Transfer,
including by providing Verastem and its designees with reasonable access by teleconference or videoconference
(or, to the extent requested by Verastem, in-person meetings) to GenFleet’s personnel, personnel of GenFleet’s
Affiliates, and personnel of Third Party contractors involved in Development or Manufacturing matters related to
the Compounds or Products to provide a reasonable level of technical assistance and consultation in connection
with such transfer.
3.5.
Costs of Technology Transfer. GenFleet will be responsible for the costs and expenses associated with the Initial
Technology Transfer, Continuing Technology Transfer, and Manufacturing Technology Transfer, including costs
associated with the cooperation and assistance described in Section 3.4 (Cooperation and Assistance); provided that
Verastem will reimburse GenFleet for its costs and expenses associated with the Manufacturing Technology
Transfer after GenFleet has exceeded [***] hours of support. GenFleet will invoice Verastem for such
Manufacturing Technology Transfer costs and expenses (which invoice shall include sufficient detail so as to
enable Verastem to confirm the accuracy of such invoice and the activities performed thereunder), and Verastem
will remit any undisputed amounts therein to GenFleet within 30 days of receipt of such invoice.
ARTICLE 4
GOVERNANCE
4.1.
Alliance Managers. Each Party will appoint an employee of such Party to act as its alliance manager under this
Agreement within [***] days after the Effective Date (each an “Alliance Manager”). The Alliance Managers will:
(a) serve as the primary points of contact between the Parties for the purpose of providing
23
the other Party with information on the progress of a Party’s activities under this Agreement; (b) be responsible for
facilitating the flow of information and otherwise promoting communication, coordination, and collaboration
between the Parties; (c) facilitate the prompt resolution of any disputes; (d) attend JSC meetings as a nonvoting
member, provided, that if an individual serves as both an Alliance Manager and a representative on the JSC, then
such individual may attend JSC meetings as a voting member in their capacity as a representative on the JSC; and
(e) after the JSC is disbanded pursuant to Section 4.2.8 (Discontinuation of JSC), coordinate ad hoc meetings
between the Parties as necessary. An Alliance Manager may bring any matter to the attention of the JSC if such
Alliance Manager reasonably believes that such matter warrants such attention. Each Party will use reasonable
efforts to keep an appropriate level of continuity but may replace its Alliance Manager at any time upon written
notice to the other Party.
4.2.
Joint Steering Committee.
4.2.1.
Formation; Composition. No later than [***] days after the Effective Date, the Parties will establish a
joint steering committee (the “Joint Steering Committee” or “JSC”) to coordinate and oversee discovery
and Development under the Collaboration Programs and Licensed Programs. The JSC will be composed of
an equal number of employee representatives from each Party (in any event, a minimum of three employee
representatives from each Party) who are fluent in English and who have the appropriate and direct
knowledge and expertise and requisite decision-making authority. Each Party may replace its JSC
representatives at any time upon written notice to the other Party. A representative of one Party will serve
as the chair of the JSC (the “Chairperson”), with such Chairperson alternating between the Parties on an
annual basis. The first Chairperson will be a representative of Verastem. The Chairperson will convene and
preside at meetings of the JSC, but will have no additional powers or rights beyond those held by the other
JSC representatives.
4.2.2.
Meetings.
(a)
Meeting Agendas. The Alliance Managers will jointly prepare and circulate an agenda for
any meeting of the JSC no later than [***] days prior to any such meeting; provided that
under exigent circumstances requiring JSC input, the Alliance Managers may jointly
prepare and circulate such agenda within a shorter period of time in advance of a meeting,
or may propose that there not be a specific agenda for a particular meeting.
(b)
Attendees. As appropriate, non-member employees or Third Party representatives of each
Party may from time to time attend meetings of the JSC or Subcommittees as nonvoting
observers; provided that no Third Party representative may attend unless (i) agreed by both
Parties and (ii) such Third Party is bound by confidentiality and nonuse obligations
consistent with and no less restrictive than the obligations set forth in Article 13
(Confidentiality).
(c)
Meeting Frequency. The JSC will hold meetings at such times as it elects to do so, but
will meet no less frequently than quarterly, unless otherwise agreed by the Parties. All
meetings will be conducted in English. The JSC may meet in person or by means of
teleconference, Internet conference, videoconference, or other similar communication
method. Each Party will bear its own expenses related to the attendance of the JSC
meetings by its representatives. Each Party may also call for special meetings to resolve
particular matters requested by such Party upon [***] days’ prior written notice to the
other Party. The Alliance Managers will be
24
responsible for scheduling and coordinating administrative matters related to JSC
meetings.
(d)
Meeting Minutes. The Alliance Managers will keep minutes of each JSC meeting that
record in writing all decisions made, action items assigned or completed, and other
appropriate matters. The Alliance Managers will send meeting minutes to all members of
the JSC for review within [***] days after each JSC meeting. Each JSC member will have
[***] days from receipt of such minutes in which to approve or provide comments on the
minutes (such approval not to be unreasonably withheld, conditioned, or delayed). If a
member, within such [***]-day period, does not notify the Alliance Managers that he or
she does not approve of the minutes, then the minutes will be deemed to have been
approved by such member.
4.2.3.
Subcommittees. The JSC may establish and delegate specifically defined duties to any operational
committee, ad hoc subcommittee, or working group (each, a “Subcommittee”) on an “as-needed” basis to
perform certain duties and exercise certain powers expressly delegated by the JSC to such Subcommittee.
Each such Subcommittee and its activities will be subject to the oversight of, and will report to, the JSC.
Each Subcommittee will be constituted and will operate as the JSC determines. No Subcommittee may
exceed the authorities specified for the JSC in this Article 4 (Governance).
4.2.4.
Specific Responsibilities of the JSC. The JSC will:
(a)
discuss and update the Available Target list set forth on Schedule 1.15 (Available Targets)
(i) within [***] days following Verastem’s selection of the first Additional target and (ii)
upon any request by Verastem pursuant to Section 5.2 (Replacement Targets);
(b)
facilitate the flow of information between the Parties with respect to the Collaboration
Programs and Licensed Programs in the Territory and Retained Territory;
(c)
discuss the Discovery Development Plans, manufacturing plans, and any material
amendments thereto, as set forth in Section 5.3 (Development Prior to the Option Effective
Date);
(d)
discuss the Territory Development Plans and Retained Territory Development Plans, and
any material amendments thereto, as set forth in Section 5.4 (Development Following
the Option Effective Date);
(e)
review and discuss any reports, including Annual Development Reports, provided by
either Party and the Option Data Packages provided by GenFleet;
(f)
discuss and determine timelines for the Development of Licensed Compounds and
Licensed Products in the Territory and Retained Territory;
(g)
discuss the filing of any Regulatory Materials with Regulatory Authorities in the Territory
or Retained Territory;
(h)
discuss any communications with Regulatory Authorities in the Territory or Retained
Territory;
25
(i)
discuss the preparation of, filing for, and prosecution and maintenance of (including the
defense of any oppositions, interferences, reissue proceedings, re- examination, and other
post-grant proceedings originating in a patent office) the GenFleet Patent Rights for the
Collaboration Program(s) and Licensed Program(s) in the Territory or Retained Territory;
(j)
discuss Infringement actions with respect to Infringement of the GenFleet Patent Rights for
the Collaboration Program(s) or Licensed Program(s) in the Territory or Retained
Territory;
(k)
discuss and mutually agree on a joint global branding and marketing strategy with respect
to the Commercialization of the appliable Licensed Products, as applicable pursuant to
Section 10.6.1 (Global Brand Elements);
(l)
discuss and approve guidelines for the issuance of press releases and public statements
related to the Licensed Compounds and Licensed Products, subject to Section 13.5 (Press
Release);
(m)
discuss and approve the initial Joint Publication Strategy and any updates thereto as set
forth in Section 13.7 (Publications);
(n)
form and delegate specifically defined responsibilities to Subcommittees as the JSC may
deem appropriate, as described in Section 4.2.3 (Subcommittees);
(o)
discuss the selection of Clinical Trial sites, and whether or not a Phase I Clinical Trial
should be conducted in the Territory during the Option Exercise Period as described in
Section 5.3.2 (Responsibility for Initial Development); and
(p)
fulfill such other responsibilities as may be allocated to the JSC under this Agreement or
by mutual written agreement of the Parties.
4.2.5.
Decision-Making. The representatives from each Party on the JSC or on any Subcommittee will have,
collectively, one vote on behalf of that Party, and all decision-making of the JSC will be by consensus. No
action taken at any meeting of the JSC or any Subcommittee will be effective unless there is a quorum at
such meeting, and at all such meetings, a quorum will be reached if two voting representatives of each
Party are present or participating in such meeting. No Party will unreasonably fail to cause a quorum of its
representatives to attend any meeting of the JSC or any Subcommittee. For clarity, matters that are
specified in Section 4.2.4 (Specific Responsibilities of the JSC) to be reviewed and discussed (as opposed
to reviewed, discussed, and approved) do not require any agreement or decision by either Party and are not
subject to the voting and decision- making procedures set forth in this Section 4.2.5 (Decision-Making), or
escalation and tie breaking provisions set forth in Section 4.2.6 (Resolution of JSC Disputes). Disputes
with respect to matters expressly assigned to the JSC in Section 4.2.4 (Specific Responsibilities of the JSC)
or elsewhere in this Agreement will be handled in accordance with Section 4.2.6 (Resolution of JSC
Disputes). Any disputes which do not relate to the matters expressly assigned to the JSC in Section 4.2.6
(Resolution of JSC Disputes) or elsewhere in this Agreement will be handled according to Article 15
(Dispute Resolution).
4.2.6.
Resolution of JSC Disputes.
26
(a)
Within the JSC. All decisions within the JSC will be made by consensus. If the JSC is
unable to reach consensus on any issue for which it is responsible within [***] days after a
Party affirmatively states that a decision needs to be made, then either Party may elect, by
written notice to the other Party, to submit such issue to the Parties’ Executive Officers in
accordance with Section 4.2.6(b) (Referral to Executive Officers).
(b)
Referral to Executive Officers. If a Party makes an election under Section 4.2.6(a)
(Within the JSC) to refer a matter to the Executive Officers, then the Executive Officers
will use good faith efforts to promptly resolve such matter. Any final decision that the
Executive Officers agree to in writing will be conclusive and binding on the Parties.
(c)
Final Decision-Making Authority. If the Executive Officers are unable to reach
consensus on any such matter within [***] Business Days (or such longer period as the
Executive Officers may agree upon) after its submission to them, then: (i) Verastem will
have final decision-making authority over matters related solely to the Territory following
the applicable Option Effective Date; and (ii) GenFleet will have final decision-making
authority over all matters (A) in the Territory and Retained Territory prior to the applicable
Option Effective Date and (B) solely in the Retained Territory following the applicable
Option Effective Date. In the event a matter is both in the Territory and the Retained
Territory following the applicable Option Effective Date, then neither Party will have final
decision-making authority, and such matter must be decided by unanimous agreement in
order to take any action or adopt any change from the then-current status quo.
4.2.7.
Limitations on Decision-Making. The JSC will have only the powers expressly assigned to it in this
Article 4 (Governance) and elsewhere in this Agreement. None of the JSC, any Subcommittee, or a Party
via exercise of its final decision-making authority will have the authority to: (a) amend, waive, or modify
any term of this Agreement; (b) resolve any dispute regarding the existence or amount of any payment
owed under this Agreement; (c) determine whether a Party has met its obligations under this Agreement; or
(d) determine whether any Pre-Option Development Milestone Event has been achieved or any payment
obligation hereunder has been triggered. No decision of the JSC, any Subcommittee, or a Party via exercise
of its final decision-making authority will be in contravention of the terms of this Agreement or applicable
law (including, as applicable, GCP, GLP, or GMP).
4.2.8.
Discontinuation of JSC. The JSC will continue to exist until the termination or expiration of this
Agreement, unless earlier terminated by mutual agreement of the Parties. Once the JSC is disbanded, the
JSC will have no further obligations under this Agreement and, thereafter, the Alliance Managers will
directly exchange information as required under this Agreement and any references in this Agreement to
decisions of the JSC will automatically become references to decisions by and between the Parties in
writing, subject to the other terms of this Agreement and consistent with the terms of Section 4.2.6(c)
(Final Decision-Making Authority). Upon disbandment of the JSC, any Subcommittee established under
Section 4.2.3 (Subcommittees) will automatically disband.
27
ARTICLE 5
DEVELOPMENT
5.1.
Selection of Additional Targets. Verastem will select the first Additional Target within [***] following the
Effective Date and the second Additional Target within [***] following the Effective Date, in each case by
providing written notice to GenFleet thereof. For clarity, Verastem may select the Additional Targets in a single
notice or in two separate notices, so long as both Additional Targets are selected within the applicable timeframe
set forth in this Section 5.1 (Selection of Additional Targets). Notwithstanding the forgoing, the timeframes for the
selection of the Additional Targets set forth in this Section 5.1 (Selection of Additional Targets) will not apply to
Verastem’s selection of any Additional Targets pursuant to Section 5.2 (Replacement Targets). Until the conclusion
of the Selection Period, GenFleet will not license, partner, divest or otherwise encumber any of the targets included
on the Available Target list without obtaining Verastem’s prior written consent.
5.2.
Replacement Targets. On an Additional Program-by-Additional Program basis, if at any time during the period
commencing on the date GenFleet receives notice of the selection of an Additional Target under Section 5.1
(Selection of Additional Targets) and continuing for [***] thereafter, the JSC determines that no chemical matter is
suitable under such Additional Program, then Verastem may request, and the JSC will provide within [***]
following such request, an updated list of Available Targets. Verastem will evaluate and select from the updated list
of Available Targets a replacement target by providing written notice to GenFleet thereof (a “Replacement Target
Notice”) within [***] following Verastem’s receipt of the updated list of Available targets. Effective immediately
upon GenFleet’s receipt of a Replacement Target Notice, the replacement target specified in such Replacement
Target Notice will become an Additional Target for purposes of this Agreement unless otherwise specified herein.
Commencing on the date Verastem receives the updated list of Available Targets under this Section 5.2
(Replacement Targets) and ending upon the earlier of (a) [***] thereafter or (b) GenFleet’s receipt of a
Replacement Target Notice, GenFleet will not license, partner, or otherwise encumber any of the targets included
on the updated list of Available Targets without obtaining Verastem’s prior written consent.
5.3.
Development Prior to the Option Effective Date.
5.3.1.
Discovery Development Plans.
(a)
Initial Discovery Development Plans. The Parties will discuss, through the JSC, and
GenFleet will consider in good faith Verastem’s reasonable input on the initial Discovery
Development Plans. GenFleet will provide a copy of the initial Discovery Development
Plan to Verastem, through the JSC, (i) for the Initial Program, within [***] of the Effective
Date, and (ii) for each Additional Program, within [***] of GenFleet’s receipt of
Verastem’s notice of its selection of the applicable Additional Target pursuant to Section
5.1 (Selection of Additional Targets) or Section 5.2 (Replacement Targets), as applicable.
(b)
Amendments to Discovery Development Plans. GenFleet may amend the Discovery
Development Plan for a Collaboration Program at any time by providing written notice to
Verastem, through the JSC; provided that, prior to implementing any material amendment,
GenFleet will present such material amendment to the JSC for discussion and consider in
good faith Verastem’s reasonable input.
5.3.2.
Responsibility for Initial Development. During the Discovery Period, GenFleet will be responsible, on a
Collaboration Program-by-Collaboration Program basis prior to the applicable Option Effective Date for
such Collaboration Program, in consultation with Verastem through the
28
JSC, for the Development of Collaboration Compounds and Collaboration Products in the Field in the
Territory and Retained Territory in accordance with the Discovery Development Plans, including (a) the
filing of any Regulatory Materials in the Field in the Territory and Retained Territory at its sole cost and
expense (except as set forth in Section 9.2 (Development Costs)), and
(b) the selection of any Clinical Trial sites in the Retained Territory. GenFleet will perform the activities set
forth in the Discovery Development Plans in accordance with the timeframes therein, and will devote
sufficient resources and personnel to complete such activities in a timely manner. In the event that
Verastem requests that a Phase 1 Clinical Trial be conducted in the Territory, then:
(i) if the Parties mutually agree through the JSC that such study should be conducted in the United States,
then Verastem shall be responsible for the regulatory costs associated with such Phase I Clinical Trial (i.e.,
the filing costs associated with such Clinical Trial, but excluding any other Third Party costs), and
GenFleet shall be responsible for all other internal and out-of-pocket costs and expenses associated with
such Phase 1 Clinical Trial; and (ii) if the Parties do not agree through the JSC that such study should be
conducted in the United States, then Verastem shall be responsible for the costs and expenses of such
activities, including any applicable internal and out- of-pocket costs and expenses associated with such
Phase 1 Clinical Trial.
5.3.3.
GenFleet Discovery Development Reports. During the Discovery Period, on a Collaboration Program-
by-Collaboration Program basis, GenFleet will deliver to the JSC on a quarterly basis (such that such
reports can be reviewed and discussed at each quarterly meeting of the JSC) a report describing in
reasonable detail the Development activities for the Collaboration Compounds and Collaboration Products
for such Collaboration Program performed during such quarter. Such reports will be the Confidential
Information of GenFleet and subject to the terms of Article 13 (Confidentiality).
5.4.
Development Following the Option Effective Date.
5.4.1.
Initial Development Plans. The Parties will discuss, through the JSC, the Territory Development Plans
and Retained Territory Development Plans, and any material amendments thereto, for the purposes of
aligning Development activities across the Territory and Retained Territory for the Licensed Programs.
Within [***] following the Option Effective Date for a Licensed Program,
(a) Verastem will provide a Territory Development Plan to GenFleet, and (b) GenFleet will provide a
Retained Territory Development Plan to Verastem. For the avoidance of doubt, each Party will be solely
responsible for the costs and expenses incurred in connection with the activities under its respective
development plan for its respective territory.
5.4.2.
Amendments to Development Plans. Verastem may amend the Territory Development Plan and GenFleet
may amend the Retained Territory Development Plan for a Licensed Program at any time by providing
written notice to the other Party, through the JSC; provided that the Parties shall discuss, through the JSC,
any material amendment to the Territory Development Plan or Retained Territory Development Plan (as
applicable) prior to a Party implementing such material amendment.
5.4.3.
Verastem Development Diligence Obligations.
(a) Generally. Following the applicable Option Effective Date for a Licensed Program, Verastem will use
Commercially Reasonable Efforts to Develop Licensed Compounds and Licensed Products for such
Licensed Program in the Territory. Notwithstanding any provision to the contrary set forth in this
Agreement, if GenFleet terminates this Agreement in accordance with Section 14.3 (Termination for
Material Breach) as a result of a breach of Verastem’s diligence obligations under this Section 5.4.3(a)
(Generally), then such termination will be GenFleet’s sole and exclusive remedy with respect to such
breach.
29
(b) Diligence Milestones. In addition to the requirements set forth in Section 5.4.3(a) (Generally),
Verastem will use Commercially Reasonable Efforts to achieve the following diligence milestone events
for each Licensed Program by the corresponding milestone deadline (each a “Diligence Milestone”).
Table 5.4.3(b)– Diligence Milestones
Diligence Milestone Event
Milestone Deadline
[***]
[***]
[***]
[***]
[***]
[***]
Notwithstanding the foregoing, if Verastem reasonably believes that it will not achieve a Diligence
Milestone for a Licensed Program by the applicable deadline set forth in Table 5.4.3(b) (Diligence
Milestones), in spite of its exercise of Commercially Reasonable Efforts to do so, then Verastem shall
promptly notify GenFleet (but in any event at least [***] days prior to the applicable Diligence Milestone
deadline) and Verastem will provide a reasonable amended milestone deadline to GenFleet based on the
progress of the applicable Licensed Program. Verastem may extend each such milestone deadline for each
Licensed Program up to two times, and any extensions beyond such initial two extensions will require the
mutual agreement of the Parties. For clarity, the Parties acknowledge and agree that, provided Verastem
has continued to use Commercially Reasonable Efforts to achieve the Diligence Milestones for a Licensed
Program, GenFleet will not have the right to terminate this Agreement pursuant to Section 14.3
(Termination for Material Breach) for a failure by Verastem to meet one or more such Diligence
Milestones.
5.4.4.
Development Reports. Following the applicable Option Effective Date for a Licensed Program, on a
Licensed Program-by-Licensed Program basis, on each anniversary of the applicable Option Effective Date
during the Term, (a) Verastem will deliver to GenFleet an annual report summarizing, at a high level, the
Development activities for the Licensed Compounds and Licensed Products for such Licensed Program
that were performed during the applicable reporting period (“Annual Development Report”) with respect
to the Territory and (b) GenFleet will deliver to Verastem an Annual Development Report with respect to
the Retained Territory. Such Annual Development Reports and any additional information provided by the
disclosing Party to the receiving Party regarding Development activities for the Licensed Compounds or
Licensed Products in the disclosing Party’s respective territory will be the Confidential Information of the
disclosing Party and subject to the terms of Article 13 (Confidentiality).
5.5.
Development Records. During the Term and for seven years thereafter (or such longer period as is required by
applicable law), each Party will maintain records of all Development activities performed by such Party with
respect to the Compounds or Products in sufficient detail and in good scientific manner, appropriate for scientific,
patent, and regulatory purposes, and in compliance with GLP, GMP, and GCP (as applicable) with respect to
activities intended to be submitted in regulatory filings, all of which records will be complete
30
and properly reflect all work done and results achieved in the performance of such Development activities by or on
behalf of each Party.
ARTICLE 6
REGULATORY
6.1.
Regulatory Responsibility. During the Discovery Period, GenFleet will be responsible for the filing of any
Regulatory Materials with Regulatory Authorities in the Territory; provided that, prior to filing such Regulatory
Materials, GenFleet will provide a copy of such Regulatory Materials to Verastem for review and discussion,
through the JSC. Following the applicable Option Effective Date, (a) Verastem will have the sole and exclusive
right to (and will solely and exclusively control, at its discretion, and have final decision-making authority with
respect to), itself or with or through Affiliates or Third Parties, (i) prepare and submit to applicable Regulatory
Authorities in the Territory all Regulatory Materials for the Licensed Compounds and Licensed Products and (ii)
obtain and maintain all Regulatory Approvals for the Licensed Products in the Territory, in each case ((i) and (ii)),
at its sole cost and expense, and (b) GenFleet will be responsible for the preparation and submission of any
regulatory filings (including HGRAC filings and HGRAC Approvals) for the Licensed Compounds and Licensed
Products in the Retained Territory at its sole cost and expense.
6.2.
Communications with Regulatory Authorities. During the Discovery Period, GenFleet will be responsible for
any communications with Regulatory Authorities in the Territory. GenFleet will provide copies of any
communications (or a reasonably detailed written summary thereof if the original communication is not available in
written format) with such Regulatory Authorities to Verastem within [***] days of the delivery of such
communications. For clarity and without limiting Section 6.1 (Regulatory Responsibility), following the applicable
Option Effective Date, Verastem will have the sole and exclusive right to correspond and communicate with
Regulatory Authorities with jurisdiction in the Territory regarding the Licensed Compounds and Licensed Products.
Unless required by applicable law, GenFleet and its Affiliates, Sublicensees, and contractors will not correspond or
communicate with Regulatory Authorities with jurisdiction in the Territory regarding any Licensed Compounds or
Licensed Product without first obtaining Verastem’s prior written consent.
6.3.
Ownership and Transfer of Regulatory Materials.
6.3.1.
Existing Regulatory Materials. On a Licensed Program-by-Licensed Program basis, GenFleet will assign
and transfer (and hereby does assign and transfer), or cause to be assigned and transferred to the extent not
Controlled by GenFleet, to Verastem (or its designee) within [***] days after the applicable Option
Effective Date any and all Regulatory Materials and Regulatory Approvals (if any) for the Licensed
Compounds or Licensed Products for such Licensed Program in the Territory Controlled by or on behalf of
GenFleet or its Affiliates (the “Existing Regulatory Materials”), including by providing true, accurate,
and complete copies thereof to Verastem. GenFleet will obtain all approvals (including HGRAC
Approvals), consents, permits, and licenses and complete all necessary security assessments or data
protection impact assessments to allow Verastem’s access to such Existing Regulatory Materials. From and
after the assignment and transfer of the Existing Regulatory Materials, Verastem will have the sole right,
itself or with or through its Affiliates or designated Third Parties, in its sole discretion, to file, maintain,
and hold title to all such Existing Regulatory Materials in the Territory.
6.3.2.
Future Regulatory Materials. Following the applicable Option Effective Date for a Licensed Program, all
Regulatory Materials and Regulatory Approvals generated or arising from or in connection with activities
under this Agreement with respect to Licensed Compounds or Licensed Products in the Territory will be
owned by and held in the name of Verastem or its designee, and
31
any Regulatory Materials or Regulatory Approvals in the Territory issued in the name of GenFleet or its
Affiliates, Sublicensees, or contractors will promptly be assigned by GenFleet to Verastem or its designee
to the extent permitted by applicable law or, in the event assignment is not permitted under applicable law,
held in trust for, or for the sole benefit of, Verastem or its designee.
6.4.
Regulatory Assistance. GenFleet will support Verastem as may be reasonably requested by Verastem from time to
time in connection with Verastem’s preparation, submission to Regulatory Authorities, and maintenance of
Regulatory Materials or Regulatory Approvals for the Licensed Compounds and Licensed Products in the Territory,
including, upon Verastem’s reasonable request: (a) attending meetings with Regulatory Authorities in the Territory
regarding any Licensed Compound or Licensed Product; (b) providing Verastem with access to Regulatory
Materials in GenFleet’s Control that are reasonably necessary or useful for obtaining Regulatory Approval of the
Licensed Compound or Licensed Product in the Territory; and (c) assisting Verastem in connection with CMC data
and the preparation and filing of Regulatory Materials related to the Manufacture of the Licensed Compounds or
Licensed Products.
6.5.
No Harmful Actions. If Verastem reasonably believes that GenFleet is taking or intends to take any action in the
Retained Territory with respect to a Licensed Product that is reasonably likely to have a material adverse effect
upon the regulatory status of the Licensed Product in the Territory, then Verastem will notify GenFleet and the
Parties will discuss in good faith a resolution to such concern. Without limiting the foregoing, unless the Parties
otherwise agree: (a) GenFleet will not communicate with any Regulatory Authority having jurisdiction in the
Territory, unless so ordered by such Regulatory Authority, in which case GenFleet will immediately notify
Verastem of such order; and (b) GenFleet will not submit any Regulatory Materials or seek Regulatory Approvals
for any Licensed Product in the Territory.
6.6.
Right of Reference; Access to Data; HGRAC.
6.6.1.
Verastem’s Right of Reference. GenFleet hereby grants and agrees to grant to Verastem and its Affiliates
a right of reference in the Territory to all Regulatory Materials pertaining to the Licensed Compounds and
Licensed Products in the Field submitted by or on behalf of GenFleet or its Affiliates or its or their
Sublicensees or licensees in the Retained Territory, and all data contained or referenced therein, with the
right to grant further rights of reference to Sublicensees in the Territory. GenFleet will use reasonable
efforts to Control all Regulatory Materials pertaining to the Licensed Products in the Field submitted by its
Sublicensees or licensees in the Retained Territory. Verastem and its Affiliates (and any Sublicensee to
whom it may grant a further right of reference) may use such right of reference to such Regulatory
Materials solely for the purpose of seeking, obtaining, and maintaining Regulatory Approval of the
Licensed Products in the Field in the Territory.
6.6.2.
GenFleet’s Right of Reference. Verastem hereby grants and agrees to grant to GenFleet and its Affiliates
the right of reference to all Regulatory Materials pertaining to the Licensed Product in the Field submitted
by or on behalf of Verastem or its Affiliates or Sublicensees in the Territory, and all data contained or
referenced therein, with the right to grant further rights of reference to Sublicensees or licensees in the
Retained Territory. Verastem will use reasonable efforts to Control all Regulatory Materials pertaining to
the Licensed Product in the Field submitted by its Sublicensees in the Territory. GenFleet and its Affiliates
(and any Sublicensee to whom it may grant a further right of reference) may use such right of reference to
such Regulatory Materials solely for the purpose of seeking, obtaining, and maintaining Regulatory
Approval of the Licensed Products in the Field in the Retained Territory.
6.6.3.
Access to Data; HGRAC.
32
(a)
Each Party will (and will require its Affiliates and Sublicensees to) provide to or secure for
the other Party such reasonably sufficient access to any and all data relating to the
Licensed Compounds and Licensed Products, including pre-clinical and Clinical Trial data
for the Licensed Compounds and Licensed Products or pharmacovigilance data for the
Licensed Compounds and Licensed Products, as may be necessary or useful for the other
Party to seek, obtain, and maintain Regulatory Approvals for the Licensed Compounds and
Licensed Products in such other Party’s applicable territory, at no additional cost to the
requesting Party. Without limiting the foregoing, GenFleet will provide to Verastem all
documentation relating to pre-clinical and Clinical Trials with respect to the Licensed
Compounds and Licensed Products, including all necessary documentation attesting to
GenFleet’s (or its Affiliates’ or Sublicensees’) compliance with GCP, GLP, and GMP filing
requirements in the Territory or the Retained Territory, on a schedule required to meet
Verastem’s applicable submission timelines. Such data and deliverables to be provided by
GenFleet to Verastem will include the items set forth on Schedule 6.6.3 hereto.
(b)
GenFleet will obtain all approvals (including HGRAC Approvals), consents, permits, and
licenses and complete all necessary security assessments or data protection impact
assessments to allow Verastem’s access to all biological materials collected from human
subjects enrolled in Clinical Trials and all such data and deliverables, including those set
forth on Schedule 6.6.3. For clarity, as it relates to Verastem’s access to and use of Clinical
Trial data generated within the People’s Republic of China, GenFleet will complete a data
protection impact assessment or outbound data transfer security assessment (where
applicable) and obtain and provide to Verastem all informed consent forms, privacy
authorizations, HGRAC Approvals, and other authorizations and approvals, at no
additional cost to Verastem. GenFleet may engage a Third Party vendor for HGRAC
filings, subject to Verastem’s prior written consent. Prior to the filing of any HGRAC
Approval, GenFleet will provide Verastem a reasonable opportunity to review and
comment on such filings and will consider Verastem’s and its representatives’ comments in
good faith. GenFleet will make available such data and deliverables in electronic form
acceptable to Verastem for review, verification, and copying. Each Party will ensure that
all informed consent forms, privacy authorizations, or privacy notices distributed to any
subjects in Clinical Trials of the Licensed Compounds and Licensed Products permit both
(a) the disclosure of pre-clinical data and Clinical Trial data to the other Party and (b) the
use of such pre-clinical data and Clinical Trial data by the other Party in accordance with
this Agreement.
6.7.
Adverse Event Reporting.
6.7.1.
Pharmacovigilance Agreement. Promptly after the first Option Effective Date, but in any event no later
than [***] thereafter, the Parties will negotiate and enter into a pharmacovigilance agreement on reasonable
and customary terms that will provide, among other things, guidelines and responsibilities for: (a) the
receipt, investigation, recording, review, communication, reporting, and exchange between the Parties of
adverse event reports and other safety information relating to the Licensed Products; (b) appropriate
procedures to ensure adequate and compliant exchange of safety data; (c) contact with Regulatory
Authorities with respect to the foregoing in clause (a); and (d) the maintenance of a global safety database
with respect to the Licensed Products; provided that Verastem will hold and control such global safety
database, in each case ((a) - (d)), in accordance with applicable law (including GCP, GLP, and GMP, as
applicable) (the “Pharmacovigilance
33
Agreement”). Each Party will cause its Affiliates and Sublicensees (and, with respect to GenFleet,
licensees) to comply with its obligations under the Pharmacovigilance Agreement.
6.7.2.
Safety Data Exchange. Until the Parties enter into the Pharmacovigilance Agreement, the Parties will (and
will cause their Affiliates and Sublicensees to) exchange any and all relevant safety data relating to the
Licensed Products within reasonably appropriate timeframes and in a reasonably appropriate format to
ensure compliance with the reporting requirements of any applicable Regulatory Authority and applicable
law (including GCP, GLP, and GMP, as applicable).
6.8.
Remedial Actions. Each Party will notify the other Party immediately, and promptly confirm such notice in
writing, if it obtains information indicating that any Licensed Product may be subject to a recall, corrective action,
or other regulatory action by any governmental authority or Regulatory Authority (a “Remedial Action”) (as to
Verastem’s notification obligation, only to the extent it would reasonably be expected to affect the Retained
Territory). The Parties will assist each other in gathering and evaluating such information as is necessary to
determine the necessity of conducting a Remedial Action with respect to the applicable territory, and otherwise
reasonably cooperate with each other with respect to such Remedial Action or potential Remedial Action. Verastem
will have sole discretion and final decision- making authority with respect to, and control over, any Remedial
Action in the Territory, including any decision to commence such Remedial Action in the Territory, and will bear
all costs of such Remedial Action. GenFleet will have sole discretion and final decision-making authority with
respect to, and control over, any Remedial Action in the Retained Territory, including any decision to commence
such Remedial Action in the Retained Territory, and will bear all costs of such Remedial Action. Notwithstanding
the foregoing, if the need for a Remedial Action arises as a result of any gross negligence or breach of a Supply
Agreement by or on behalf of GenFleet or its Affiliates, then all costs incurred in connection with such Remedial
Action (including costs of notification, destruction, and return of the affected Licensed Product and any refund to
customers of amounts paid for such Licensed Product) will be the sole responsibility of GenFleet. The Parties’
rights and obligations under the Pharmacovigilance Agreement, Supply Agreements, and quality agreements will
be consistent with this Section 6.8 (Remedial Actions).
ARTICLE 7
MANUFACTURING AND SUPPLY
7.1.
Manufacturing by GenFleet.
7.1.1.
Generally. Before the completion of the Manufacturing Technology Transfer with respect to any Licensed
Product (including the Licensed Compounds contained therein), GenFleet will (either itself or through its
Affiliates or, subject to Section 7.1.3 (CMOs), CMOs), Manufacture and supply all of Verastem’s and its
Affiliates’ and Sublicensees’ requirements of such Licensed Product (including the Licensed Compounds
contained therein) for Development and Commercialization in the Field in the Territory; provided that,
following such Manufacturing Technology Transfer, Verastem may elect to continue to receive supply from
Genfleet in accordance with the terms and conditions set forth in the applicable Supply Agreement and
Quality Agreement.
7.1.2.
Supply Agreement. On a Licensed Program-by-Licensed Program basis, within (a) [***] days after the
Effective Date, the Parties will negotiate and enter into a quality agreement (a “Quality Agreement”)
governing the quality-related terms and conditions for Licensed Products Manufactured by or on behalf of
GenFleet for use in Clinical Trials both inside and outside of the Territory, (b) [***] days after the
applicable Option Effective Date, the Parties will negotiate and enter into a supply agreement for the
Manufacture and supply of Licensed Compounds and Licensed Products for use in Clinical Trials in the
Territory, (c) [***] days prior to the anticipated First Commercial Sale of a Licensed Product, the Parties
will negotiate and enter into a supply and
34
quality agreement for commercial supply of Licensed Products (each of (b) and (c), a “Supply
Agreement”) pursuant to which Verastem will purchase from GenFleet the Licensed Compounds and
Licensed Products required for the Development and Commercialization of the Licensed Compounds and
Licensed Products in the Territory at a transfer price equal to (i) GenFleet’s fully burdened manufacturing
cost (to be defined in the Supply Agreement) for Licensed Compound and Licensed Product used for
Development, or (ii) GenFleet’s fully burdened manufacturing cost plus [***] for Licensed Compound and
Licensed Product used for Commercialization. For the Initial Program, such fully burdened manufacturing
cost will include a one-time amount for reimbursement of a portion of GenFleet’s past-incurred CMC
expenses (subject to GenFleet providing reasonably detailed documentation therefor) for the Manufacture
of Licensed Compound and Licensed Product, up to a total of [***]. The terms of each Supply Agreement
and Quality Agreement will be consistent with the terms and conditions of this Agreement and include
such other terms as are reasonable and customary for agreements of such type.
7.1.3.
CMOs. GenFleet may engage a CMO to Manufacture or supply the Licensed Compounds or Licensed
Products for the Territory; provided that such CMO has been approved in writing by Verastem (such
approval not to be unreasonably withheld, conditioned, or delayed) and such CMO meets Verastem’s
qualification requirements throughout such engagement.
7.2.
Manufacturing Compliance. GenFleet will (either itself or through its Affiliates) ensure that the design of
synthesis and selection of regulatory starting materials are such that are justifiable based on structural complexity,
process robustness, and impurity control strategy as guided by the relevant Regulatory Authorities and in
accordance with the ICH Q11 and Q7 general principles for linear or convergent syntheses (as updated or amended
from time to time).
7.3.
Manufacturing by Verastem. Following completion of the Manufacturing Technology Transfer with respect to
any Licensed Product (including the Licensed Compounds contained therein), Verastem will (either itself or
through its Affiliates or Third Parties), have sole control over and decision-making authority with respect to the
Manufacture of such Licensed Product (including the Licensed Compounds contained therein) for Development,
Commercialization, and Exploitation in the Field in the Territory.
ARTICLE 8
COMMERCIALIZATION
8.1.
Responsibility for Commercialization. Verastem will have sole control over and decision-making authority with
respect to the Commercialization of Licensed Products in the Territory, including, if applicable, seeking and
maintaining any Pricing and Reimbursement Approval for the Licensed Products in The Territory, at its sole cost
and expense.
8.2.
Commercialization Diligence Obligations. Following the applicable Option Effective Date, on a Licensed
Product-by-Licensed Product and country-by-country basis, following receipt of Regulatory Approval for such
Licensed Product in such country in the Territory, Verastem will use Commercially Reasonable Efforts to
Commercialize such Licensed Product in such country. Notwithstanding any provision to the contrary set forth in
this Agreement, if GenFleet terminates this Agreement, in its entirety or in part, in accordance with Section 14.3
(Termination for Material Breach) as a result of a breach of Verastem’s diligence obligations under this Section 8.2
(Commercialization Diligence Obligations), then such termination will be GenFleet’s sole and exclusive remedy
with respect to such breach.
8.3.
Commercialization Reports. Following the First Commercial Sale of a Licensed Product in the Territory, to the
extent that Verastem is performing, or having performed, Commercialization activities for any Licensed Product in
the Territory, Verastem will provide an annual report to GenFleet summarizing at a
35
high level the Commercialization activities for the Licensed Products during the period since the preceding report
was provided, in a level of detail sufficient to enable GenFleet to determine Verastem’s compliance with its
diligence obligations pursuant to Section 8.2 (Commercialization Diligence Obligations). Such reports and any
additional information provided by Verastem regarding Commercialization activities for the Licensed Products, in
each case, will be the Confidential Information of Verastem and subject to the terms of Article 13 (Confidentiality).
8.4.
Diversion. Each Party agrees that it will not, and will ensure that its Affiliates and Sublicensees and contractors
will not, either directly or indirectly, promote, have promoted, market, have marketed, distribute, have distributed,
import, have imported, sell, or have sold any Licensed Products to any Third Party or to any address or Internet
Protocol address or the like in the other Party’s territory, including via the Internet or mail order. Neither Party will
engage, nor permit its Affiliates, Sublicensees, or contractors to engage, in any advertising or promotional activities
relating to any Licensed Products for use directed primarily to customers or other buyers or users of the Licensed
Products located in any country in the other Party’s territory, or solicit orders from any prospective purchaser
located in any country in the other Party’s territory. If a Party or its Affiliates, Sublicensees, or contractors receive
any order for any Licensed Products from a prospective purchaser located in a country in the other Party’s territory,
then such Party, Affiliate, Sublicensee, or contractor (as applicable) will immediately refer that order to such other
Party and will not accept any such orders. Neither Party will, nor permit its Affiliates, Sublicensees, or contractors
to, deliver or tender (or cause to be delivered or tendered) any Licensed Products to Third Parties for use in the
other Party’s territory except (a) in connection with a Manufacturing Technology Transfer pursuant to Section 3.2
(Manufacturing Technology Transfer) or (b) in connection with delivery of Licensed Compounds or Licensed
Products to Verastem or any of its Affiliates or Sublicensees pursuant to this Agreement, the Supply Agreements, or
the Quality Agreement.
ARTICLE 9
FINANCIALS
9.1.
Upfront Payment. Verastem will pay to GenFleet a non-refundable upfront payment equal to $5,000,000 in two
separate installments (the “Upfront Payment”). Verastem will pay (a) the first installment of the Upfront Payment,
equal to $2,000,000, upon the Effective Date and (b) the second installment of the Upfront Payment, equal to
$3,000,000, upon the initiation of the first Phase 1 Clinical Trial under the Initial Program.
9.2.
Development Costs. Within [***] days following the anniversary of the Effective Date during the Discovery
Period, Verastem will pay to GenFleet an amount equal to [***] (the “R&D FTE Fee”), which R&D FTE Fee will
be used to support GenFleet’s performance of its activities under the Discovery Development Plans for the
Collaboration Programs. Except with respect to Verastem’s payment of the annual R&D FTE Fee, GenFleet will be
solely responsible for the costs and expenses incurred in connection with Development activities under the
Discovery Development Plans (regardless of whether such costs and expenses exceed [***] annually).
9.3.
Option Exercise Fee. On a Licensed Program-by-Licensed Program basis, Verastem will pay to GenFleet
$6,000,000 (the “Option Exercise Fee”) within [***] Business Days following Verastem’s delivery of an Option
Exercise Notice in accordance with Section 2.2.3 (Option Exercise).
9.4.
Milestone Payments.
9.4.1.
Pre-Option Development Milestones.
36
(a)
Pre-Option Development Milestone Payments. Verastem will pay to GenFleet the
applicable amount set forth in Table 9.4.1(a) (Pre-Option Development Milestones) for the
milestone event described below (the “Pre-Option Development Milestone Event,” and
each respective payment, a “Pre-Option Development Milestone Payment”) for the first
Collaboration Product under each Additional Program for an Additional Target selected
pursuant to Section 5.1 (Selection of Additional Targets) to achieve the Pre-Option
Development Milestone Event:
Table 9.4.1(a) – Pre-Option Development Milestone
Pre-Option Development Milestone Event
Pre-Option Development Milestone Payment
[***]
[***]
(b)
Achievement of Pre-Option Development Milestones. Each Pre-Option Development
Milestone Payment will be payable a maximum of one time for each Additional Program
for an Additional Target selected pursuant to Section 5.1 (Selection of Additional Targets)
(i.e., no more than [***] in Pre-Option Development Milestone Payments). For clarity, no
Pre-Option Development Milestone Payment will be due hereunder for any (i) subsequent
or repeated achievement of the same Pre-Option Development Milestone Event (as the
case may be) by an Additional Program or (ii) Additional Program for a replacement
Additional Target selected pursuant to Section 5.2 (Replacement Targets).
(c)
Invoicing and Payment of Pre-Option Development Milestone Payments. In the event
that GenFleet or its Affiliates or Sublicensees achieves the Pre-Option Development
Milestone Event, GenFleet will notify Verastem thereof and invoice Verastem for the
applicable Pre-Option Development Milestone Payment within 30 days of such
achievement and Verastem will pay to GenFleet such Pre-Option Development Milestone
Payment within [***] days after receipt of an undisputed invoice therefor in accordance
with Section 9.8.1 (Currency; Payment Method).
9.4.2.
Development and Commercialization Milestones.
(a)
Development and Commercialization Milestone Payments. On a Licensed Program-by-
Licensed Program basis, Verastem will pay the applicable amount set forth in Table
9.4.2(a) (Development and Commercialization Milestones) associated with each milestone
event described below (each event, a “Development and Commercialization Milestone
Event,” and each respective payment, a “Development and Commercialization
Milestone Payment”) for the achievement by Verastem, its Affiliates, or its Sublicensees
of the applicable Development and Commercialization Milestone Event by the first
Licensed Product under a Licensed Program:
37
Table 9.4.2(a) – Development and Commercialization Milestones
Development and Commercialization Milestone Event*
Development and Commercialization Milestone Payment
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
*For the avoidance of doubt, each of the milestones set forth in Table 9.4.2(a) may be triggered by a Sublicensee of Verastem.
(b)
Achievement of Development and Commercialization Milestones. Each Development
and Commercialization Milestone Payment will be payable a maximum of one time for
each Licensed Program upon the first Licensed Product under each such Licensed Program
to achieve the applicable Development and Commercialization Milestone Event, regardless
of the number of times the applicable Development and Commercialization Milestone
Event is achieved with respect to a Licensed Product or Licensed Program. For clarity, no
Development and Commercialization Milestone Payment will be due for any subsequent
or repeated achievement of any such same Development and Commercialization Milestone
Event (as the case may be) for such Licensed Program.
(c)
Invoicing and Payment of Development and Commercialization Milestone Payments.
In the event that Verastem or its Affiliates achieves a Development and Commercialization
Milestone Event, Verastem will notify GenFleet thereof within [***] of such achievement.
Following GenFleet’s receipt of such notice from Verastem, GenFleet will invoice
Verastem for the applicable Development and Commercialization Milestone Payment and
Verastem will pay to GenFleet such Development and Commercialization Milestone
Payment within [***] days after receipt of an undisputed invoice therefor in accordance
with Section 9.8.1 (Currency; Payment Method).
9.4.3.
Sales Milestones.
(a)
Sales Milestone Payments. On a Licensed Program-by-Licensed Program basis, Verastem
will pay the applicable amount set forth in Table 9.4.3(a) (Sales Milestones) associated
with each milestone event described below (each event a “Sales Milestone Event,” and
each respective payment, a “Sales Milestone Payment”):
38
Table 9.4.3(a) – Sales Milestones
Sales Milestone Event*
Sales Milestone Payment
[***]
[***]
[***]
[***]
[***]
[***]
*For the avoidance of doubt, Annual Net Sales for purposes of each of the milestones set forth in Table 9.4.3(a) will include
Net Sales by Sublicensees of Verastem.
(b)
Achievement of Sales Milestones. Each Sales Milestone Event will be payable a
maximum of one time per Licensed Program as set forth in the table above, upon
achievement of the applicable Sales Milestone Event, regardless of the number of times the
applicable Sales Milestone Event is achieved by such Licensed Program. For clarity, no
Sales Milestone Payment will be due hereunder for any subsequent or repeated
achievement of any such same Sales Milestone Event for such Licensed Program. Further,
Net Sales for a given Licensed Product in a given country for which the Royalty Term has
expired will not be included in the Annual Net Sales for purposes of the Sales Milestone
Events.
(c)
Invoicing and Payment of Sales Milestone Payments. In the event that Annual Net Sales
of all Licensed Products under a given Licensed Program first achieve a Sales Milestone
Event during a particular Calendar Year, Verastem will notify GenFleet thereof in the last
Payment Report for such Calendar Year. Following GenFleet’s receipt of such Payment
Report, GenFleet will invoice Verastem for the applicable Sales Milestone Payment and
Verastem will pay to GenFleet such Sales Milestone Payment within [***] days after
receipt of such an undisputed invoice in accordance with Section 9.8.1 (Currency; Payment
Method).
9.5.
Royalties.
9.5.1.
Royalty Rates. On a Licensed Product-by-Licensed Product and country-by-country basis, during the
applicable Royalty Term, Verastem will pay to GenFleet royalties on Annual Net Sales of such Licensed
Product in a given country in the Territory equal to the portions of Annual Net Sales of such Licensed
Product set forth in Table 9.5.1 (Royalties) multiplied by the applicable royalty rate set forth in Table 9.5.1
(Royalties) for such portion of Annual Net Sales of such Licensed Product in a given country in the
Territory, as may be reduced in accordance with Section 9.5.3 (Royalty Reduction).
39
Table 9.5.1 – Royalties*
Annual Net Sales in the Territory for a Licensed Product in a Calendar Year
Royalty Rate
(i)
Portion of Annual Net Sales in the Territory of a Licensed Product in a given
Calendar Year up to and including [***]
[***]
(ii)
Portion of Annual Net Sales in the Territory of a Licensed Product in a given
Calendar Year above [***]
[***]
*For the avoidance of doubt, Annual Net Sales for purposes of each of the royalty tiers set forth in Table 9.5.1 will include Net Sales by
Sublicensees of Verastem.
9.5.2.
Royalty Term. Verastem’s royalty obligations to GenFleet under Section 9.5.1 (Royalty Rates) will apply,
on a Licensed Product-by-Licensed Product and country-by-country basis, during the applicable Royalty
Term for such Licensed Product in such country in the Territory. Following the expiration of the applicable
Royalty Term for a given Licensed Product in a given country, the license granted to Verastem under this
Agreement with respect to such Licensed Product in such country will become fully paid-up, perpetual,
irrevocable, and royalty-free in accordance with Section 14.6.1(a) (Upon Expiration).
9.5.3.
Royalty Reductions. Notwithstanding the foregoing:
(a)
Expiration of Valid Claim. If, on a country-by-country and Licensed Product- by-
Licensed Product basis, pursuant to Section 9.5.1 (Royalty Rates), any royalties are
payable on Annual Net Sales of a Licensed Product in any country in the Territory where
there is no GenFleet Patent Right containing a Valid Claim Covering such Licensed
Product in such country in the Territory (i.e., royalties are payable on Annual Net Sales of
a Licensed Product in a country in the Territory on the basis of clauses (b) or (c) in the
definition of Royalty Term), then, except as otherwise set forth in this Section 9.5.3
(Royalty Reductions), the royalty rates otherwise payable with respect to Annual Net Sales
of such Licensed Product in such country pursuant to this Section 9.5 (Royalties) will be
reduced by [***].
(b)
Generic Competition. On a Licensed Product-by-Licensed Product and country-by-
country basis, during the applicable Royalty Term, upon the first sale of a Generic Product
with respect to such Licensed Product in such country in the Territory, the royalty rates
otherwise payable with respect to Annual Net Sales of such Licensed Product in such
country pursuant to this Section 9.5 (Royalties) will be reduced by [***].
(c)
Blocking Third Party Technology. If, after the Effective Date, Verastem or any of its
Affiliates or Sublicensees obtains a right or license under any Patent Right owned,
Controlled, or otherwise held for use by a Third Party in a particular country that is
necessary (as determined by Verastem or such Affiliate or Sublicensee acting in good faith)
to Exploit any Licensed Compound or Licensed Product in the Field in the Territory,
including pursuant to Section 2.6 (Third Party Technology), then Verastem may deduct
from the royalty payments that are otherwise due to GenFleet pursuant to this Section 9.5
(Royalties) [***] of all payments paid by Verastem or any of its Affiliates or Sublicensees
to such Third Party.
40
(d)
Royalty Floor. In no event will the royalty payments otherwise due to GenFleet in a
particular Calendar Year be reduced by Section 9.5.3(a)-(c) (Royalty Reductions) above, in
the aggregate, by more than [***] of the amount that would otherwise be due in such
Calendar Year. Notwithstanding the foregoing, if Verastem is unable to fully offset
deductions against royalty payments that would otherwise have been permitted pursuant to
Section 9.5.3(a)-(c) (Royalty Reductions) above due to the operation of the foregoing
floor, then Verastem will have the right to carry forward any such amounts subsequent
royalty payments in future Calendar Years until the full reduction has been recognized.
9.5.4.
Invoicing and Payment of Royalties. Following GenFleet’s receipt of a Payment Report reporting Annual
Net Sales for a Calendar Year, GenFleet will invoice Verastem for the applicable royalty payment due with
respect to such Annual Net Sales and Calendar Year and Verastem will pay to GenFleet such royalty
payment within [***] days after receipt of such an undisputed invoice in accordance with Section 9.8.1
(Currency; Payment Method).
9.6.
Sublicense Fee.
9.6.1.
Payment of Sublicense Fee. In the event that Verastem grants a sublicense to a Third Party pursuant to
Section 2.4 (Sublicensing) for all Development and Commercialization rights in any of the US, the EU
(including the United Kingdom) or Japan, then Verastem will pay to GenFleet the applicable percentage set
forth in Table 9.6.1 (Sublicense Fee) of any upfront payment received by Verastem under the applicable
sublicense agreement executed during the applicable period set forth in Table 9.6.1 (Sublicense Fee) (such
payment, the “Sublicense Fee”); provided that, such Sublicense Fee will only apply with respect to the
Additional Programs (and not the Initial Program):
Table 9.6.1 – Sublicense Fee
Event
Sublicense Fee
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
9.6.2.
Apportionment.
(a)
Multiple Licensed Products. [***].
(b)
Third Party Rights. In the event that any sublicense agreement transfers rights under the
GenFleet Technology together with intellectual property rights owned, Controlled, or held
for use by Verastem other than pursuant to this Agreement, whether proprietary to
Verastem or obtained from a Third Party, then the upfront payment for purposes of
determining the Sublicense Fee will exclude consideration received by Verastem from a
Sublicensee in consideration for such other intellectual property rights (as reasonably
determined by Verastem).
9.6.3.
Invoicing and Payment of Sublicense Fee. Following GenFleet’s receipt of notice from Verastem that
Verastem has granted a sublicense for which a Sublicense Fee would apply, GenFleet will invoice Verastem
for the applicable Sublicense Fee and Verastem will pay to GenFleet such Sublicense Fee within [***] days
after receipt of such an undisputed invoice in accordance with Section 9.8.1 (Currency; Payment Method).
41
9.7.
Payment Reports. Within [***] days after the end of each Calendar Year, commencing upon the earlier of
(a) the first Calendar Year in which Verastem or its Affiliates would owe a Sublicense Fee, or (b) the First
Commercial Sale of a Licensed Product in a country in the Territory, Verastem will submit to GenFleet a written
report in respect of such Calendar Year (each, a “Payment Report”), which report will include for such Calendar
Year, on a Licensed Product-by-Licensed Product and country-by-country basis: (i) the upfront payment received
by Verastem or its Affiliates under a sublicense agreement; (ii) a calculation of the Sublicense Fee due for such
sublicense agreement; (iii) the amount of gross sales (in U.S. dollars) of Licensed Products sold by Verastem and
its Affiliates in the Territory; (iv) an itemized calculation of Annual Net Sales by Verastem and its Affiliates
showing deductions provided for in the definition of Net Sales; (v) a calculation of the royalty payment due on
such Annual Net Sales; and (vi) the calculation and application of the reductions, if any, made pursuant to Section
9.5.3 (Royalty Reductions). Each Payment Report will be the Confidential Information of Verastem.
9.8.
Additional Payment Terms.
9.8.1.
Currency; Payment Method. All payments under this Agreement are expressed in U.S. Dollars and will
be paid in U.S. Dollars, in immediately available funds by wire transfer to an account designated by
GenFleet (which account GenFleet may update from time to time in writing). If any amounts that are
relevant to the determination of amounts to be paid under this Agreement or any calculations to be
performed under this Agreement are denoted in a currency other than U.S. Dollars, such amounts will be
converted to their U.S. Dollar equivalent using Verastem’s then-current standard procedures and
methodology, including its then-current standard exchange rate methodology for the translation of foreign
currency expenses into U.S. Dollars or, in the case of Sublicensees, such similar methodology, consistently
applied. Calculation of Net Sales will exclude hedging and foreign exchange gain or loss realized through a
hedging program.
42
9.8.2.
General Right to Reconcile Payments. Verastem will have the right to offset any amount owed by
GenFleet to Verastem under or in connection with this Agreement which obligation is not being disputed
by GenFleet in good faith, including in connection with any breach or indemnification obligation by
GenFleet, against any payments owed by Verastem to GenFleet under this Agreement. Such offsets will be
in addition to any other rights or remedies available under this Agreement or applicable law.
9.8.3.
Late Payments. Any payments or portions thereof due hereunder that are not paid on the date such
payments are due under this Agreement will bear interest at a rate equal to the lesser of: (a) [***]; or (b) the
maximum rate permitted by applicable law; in each case, calculated on the number of days such payment is
delinquent, compounded monthly.
9.9.
Records; Audit Rights.
9.9.1.
Records. Each Party will keep, and will cause its Affiliates and Sublicensees to keep, complete, true, and
accurate books and records in accordance with its Accounting Standard in relation to this Agreement and
Net Sales, royalty payments, Pre-Option Development Milestone Payments, Development and
Commercialization Milestone Payments, Sales Milestone Payments, Sublicense Fees, and any other
payments required hereunder, as applicable. Each Party will keep such books and records for at least three
years following the Calendar Year to which they pertain or for such longer period of time as required under
any applicable law.
9.9.2.
Audit Rights. Subject to the other terms of this Section 9.9.2 (Audit Rights), during the Term, at the
request of a Party (the “Auditing Party”), which will not be made more frequently than [***] per Calendar
Year, upon at least [***] days prior written notice from the Auditing Party, and at the expense of the
Auditing Party, the other Party (the “Audited Party”) will permit an independent, nationally-recognized
certified public accountant selected by the Auditing Party and reasonably acceptable to the Audited Party
(the “Auditor”) to inspect, during regular business hours, the relevant records required to be maintained by
the Audited Party under Section 9.9.1 (Records); provided that such audit right will not apply to records
beyond three years from the end of the Calendar Year to which they pertain and that records for a particular
period may only be audited once. Prior to its inspection, the Auditor will enter into a confidentiality
agreement with both Parties having obligations of confidentiality and non-use no less restrictive than those
set forth in Article 13 (Confidentiality) and limiting the disclosure and use of such information by such
accountant to authorized representatives of the Parties and the purposes germane to Section 9.9.1
(Records). The Auditor will report to the Auditing Party only whether the particular amount being audited
was accurate and, if not, the amount of any discrepancy and a reasonable summary of the reason for such
discrepancy, and the Auditor will not report any other information to the Auditing Party. The Auditing
Party will treat the results of the Auditor’s review of the Audited Party’s records as Confidential
Information of the Audited Party subject to the terms of Article 13 (Confidentiality). In the event such audit
leads to the discovery of a discrepancy to the Auditing Party’s detriment, the Audited Party will, within
[***] days after receipt of such report from the Auditor, pay any undisputed amount of the discrepancy.
The Auditing Party will pay the full cost of the audit unless the underpayment of amounts due to the
Auditing Party is greater than [***] of the amount due for the entire period being examined, in which case
the Audited Party will pay the reasonable cost charged by the Auditor for such review. Any undisputed
overpayments by the Audited Party revealed by an examination will be paid by the Auditing Party within
[***] days of the Auditing Party’s receipt of the applicable report.
43
9.9.3.
Records Final. Upon the expiration of [***] years following the end of a given Calendar Year, subject and
without prejudice to the determination of any review commenced prior to such third anniversary pursuant
to Section 9.9.2 (Audit Rights), the calculation of any amounts payable by a Party to the other Party with
respect to such Calendar Year will not be subject to the audit provisions of this Section 9.9 (Records; Audit
Rights).
9.10.
Taxes.
9.10.1. Taxes on Income. Except as set forth in this Section 9.10 (Taxes), each Party will be solely responsible for
the payment of any and all taxes levied on account of all payments it receives under this Agreement.
9.10.2. Tax Withholding. If applicable laws require the withholding of taxes, then Verastem will make such
withholding payments in a timely manner and will subtract the amount thereof from the payments to
GenFleet. Verastem will promptly (as available) submit to GenFleet appropriate proof of payment of the
withheld taxes as well as the official receipts within a reasonable period of time. Verastem will provide
GenFleet reasonable assistance in order to allow GenFleet to obtain the benefit of any present or future
treaty against double taxation or refund or reduction in taxes that may apply to the payments under this
Agreement. Without limiting the generality of the foregoing, if GenFleet is entitled under any applicable
tax treaty to a reduction of rate of, or the elimination of, or recovery of, applicable withholding taxes, then
it may deliver to Verastem or the appropriate governmental authority in the Territory the prescribed forms
necessary to reduce the applicable rate of withholding or to relieve Verastem of its obligation to withhold
taxes. In such case, Verastem will apply the reduced rate of withholding, or not withhold, as the case may
be, provided that Verastem is in receipt of evidence, in a form reasonably satisfactory to Verastem (e.g.,
GenFleet’s delivery of all applicable documentation) prior to the time that the applicable payments are due.
9.10.3. Tax Cooperation. Each Party will provide the other with reasonable assistance to enable the recovery, as
permitted by applicable law, of withholding taxes, VAT, or similar obligations resulting from payments
made under this Agreement, such recovery to be for the benefit of the Party bearing such withholding tax
or VAT.
9.10.4. VAT. The Parties agree to cooperate with one another and use reasonable efforts to ensure that any value
added tax or similar payment (“VAT”) does not represent an unnecessary cost in respect of payments made
under this Agreement. If any VAT is owing in any jurisdiction with respect to any such payment, then
GenFleet will pay such VAT and such payment will be made after deduction of such VAT that is due
specifically in relation to such payment to GenFleet under this Agreement. In the event that any deducted
VAT is later recovered by GenFleet or its Affiliates, Verastem will promptly reimburse GenFleet for the
deducted amount. In the event that any VAT is owing in any jurisdiction in respect of any such payment,
GenFleet will provide to Verastem tax invoices showing the correct amount of VAT in respect of such
payments hereunder.
9.10.5. Tax Forms. GenFleet shall deliver to Verastem a valid, properly completed, duly executed applicable
Internal Revenue Service Form W-8BEN-E.
ARTICLE 10
INTELLECTUAL PROPERTY
10.1.
Intellectual Property Ownership.
44
10.1.1. Background Technology. As between the Parties, each Party will retain all of its rights, title, and interests
in and to all Know-How, Patent Rights, and other intellectual property rights that are Controlled by such
Party or its Affiliates prior to the Effective Date or are otherwise conceived, discovered, developed,
invented, created, or otherwise made or acquired by such Party or its Affiliates outside of the performance
of activities under this Agreement, subject to any rights or licenses expressly granted by such Party to the
other Party under this Agreement.
10.1.2. GenFleet Collaboration Technology. As between the Parties, subject to any rights or licenses expressly
granted by GenFleet to Verastem under this Agreement, GenFleet is and will be the sole owner of all
GenFleet Collaboration Technology and will retain all of its rights, title, and interests thereto. To the extent
that Verastem or any of its Affiliates acquires any rights, title, or interests in or to any GenFleet
Collaboration Technology, Verastem for itself and on behalf of its Affiliates, hereby irrevocably assigns to
GenFleet all such rights, title, and interests in and to all such GenFleet Collaboration Technology.
10.1.3. Verastem Collaboration Technology. As between the Parties, subject to any rights or licenses expressly
granted by Verastem to GenFleet under this Agreement, Verastem is and will be the sole owner of all
Verastem Collaboration Technology and will retain all of its rights, title, and interests thereto. To the extent
that GenFleet or any of its Affiliates acquires any rights, title, or interests in or to any Verastem
Collaboration Technology, GenFleet for itself and on behalf of its Affiliates, hereby irrevocably assigns to
Verastem all such rights, title, and interests in and to all such Verastem Collaboration Technology.
10.1.4. Joint Collaboration Technology. As between the Parties, subject to any rights or licenses expressly
granted by one Party to the other Party under this Agreement, the Parties will jointly own all Joint
Collaboration Technology on an equal and undivided basis, including all rights, title, and interests thereto.
Each Party, for itself and on behalf of its Affiliates, hereby assigns to the other Party an equal and
undivided joint ownership interest in and to all Joint Collaboration Technology to be held in accordance
with this Section 10.1.4 (Joint Collaboration Technology). Neither Party will have any obligation to
account to the other Party for profits with respect to, or to obtain any consent of the other Party to license
or Exploit, Joint Collaboration Technology by reason of joint ownership thereof in such Party’s territory
(i.e., the Territory with respect to Verastem and the Retained Territory with respect to GenFleet), and each
Party hereby waives any right it may have under the laws of any jurisdiction to require any such consent or
accounting. For clarity, neither Party will have the right to Exploit the Joint Collaboration Technology in
the other Party’s territory without the prior consent of such other Party.
10.1.5. Disclosure and Inventorship. GenFleet will promptly disclose to Verastem in writing, and will cause its
Affiliates to so disclose, the conception, discovery, development, invention, creation, or other making of
any GenFleet Know-How or Joint Collaboration Know-How. Verastem will promptly disclose to GenFleet
in writing, and will cause its Affiliates to so disclose, the conception, discovery, development, invention,
creation, or other making of any Verastem Product Know-How or Joint Collaboration Know-How during
the Term. Each Party will respond promptly to reasonable requests from the other Party for additional
information relating to such disclosures. All determinations of inventorship under this Agreement will be
made in accordance with U.S. patent law.
10.1.6. Invention Assignments. Each Party will cause all employees and contractors who perform activities for
such Party or its Affiliate under this Agreement to be under an obligation to assign their rights in any
Know-How and other intellectual property rights resulting therefrom to such Party or its Affiliate. At the
request of the Party controlling the relevant prosecution and
45
maintenance, enforcement, or defense activities with respect to a Patent Right under this Agreement in
accordance with this Article 10 (Intellectual Property), the other Party will require its employees and
contractors who are inventors on any such Patent Right to cooperate and provide assistance to its employer
or its Affiliate in relevant intellectual property-related matters, including by executing all appropriate
documents, cooperating in discovery and, if legally required to continue any such enforcement activities,
joining as a party to any action or providing a power of attorney solely for such purpose.
10.1.7. Covenants in Support of Assignment. Without limiting the generality of Section 10.1.6 (Invention
Assignments), the Party required to assign to the other Party rights in any Patent Rights or Know-How
under this Agreement (the “Assigned Technology” and the “Assigning Party,” and the “Owning Party,”
respectively) will take (and cause its Affiliates, and their respective employees, agents, and contractors to
take) such further actions reasonably requested by the Owning Party to evidence such assignment and to
assist the Owning Party in obtaining Patent Rights and other intellectual property protection for such
Assigned Technology, including executing further assignments, consents, releases, and other commercially
reasonable documentation and providing good faith testimony by affidavit, declaration, in-person, or other
proper means in support of any effort by the Owning Party to establish, perfect, defend, or enforce its rights
in any such Assigned Technology through prosecution of governmental filings, regulatory proceedings,
litigation and other means, including through the filing, prosecution, maintenance, and enforcement of such
Assigned Technology. Without limitation, the Assigning Party will cooperate with the Owning Party if the
Owning Party applies for U.S. or foreign patent protection for such Assigned Technology and will obtain
the cooperation of the individual inventors of any such Assigned Technology. If the Assigning Party is
unable to assign any Assigned Technology, then the Assigning Party hereby grants and agrees to grant to
the Owning Party a royalty-free, fully paid-up, exclusive (even as to the Assigning Party, subject to the
terms of this Agreement, including the licenses granted to the Owning Party pursuant to Article 2 (Licenses
and Option)), perpetual, irrevocable license (with the right to grant sublicenses through multiple tiers)
under such Assigned Technology for any and all purposes.
10.2.
Prosecution and Maintenance.
10.2.1. Verastem Product Patent Rights and Verastem Collaboration Patent Rights. As between the Parties,
Verastem will have the sole right, but not the obligation, to control the preparation of, filing for, and
prosecution and maintenance of (including the defense of any oppositions, interferences, reissue
proceedings, re-examinations, and other post-grant proceedings originating in a patent office) of the
Verastem Product Patent Rights and Verastem Collaboration Patent Rights, [***].
10.2.2. GenFleet Patent Rights.
(a)
Prior to Option Effective Date. Prior to the Option Effective Date, as between the Parties,
GenFleet will have the sole right, but not the obligation, in consultation with Verastem
through the JSC, to control the preparation of, filing for, and prosecution and maintenance
of (including the defense of any oppositions, interferences, reissue proceedings, re-
examinations, and other post-grant proceedings originating in a patent office) the GenFleet
Patent Rights for the Collaboration Program(s) both within and outside the Territory, [***].
46
(b)
Following Option Effective Date. Following the Option Effective Date for a Licensed
Program, as between the Parties, Verastem will have the first right, but not the obligation,
to control the preparation of, filing for, and prosecution and maintenance of (including the
defense of any oppositions, interferences, reissue proceedings, re-examinations, and other
post-grant proceedings originating in a patent office) of GenFleet Patent Rights for such
Licensed Program in the Territory. If Verastem declines to file for, prosecute, or maintain
(including defending or prosecuting oppositions, interferences, reissue proceedings, re-
examinations, and other post-grant proceedings originating in a patent office) any GenFleet
Patent Right for such Licensed Program in the Territory, then it will give GenFleet
reasonable notice thereof (in any event, sufficiently in advance to enable GenFleet to
assume control of such filing, prosecution, or maintenance), and thereafter, GenFleet may,
upon written notice to Verastem and at GenFleet’s cost and expense, control the filing for,
prosecution, and maintenance of such GenFleet Patent Rights in the Territory in
accordance with this Section 10.2.2 (GenFleet Patent Rights), mutatis mutandis. In the
event GenFleet assumes control of the preparation of, filing for, and prosecution and
maintenance (including the defense of any oppositions, interferences, reissue proceedings,
re-examinations, and other post- grant proceedings originating in a patent office) with
respect to any GenFleet Patent Rights for such Licensed Program in the Territory, then
Verastem will: (a) provide GenFleet with copies of any relevant communications, filings,
drafts, and documents not previously provided to GenFleet as well as written notice of any
pending deadlines or communications applicable thereto; and (b) execute and deliver any
legal papers reasonably requested by GenFleet to effectuate transfer of control of the filing,
prosecution, and maintenance of such GenFleet Patent Rights in the Territory (including
papers that transfer any rights, title, and interests in or to the GenFleet Patent Rights to
Verastem).
10.2.3. Joint Collaboration Patent Rights.
(a)
Verastem First Right. Verastem will have the first right, but not the obligation, to control
the preparation of, filing for, and prosecution and maintenance of (including the defense of
any oppositions, interferences, reissue proceedings, re- examinations, and other post-grant
proceedings originating in a patent office) the Joint Collaboration Patent Rights, both
within and outside the Territory, [***].
(b)
GenFleet Step-In Right. If Verastem declines to file for, prosecute, or maintain (including
defending or prosecuting oppositions, interferences, reissue proceedings, re-examinations,
and other post-grant proceedings originating in a patent office) any Joint Collaboration
Patent Right in the Retained Territory, then it will give GenFleet reasonable notice thereof
(in any event, sufficiently in advance to enable GenFleet to assume control of such filing,
prosecution, or maintenance), and thereafter, GenFleet may, upon written notice to
Verastem and [***], control the filing for, prosecution, and maintenance of such Joint
Collaboration Patent Rights in accordance with this Section 10.2.3 (Joint Collaboration
Patent Rights), mutatis mutandis. In the event GenFleet assumes control of the preparation
of, filing for, and prosecution and maintenance (including the defense of any oppositions,
interferences, reissue proceedings, re- examinations, and other post-grant proceedings
originating in a patent office) with respect to any Joint Collaboration Patent Rights
pursuant to this
47
Section 10.2.3(b) (GenFleet Step-in Right), then Verastem will: (a) provide GenFleet with
copies of any relevant communications, filings, drafts, and documents not previously
provided to Verastem as well as written notice of any pending deadlines or
communications applicable thereto; and (b) execute and deliver any legal papers
reasonably requested by GenFleet to effectuate transfer of control of the filing,
prosecution, and maintenance of such Joint Collaboration Patent Rights (including papers
that transfer any rights, title, and interests in or to the Joint Collaboration Patent Rights to
GenFleet).
10.2.4. Cooperation. Each Party will reasonably cooperate with the other Party in the filing, prosecution, and
maintenance (including the defense of any oppositions, interferences, reissue proceedings, re-
examinations, and other post-grant proceedings originating in a patent office) of the GenFleet Patent Rights
and Joint Collaboration Patent Rights. Such cooperation includes promptly executing all documents,
requiring inventors to be available to discuss and review applications and other filings, and requiring
inventors, contractors, employees, and consultants and agents of such Party and any of its Affiliates, and
for the prosecuting Party and any of its Affiliates and Sublicensees, to execute all documents, as reasonable
and appropriate so as to enable the prosecution and maintenance of any such Patent Rights.
10.3.
Enforcement.
10.3.1. Notification of Infringement. If GenFleet or Verastem becomes aware of any actual or suspected
infringement of any GenFleet Patent Right or Joint Collaboration Patent Right (“Infringement”), then
such Party will promptly notify the other Party, and following such notification, the Parties will confer.
10.3.2. Verastem Product Patent Rights and Verastem Collaboration Patent Rights. As between the Parties,
Verastem will have the sole right, but not the obligation, to bring an Infringement action with respect to
Infringement of the Verastem Product Patent Rights or Verastem Collaboration Patent Rights [***], in its
own name and in its own direction and control, and to settle any such action or preceding.
10.3.3. GenFleet Patent Rights.
(a)
Prior to Option Effective Date. Prior to the Option Effective Date, GenFleet will have the
sole right, but not the obligation, in consultation with Verastem through the JSC, to bring
an Infringement action with respect to Infringement of the GenFleet Patent Rights for the
Collaboration Program(s) in the Territory or Retained Territory [***], in its own name and
in its own direction and control, and to settle any such action or proceeding subject to
Section 10.5 (Settlement).
(b)
After Option Effective Date. Following the Option Effective Date for a Licensed
Program, as between the Parties, Verastem will have the sole right, but not the obligation to
bring an Infringement action with respect to Infringement of the GenFleet Patent Rights for
such Licensed Program in the Territory [***], in its own name and in its own direction and
control, and to settle any such action or proceeding subject to Section 10.5 (Settlement). In
the event that Verastem (a) fails to bring an action with respect to such Infringement within
[***] after a written request from GenFleet to do so (or such shorter period as may be
required by applicable law), or (b) discontinues the prosecution of any such
48
action after filing without abating such Infringement (including through settlement), then
GenFleet will have the second right, but not the obligation, to bring an Infringement action
with respect to such Infringement [***], in its own name, and under its own direction and
control, or settle any such action or proceeding subject to Section 10.5 (Settlement).
10.3.4. Joint Collaboration Patent Rights. Verastem will have the first right, but not the obligation, to bring an
Infringement action with respect to Infringement of the Joint Collaboration Patent Rights in the Territory at
its own expense, in its own name, and to settle any such action or proceeding subject to Section 10.5
(Settlement), provided that, Verastem will keep GenFleet reasonably informed with respect thereto, and
Verastem will consider any comments from GenFleet in good faith and will reasonably incorporate such
comments where appropriate. In the event Verastem (a) fails to bring an action with respect to such
Infringement within 60 days after a written request from GenFleet to do so (or such shorter period as may
be required by applicable law), or (b) discontinues the prosecution of any such action after filing without
abating such Infringement (including through settlement), then GenFleet will have the second right, but not
the obligation, to bring an Infringement action with respect to such Infringement [***], in its own name,
and under its own direction and control, or settle any such action or proceeding subject to Section 10.5
(Settlement).
10.3.5. Cooperation; Assistance. Regardless of which Party exercises its right under this Section 10.3
(Enforcement) to bring an action with respect to Infringement, the other Party and its Affiliates will
reasonably assist such enforcing Party in any action or proceeding being defended or prosecuted if so
requested. The non-enforcing Party will have the right to be represented in such action by counsel of its
own choice, and will join such suit if deemed a necessary party.
10.3.6. Recoveries. If either Party exercises the rights conferred under this Section 10.3 (Enforcement) to bring an
action with respect to Infringement and recovers any Damages, payments, or other sums in such action or
proceeding or in settlement thereof, then such Damages or other sums recovered will [***].
10.4.
Defense and Settlement of Third Party Claims.
10.4.1. Notice. If any Compound or Product becomes the subject of a Third Party’s claim or assertion of
infringement, misappropriation, or other violation of a Third Party’s intellectual property rights, the Party
first having notice of the claim or assertion will promptly notify the other Party.
10.4.2. Right to Defend. Except as otherwise provided in Article 12 (Indemnification): (a) Verastem will have the
sole right, but not the obligation, to defend (or, subject to Section 10.5 (Settlement), elect to settle) any
such Third Party claim or assertion that the Exploitation of a Compound or Product in the Territory
infringes, misappropriates, or otherwise violates a Third Party’s intellectual property, at its own expense;
and (b) GenFleet will have the sole right, but not the obligation, to defend (or, subject to Section 10.5
(Settlement), elect to settle) any such Third Party claim or assertion that the Exploitation of a Compound or
Product in the Retained Territory infringes, misappropriates, or otherwise violates a Third Party’s
intellectual property, at its own expense. The
49
non-defending Party will reasonably cooperate with the other Party conducting the defense of the claim or
assertion. The non-defending Party will have the right to be represented in such action by counsel of its
own choice, and will join such suit if deemed a necessary party.
10.4.3. Recoveries. Any recovery (including any settlement) received as a result of any action under this Section
10.4 (Defense and Settlement of Third Party Claims) will be allocated pursuant to Section 10.3.6
(Recoveries), mutatis mutandis.
10.5.
Settlement. Neither Party will enter into any settlement of any claim described in Section 10.3 (Enforcement) or
Section 10.4 (Defense and Settlement of Third Party Claims) that limits or otherwise adversely affects the other
Party’s rights or interests under this Agreement (including by admitting that any GenFleet Patent Right or Joint
Collaboration Patent Right is invalid or unenforceable), admits fault of the other Party, or imposes any monetary or
other obligations on the other Party without such other Party’s written consent (not to be unreasonably withheld,
conditioned, or delayed).
10.6.
Product Marks.
10.6.1. Global Brand Elements. GenFleet acknowledges that Verastem may elect to develop and adopt certain
distinctive Trademarks, designs, or copyrights to be used in connection with the Commercialization of the
Licensed Products on a global basis (such branding elements, collectively, the “Global Brand Elements”).
As between the Parties, Verastem will be the sole and exclusive owner of all Global Brand Elements. If
Verastem so elects, then: (a) Verastem and GenFleet will negotiate in good faith and enter into a trademark
license agreement pursuant to which Verastem will grant to GenFleet the non-exclusive right to use such
Global Brand Elements solely to Commercialize Licensed Products in the Retained Territory, and (b)
GenFleet will Commercialize the Licensed Product in the Retained Territory in a manner consistent with
such Global Brand Elements. Notwithstanding the foregoing, in the event no such Global Brand Elements
exist at the time GenFleet intends to begin Commercializing Licensed Products in the Retained Territory,
then GenFleet shall promptly notify Verastem, and the Parties will discuss, through the JSC, and mutually
agree on a joint global branding and marketing strategy with respect to the Commercialization of the
applicable Licensed Products throughout each of their respective territories.
10.6.2. Selection of Product Marks in the Territory. Verastem will have the sole and exclusive right, but not the
obligation, to brand and promote the Licensed Products in the Territory using Trademarks, designs, and
copyrights it determines appropriate in its sole discretion for the Licensed Products, which may vary within
the Territory (each, a “Product Mark”). Verastem will own all rights, title and interests in and to the
Product Marks and Global Brand Elements, and all goodwill in the Product Marks and Global Brand
Elements will inure to the benefit of Verastem. Verastem will have the sole and exclusive right and
responsibility to register, maintain, defend, and enforce the Product Marks and Global Brand Elements both
within and outside the Territory to the extent it determines reasonably necessary. Except as otherwise
agreed in writing by both Parties, Verastem does not grant to GenFleet, by implication, estoppel, or
otherwise, any license to any Product Mark or Global Brand Element. GenFleet and its Affiliates will not,
and will ensure that its Sublicensees and contractors do not, directly or indirectly or through any Third
Party, file any application to register or register any Product Mark or Global Brand Element within or
outside the Territory. To the extent GenFleet or any of its Affiliates, Sublicensees, or contractors acquires
any rights, title, or interests in or to any Product Mark or Global Brand Element, including any Trademark
registration or application therefor or goodwill associated therewith, GenFleet will, and hereby does, and
will cause its Affiliates, Sublicensees, and contractors to, assign the same to Verastem. GenFleet will not
attack, dispute, or contest the validity or ownership of any Product
50
Mark or Global Brand Element, or any registrations issued or issuing with respect thereto, whether inside
or outside the Territory.
10.7.
Patent Marking. Each Party agrees to mark all Licensed Products with the appropriate patent numbers to the
extent the applicable Party does so for its other products on a country-by-country basis or as required by the
applicable law of a country in which a Licensed Product is sold.
10.8.
Patent Right Term Extension. If elections with respect to obtaining patent term extension or supplemental
protection certificates or their equivalents in any country in the Territory with respect to any Licensed Product
becomes available, upon Regulatory Approval or otherwise, then Verastem will have the sole right to file for patent
term extension or supplemental protection certificates or their equivalents and to determine which issued patent to
extend. GenFleet and any of its Affiliates will reasonably cooperate with Verastem so as to enable Verastem to
exercise its rights under this Section 10.8 (Patent Right Term Extension). Such cooperation includes promptly
executing all documents, requiring inventors to be available to discuss and review any filings, and requiring
inventors, contractors, employees, consultants and agents of GenFleet or any of its Affiliates to execute all
documents, as reasonable and appropriate so as to enable Verastem to exercise its rights under this Section 10.8
(Patent Right Term Extension).
10.9.
Regulatory Exclusivity. Verastem will have the sole right to seek and maintain all Regulatory Exclusivity periods
that may be available for the Licensed Products in the Field in the Territory.
10.10. CREATE Act. Notwithstanding any provision to the contrary set forth in this Agreement, neither Party may
invoke this Agreement as a “joint research agreement” pursuant to the Cooperative Research and Technology
Enhancement Act, 35 U.S.C. § 102(c) without the prior written consent of the other Party.
ARTICLE 11
REPRESENTATIONS, WARRANTIES, AND COVENANTS
11.1.
Representations and Warranties Verastem. Verastem hereby represents and warrants to GenFleet, as of the
Effective Date, that:
11.1.1. Corporate Existence and Power. Verastem is a company or corporation duly organized, validly existing,
and in good standing under the laws of the jurisdiction in which it is incorporated, and has full corporate
power and authority and the legal right to own and operate its property and assets and to carry on its
business as it is now being conducted and as contemplated in this Agreement, including the right to grant
the licenses and rights granted by it hereunder.
11.1.2. Authority. Verastem has the corporate power and authority and the legal right to enter into this Agreement
and perform its obligations hereunder (including granting the licenses and rights granted by it hereunder),
and Verastem has taken all necessary corporate action on its part required to authorize the execution and
delivery of this Agreement and the performance of its obligations hereunder.
11.1.3. Binding Agreement. This Agreement has been duly executed and delivered on behalf of Verastem, and
constitutes a legal, valid, and binding obligation of Verastem that is enforceable against it in accordance
with its terms.
11.1.4. No Conflict. The execution, delivery, and performance of this Agreement by Verastem does not breach,
violate, or conflict with any agreement or any provision thereof (including any
51
confidentiality or non-competition obligation, any exclusivity obligation, or any provisions with respect to
the ownership, prosecution, maintenance, enforcement, and defense of intellectual property rights), or any
instrument or understanding, oral or written, to which Verastem (or any of its Affiliates) is a party or by
which Verastem (or any of its Affiliates) is bound, nor violate any applicable law.
11.1.5. Government Authorization. No government authorization, consent, approval, license, exemption of or
filing or registration with, any court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, under any applicable law, is or will be necessary for, or in connection
with, the transactions contemplated by this Agreement, or for the performance by Verastem of its
obligations under this Agreement, except as may be required to Develop (including to conduct Clinical
Trials or to seek or obtain Regulatory Approvals or applicable Regulatory Materials), Manufacture,
Commercialize, or otherwise Exploit Compounds or Products.
11.1.6. Third Party Consent. Verastem has obtained all necessary authorizations, consents and approvals of any
Third Party that is required to be obtained by it for, or in connection with, the transactions contemplated by
this Agreement, or for the performance by it of its obligations under this Agreement, except as may be
required to Develop (including to conduct Clinical Trials or to seek or obtain Regulatory Approvals or
applicable Regulatory Materials), or to Manufacture, Commercialize, or otherwise Exploit Compounds or
Products.
11.1.7. No Debarment. Neither Verastem nor any of its Affiliates has been debarred or is subject to debarment
pursuant to Section 306 of the FFDCA or analogous provisions of applicable law outside the United States
or is listed on any excluded list. Neither Verastem nor any of its Affiliates has, to its knowledge, used in
any capacity, in connection with the activities to be performed under this Agreement, any individual or
entity that has been debarred pursuant to Section 306 of the FFDCA or analogous provisions of applicable
law outside the United States, or that is the subject of a conviction described in such Section or analogous
provisions of applicable law outside the United States, or listed on any excluded list.
11.1.8. Bankruptcy; Insolvency. Verastem and its Affiliates are not subject to any action or petition, pending or
otherwise, for bankruptcy or insolvency in any state, country, or other jurisdiction, and it is not aware of
any facts or circumstances that could result in Verastem or any of its Affiliates becoming or being declared
insolvent, bankrupt, or otherwise incapable of meeting its obligations under this Agreement as they become
due in the ordinary course of business.
11.2.
Representations and Warranties of GenFleet. GenFleet hereby represents and warrants to Verastem, (a) as of the
Effective Date, except as set forth on Schedule 11.2 (Exceptions to Representations and Warranties of GenFleet),
and (b) as of each Option Effective Date except as disclosed to Verastem in writing (including in the applicable
Option Data Package), that:
11.2.1. Corporate Existence and Power. GenFleet is a company or corporation duly organized, validly existing,
and in good standing under the laws of the jurisdiction in which it is incorporated, and has full corporate
power and authority and the legal right to own and operate its property and assets and to carry on its
business as it is now being conducted and as contemplated in this Agreement, including the right to grant
the licenses and rights granted by it hereunder.
11.2.2. Authority. GenFleet has the corporate power and authority and the legal right to enter into this Agreement
and perform its obligations hereunder (including granting the licenses and rights granted by it hereunder),
and GenFleet has taken all necessary corporate action on its part required
52
to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder.
11.2.3. Binding Agreement. This Agreement has been duly executed and delivered on behalf of GenFleet, and
constitutes a legal, valid, and binding obligation of GenFleet that is enforceable against it in accordance
with its terms.
11.2.4. No Conflict. The execution, delivery, and performance of this Agreement by GenFleet does not breach,
violate, or conflict with any agreement or any provision thereof (including any confidentiality or non-
competition obligation, any exclusivity obligation, or any provisions with respect to the ownership,
prosecution, maintenance, enforcement, and defense of intellectual property rights), or any instrument or
understanding, oral or written, to which GenFleet (or any of its Affiliates) is a party or by which GenFleet
(or any of its Affiliates) is bound, nor violate any applicable law.
11.2.5. Government Authorization. No government authorization, consent, approval, license, exemption of or
filing or registration with, any court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, under any applicable law, is or will be necessary for, or in connection
with, the transactions contemplated by this Agreement, or for the performance by GenFleet of its
obligations under this Agreement, except as may be required to Develop (including to conduct Clinical
Trials or to seek or obtain Regulatory Approvals or applicable Regulatory Materials), Manufacture,
Commercialize, or otherwise Exploit Collaboration Compounds, Licensed Compounds, Collaboration
Products, or Licensed Products.
11.2.6. Third Party Consent. GenFleet has obtained all necessary authorizations, consents and approvals of any
Third Party that is required to be obtained by it for, or in connection with, the transactions contemplated by
this Agreement, or for the performance by it of its obligations under this Agreement, except as may be
required to Develop (including to conduct Clinical Trials or to seek or obtain Regulatory Approvals or
applicable Regulatory Materials), or to Manufacture, Commercialize, or otherwise Exploit Collaboration
Compounds, Licensed Compounds, Collaboration Products, or Licensed Products.
11.2.7. No Debarment. Neither GenFleet nor any of its Affiliates has been debarred or is subject to debarment
pursuant to Section 306 of the FFDCA or analogous provisions of applicable law outside the United States
or is listed on any excluded list. Neither GenFleet nor any of its Affiliates has, to its knowledge, used in
any capacity, in connection with the activities to be performed under this Agreement, any individual or
entity that has been debarred pursuant to Section 306 of the FFDCA or analogous provisions of applicable
law outside the United States, or that is the subject of a conviction described in such Section or analogous
provisions of applicable law outside the United States, or listed on any excluded list.
11.2.8. Bankruptcy; Insolvency. GenFleet and its Affiliates are not subject to any action or petition, pending or
otherwise, for bankruptcy or insolvency in any state, country, or other jurisdiction, and it is not aware of
any facts or circumstances that could result in GenFleet or any of its Affiliates becoming or being declared
insolvent, bankrupt, or otherwise incapable of meeting its obligations under this Agreement as they become
due in the ordinary course of business.
11.2.9. No Conflicts. GenFleet has the full right, power, and authority to grant all of the rights and licenses
granted to GenFleet under this Agreement. Neither GenFleet nor its Affiliates have assigned, transferred,
conveyed, or granted any right or license, or committed to assign, convey, transfer, or grant any right or
license, to any Third Party, or made or committed to make any covenant to any
53
Third Party relating to any of the GenFleet Technology, in each case, that would conflict with or limit the
scope of any of the rights or licenses granted to Verastem hereunder.
11.2.10.Sufficiency. The GenFleet Technology constitutes all Patent Rights and Know-How Controlled by
GenFleet or any of its Affiliates that are necessary or useful for the Exploitation of the Compound or
Product in the Field in the Territory. Neither GenFleet nor its Affiliates has knowledge of any Patent Right
or Know-How Controlled by a Third Party that is necessary for the Exploitation of the Compound or
Product in the Field in the Territory.
11.2.11.Ownership. GenFleet is the sole and exclusive owner of the GenFleet Technology, free and clear of all
liens, charges, encumbrances, licenses, or security interests, including any claims by any governmental
authority or academic or non-profit institution. GenFleet does not Control any GenFleet Technology
pursuant to an In-License. Neither GenFleet nor any of its Affiliates owns or holds rights to any Patent
Rights or Know-How that would otherwise qualify as GenFleet Technology but for the fact that GenFleet
or such Affiliate does not own or otherwise Control such Patent Right or Know-How.
11.2.12.GenFleet Patent Rights. Schedule 1.69 (GenFleet Patent Rights) sets forth a complete and accurate list of
all GenFleet Patent Rights existing as of the Effective Date.
11.2.13.Existing In-Licenses. GenFleet has provided Verastem with true, complete and correct copies of each In-
License entered into by GenFleet prior to the Effective Date and, as applicable, during the Discovery
Period, a list which is attached hereto as Schedule 11.2.13 (Existing In-Licenses).
11.2.14.Litigation and Disputes. There are no claims, judgments, settlements, litigations, suits, actions, disputes,
arbitration, judicial or legal, administrative or other proceedings, or governmental investigations pending
or, to GenFleet’s knowledge, threatened against GenFleet or its Affiliates which could reasonably be
expected to adversely affect or restrict the ability of GenFleet to consummate or perform the transactions
and obligations contemplated under this Agreement, or which would affect the GenFleet Technology,
GenFleet’s Control thereof, or any Compounds or Products.
11.2.15.No Infringement or Misappropriation. GenFleet has not misappropriated, or, to GenFleet’s knowledge,
infringed or otherwise violated any intellectual property (including any Patent Right or Know-How) of a
Third Party in connection with Developing the GenFleet Technology or Exploiting the Compounds or
Products. Neither GenFleet nor its Affiliates have received any notice, written or otherwise, of any claim
that any Patent Right or Know-How (including any trade secret right) Controlled by a Third Party would
be infringed, misappropriated, or otherwise violated by the performance of the activities hereunder or by
the Exploitation of the Compounds or Products in the Field in the Territory. To GenFleet’s knowledge, the
use and practice of the GenFleet Technology as contemplated by this Agreement does not and will not
infringe, misappropriate, or otherwise violate any intellectual property right (including any Patent Right or
Know-How) of any Third Party. To GenFleet’s knowledge, no Third Party is infringing, misappropriating,
or otherwise violating, or threatening to infringe, misappropriate, or otherwise violate, the GenFleet
Technology.
11.2.16.Validity and Enforceability of GenFleet Patent Rights. All GenFleet Patent Rights existing as of the
Effective Date: (a) have been and, in the case of pending patent applications are being, diligently
prosecuted in the respective patent offices in accordance with applicable law and the policies and
procedures of the applicable patent office; (b) have been and, in the case of pending patent applications are
being, filed and maintained in accordance with applicable law and the policies and procedures of the
applicable patent office; and (c) all applicable fees have been paid
54
on or before the due date for payment. All GenFleet Patent Rights are subsisting and, to GenFleet’s
knowledge, are not invalid or unenforceable, in whole or in part. There are no oppositions, nullity actions,
interferences, inter partes reexaminations, inter partes reviews, post-grant reviews, derivation proceedings,
or other proceedings pending or, to GenFleet’s knowledge, threatened, in writing (but excluding office
actions or similar communications issued by the United States Patent Right and Trademark Office or any
analogous foreign governmental authority) claiming that a GenFleet Patent Right is invalid or
unenforceable. The inventorship of each GenFleet Patent Right is properly identified on the filed patent
documents for such Patent Right. No dispute regarding inventorship or ownership has been alleged or
threatened with respect to any GenFleet Patent Right.
11.2.17.Third Party Agreements and Other Restrictions. There are no exclusivity provisions or any other
restrictions in any agreement between GenFleet or its Affiliates, on the one hand, and any Third Party, on
the other hand, that would limit either Party’s ability to Exploit the Compounds or Products in the Field in
the Territory. Neither GenFleet nor any of its Affiliates are delinquent in any payment obligations to any
Third Party, or engaged in any dispute with any Third Party, that would limit either Party’s ability to
Exploit the Compounds or Products in the Field in the Territory.
11.2.18.Technology Assignment. GenFleet and its Affiliates have obtained from all individuals who participated
in any respect in the invention, authorship, or other creation of any GenFleet Technology valid and
enforceable written assignments of all rights of such individuals in such GenFleet Technology. All of
GenFleet’s and its Affiliates’ employees, officers, contractors, and consultants have executed valid and
enforceable written agreements requiring assignment to GenFleet or its Affiliates, as applicable, of all
rights, title, and interests in and to inventions made during the course of and as the result of this
Agreement. No employee, officer, contractor, or consultant of GenFleet or its Affiliates is subject to any
agreement with any other Third Party that requires such employee, officer, contractor, or consultant to
assign or otherwise transfer any interest in any GenFleet Technology to any Third Party.
11.2.19.Government Funding. No government funding, facilities of a university, college, or other educational
institution or research center was used in the development of any GenFleet Technology. No Person who
was involved in, or who contributed to, the creation or development of any GenFleet Technology has
performed services for the government, university, college, or other educational institution or research
center in a manner that would affect GenFleet’s or any of its Affiliates’ rights in the GenFleet Technology.
The inventions claimed, covered or encompassed by the GenFleet Technology: (a) were not conceived,
discovered, developed, or otherwise made in connection with any research activities funded, in whole or in
part, by the federal government of the United States (or any agency thereof) or the government of any other
country; (b) are not a “subject invention” as that term is described in 35 U.S.C. §201(e); (c) are not
otherwise subject to the provisions of the Patent and Trademark Law Amendments Act of 1980, codified at
35 U.S.C. §§200-212, or any regulations promulgated pursuant thereto, including in 37 C.F.R. Part 401; (d)
in the case of clauses
(b) or (c), are not subject to similar obligations or restrictions under the applicable law of any other
country; and (e) are not the subject of any licenses, options, or other rights of any governmental authority,
within or outside the United States.
11.2.20.Manufacturing. GenFleet, and Third Party Manufacturers engaged by GenFleet, possess all permits,
licenses, and other authorizations required to be held or maintained for the Manufacture and supply of the
Compounds and Products.
11.2.21.Protection of Trade Secrets. GenFleet and its Affiliates have taken commercially reasonable measures
consistent with industry practices to protect the secrecy, confidentiality, and value of all GenFleet Know-
How that constitutes trade secrets under applicable law, including by requiring all
55
employees, consultants, and contractors to execute binding and enforceable agreements requiring all such
employees, consultants, and contractors to maintain the confidentiality of all such GenFleet Know-How.
11.2.22.Compliance with Applicable Law. GenFleet and its Affiliates have conducted, and, to GenFleet’s
knowledge, their respective contractors and consultants have conducted prior to such date all Exploitation
of the Compounds and Products in accordance with all applicable law, including GLP, GCP, and GMP (as
applicable) and applicable local and other anti-corruption or anti-bribery laws (including, as applicable, the
provisions of the FCPA, the U.K. Anti-Bribery Act, and the Anti- Corruption Act of the PRC).
11.2.23.Anti-Corruption Compliance. GenFleet and its Affiliates and, to GenFleet’s knowledge, contractors,
have not performed any actions that are prohibited by applicable local and other anti- corruption or anti-
bribery laws (including, as applicable, the provisions of the FCPA, the U.K. Anti- Bribery Act, and the
Anti-Corruption Act of the PRC). Without limiting the generality of the foregoing, GenFleet and its and its
Affiliates’ employees and contractors have not, directly or indirectly through Third Parties, paid, promised
or offered to pay, or authorized the payment of, any money or given any promise or offered to give, or
authorized the giving of, anything of value (including any corrupt payment, gratuity, emolument, bribe,
kickback, illicit gift or hospitality or other illegal or unethical benefit) to a Public Official or Entity or other
Person for purpose of improperly obtaining or retaining business for or with, or directing business to, any
Person, or otherwise in a manner that would violate applicable local and other anti-corruption or anti-
bribery laws (including the provisions of the FCPA, the U.K. Anti-Bribery Act, and the Anti-Corruption
Act of the PRC).
11.3.
Covenants of GenFleet. GenFleet covenants to Verastem that, during the Term:
11.3.1. No Misappropriation. GenFleet and its Affiliates will not misappropriate the trade secrets or other rights
or property of any Third Party in the conception, development, and reduction to practice of any GenFleet
Technology or the Exploitation of the Compounds or Products.
11.3.2. In-Licenses. GenFleet and its Affiliates will: (a) remain in compliance in all respects with, and not, without
Verastem’s written consent, amend in a manner that adversely affects the rights granted to Verastem
hereunder or GenFleet’s ability to fully perform its obligations hereunder, in each case, any Third Party
agreements entered into by GenFleet prior to the Effective Date or during the Term pursuant to which
GenFleet Controls any GenFleet Technology (each, an “In-License”);
(b) provide prompt notice to Verastem of any alleged breach or default of any In-License; and (c) in the
event of a breach or default by GenFleet of any In-License and failure by GenFleet to cure such breach or
default in a timely manner, permit Verastem to cure such breach on GenFleet’s behalf upon Verastem’s
reasonable written request.
11.3.3. Anti-Corruption Compliance. GenFleet will maintain an anti-corruption policy during the Term.
GenFleet and its Affiliates will not, and will use reasonable efforts to ensure that its Sublicensees and
contractors will not, in the performance of this Agreement, perform any actions that are prohibited by
applicable local and other anti-corruption or anti-bribery laws or regulations (including, as applicable, the
provisions of the FCPA, the U.K. Anti-Bribery Act, and the Anti- Corruption Act of the PRC). Without
limiting the generality of the foregoing, during the Term, GenFleet and its and its Affiliates’ employees and
contractors will not, in connection with activities performed under this Agreement, directly or indirectly
through Third Parties, pay, promise or offer to pay, or authorize the payment of, any money or give any
promise or offer to give, or authorize the giving of, anything of value (including any corrupt payment,
gratuity, emolument, bribe,
56
kickback, illicit gift or hospitality or other illegal or unethical benefit) to a Public Official or Entity or other
Person for purpose of improperly obtaining or retaining business for or with, or directing business to, any
Person, or otherwise in a manner that would violate applicable local and other anti- corruption or anti-
bribery laws or regulations (including, as applicable, the provisions of the FCPA, the U.K. Anti-Bribery
Act, and the Anti-Corruption Act of the PRC).
11.4.
Mutual Covenants. Each Party covenants to the other Party that, during the Term:
11.4.1. Compliance with Applicable Law. Such Party and its Affiliates will perform its all activities
contemplated by this Agreement (including the practice of the GenFleet Technology and the Exploitation
of the Collaboration Compound, Licensed Compound, Collaboration Product, or Licensed Product (as
applicable) within and outside the Territory) in compliance with all applicable law, including, to the extent
applicable, applicable local and other anti-corruption or anti-bribery laws or regulations, GCP, GLP and
GMP (as applicable), and otherwise in accordance with good scientific, clinical and manufacturing
practices and applicable industry ethical codes, and will cause its Sublicensees and contractors to comply
with the same. No Party will be required to take any action under this Agreement that would, on written
advice of counsel, require such Party to violate such applicable law or regulation.
11.4.2. No Debarment. Such Party and its Affiliates will not employ, or otherwise use in any capacity, the services
of any Person suspended, proposed for debarment or debarred under United States law, including under 21
U.S.C. § 335a, or any foreign equivalent thereof, with respect to the performance of activities contemplated
by this Agreement.
11.4.3. No Conflicts. Such Party and its Affiliates will not enter into any agreement, contract, commitment, or
other arrangement, or otherwise take any action or fail to take any action, that could reasonably be expected
to conflict with the rights granted to the other Party hereunder or otherwise prevent the other Party or its
Affiliates from exercising the rights granted to it hereunder.
11.4.4. Government Authorization. Such Party will maintain all permits, licenses, registrations, and other forms
of authorizations and approvals from any governmental authority or Regulatory Authority that are
necessary or required to be obtained or maintained by such Party in order for such Party to perform its
obligations hereunder in a manner which complies with all applicable law (including GCP, GLP, and GMP,
as applicable).
11.5.
NO OTHER REPRESENTATIONS OR WARRANTIES. EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS OR EXTENDS
ANY WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED (AND EACH PARTY HEREBY
EXPRESSLY DISCLAIMS ANY AND ALL REPRESENTATIONS AND WARRANTIES NOT EXPRESSLY
PROVIDED IN THIS AGREEMENT), INCLUDING WITH RESPECT TO ANY PATENTS RIGHTS OR
KNOW-HOW, INCLUDING WARRANTIES OF VALIDITY OR ENFORCEABILITY, MERCHANTABILITY,
FITNESS FOR A PARTICULAR USE OR PURPOSE, PERFORMANCE, AND NON-INFRINGEMENT OF
ANY THIRD PARTY PATENT RIGHT OR OTHER INTELLECTUAL PROPERTY RIGHT. NEITHER PARTY
MAKES ANY REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, THAT IT WILL BE
ABLE TO SUCCESSFULLY ADVANCE ANY LICENSED PRODUCT OR DEVELOP, ACHIEVE
REGULATORY APPROVAL FOR, MANUFACTURE, COMMERCIALIZE OR OTHERWISE EXPLOIT ANY
COLLABORATION PRODUCT OR LICENSED PRODUCT OR, IF COMMERCIALIZED, THAT ANY
PARTICULAR SALES LEVEL OR PROFIT OF SUCH COLLABORATION PRODUCT OR LICENSED
PRODUCT WILL BE ACHIEVED.
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ARTICLE 12
INDEMNIFICATION
12.1.
Indemnification by GenFleet. Subject to the remainder of this Article 12 (Indemnification), GenFleet will defend,
indemnify, and hold harmless Verastem, its Affiliates, and its and their respective officers, directors, employees,
agents, successors, and assigns (each, a “Verastem Indemnitee”) from and against any and all Damages to the
extent arising out of or relating to, directly or indirectly, any Third Party Claim based on:
12.1.1. the Exploitation of Collaboration Compounds, Licensed Compounds, Collaboration Products, or Licensed
Products by or on behalf of GenFleet or any of its Affiliates or any Third Party;
12.1.2. any breach by GenFleet of any of its representations, warranties, covenants, agreements, or obligations
under this Agreement;
12.1.3. any claim that the practice of the GenFleet Technology infringes, misappropriates or otherwise violates any
intellectual property rights owned or possessed by any Third Party;
12.1.4. any claims of any nature arising out of any Exploitation of any Compound or Product by or on behalf of
GenFleet or its Affiliates after the effective date of expiration or termination of this Agreement;
12.1.5. the gross negligence, recklessness, or willful misconduct of GenFleet or its Affiliates or its or their
respective directors, officers, employees, or agents, in connection with GenFleet’s performance of its
obligations under this Agreement; or
12.1.6. violation of applicable law by GenFleet, its Affiliates, licensees, Sublicensees, or contractors in connection
with the performance of its obligations or exercise of its rights under this Agreement;
provided, however, that, in each case, such indemnity will not apply to the extent Verastem has an indemnification
obligation pursuant to Section 12.2 (Indemnification by Verastem) for such Damages.
12.2.
Indemnification by Verastem. Subject to the remainder of this Article 12 (Indemnification), Verastem will
defend, indemnify, and hold harmless GenFleet, its Affiliates, and its and their respective officers, directors,
employees, agents, successors, and assigns (each, a “GenFleet Indemnitee”) from and against any and all
Damages to the extent arising out of or relating to, directly or indirectly, any Third Party Claim based on:
12.2.1. the Exploitation of Collaboration Compounds, Licensed Compounds, Collaboration Products, or Licensed
Products by or on behalf of Verastem or any of its Affiliates or Sublicensees;
12.2.2. any breach by Verastem of any of its representations, warranties, covenants, agreements, or obligations
under this Agreement;
12.2.3. the gross negligence, recklessness, or willful misconduct of Verastem or its Affiliates or its or their
respective directors, officers, employees or agents, in connection with Verastem’s performance of its
obligations under this Agreement; or
12.2.4. violation of applicable law by Verastem, its Affiliates, Sublicensees, or contractors in connection with the
performance of its obligations or exercise of its rights under this Agreement;
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provided, however, that, in each case, such indemnity will not apply to the extent GenFleet has an indemnification
obligation pursuant to Section 12.1 (Indemnification by GenFleet) for such Damages.
12.3.
Indemnification Procedures. The Party claiming indemnity under this Article 12 (Indemnification) (the
“Indemnified Party”) will provide written notice to the Party from whom indemnity is being sought (the
“Indemnifying Party”) promptly after learning of the Third Party Claim for which indemnity is being sought. The
Indemnifying Party’s obligation to defend, indemnify, and hold harmless pursuant to Section 12.1 (Indemnification
by GenFleet) or Section 12.2 (Indemnification by Verastem), as applicable, will be reduced to the extent the
Indemnified Party’s delay in providing notification pursuant to this Section 12.3 (Indemnification Procedure)
results in actual prejudice to the Indemnifying Party; provided, however, that the failure by an Indemnified Party to
give such notice or otherwise meet its obligations under this Section 12.3 (Indemnification Procedures) will not
relieve the Indemnifying Party of its indemnification obligation under this Agreement. At its option, the
Indemnifying Party may assume the defense and have exclusive control, at its own expense, of any Third Party
Claim for which indemnity is being sought by giving written notice to the Indemnified Party within 30 days after
receipt of the notice of the Third Party Claim. The assumption of defense of the Third Party Claim will not be
construed as an acknowledgment that the Indemnifying Party is liable to indemnify any Indemnified Party in
respect of the Third Party Claim, nor will it constitute waiver by the Indemnifying Party of any defenses it may
assert against the Indemnified Party’s claim for indemnification. The Indemnified Party will provide the
Indemnifying Party with reasonable assistance, at the Indemnifying Party’s expense, in connection with the
defense. The Indemnified Party may participate in and monitor such defense with counsel of its own choosing at its
sole expense; provided, however, that the Indemnifying Party will have the right to assume and conduct the defense
of the Third Party Claim with counsel of its choice. The Indemnifying Party will not settle any Third Party Claim
without the prior written consent of the Indemnified Party, not to be unreasonably withheld, conditioned, or
delayed. If the Indemnifying Party does not assume and conduct the defense of the Third Party Claim as provided
above, then (a) the Indemnified Party may defend against, and consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim in any manner the Indemnified Party may deem reasonably
appropriate (and the Indemnified Party need not consult with, or obtain any consent from, the Indemnifying Party
in connection therewith), and (b) the Indemnified Party reserves any right it may have under this Article 12
(Indemnification) to obtain indemnification from the Indemnified Party.
12.4.
Limitation of Liability. NEITHER OF THE PARTIES, NOR ANY OF THEIR RESPECTIVE AFFILIATES,
WILL BE LIABLE TO THE OTHER PARTY OR ITS AFFILIATES UNDER OR IN CONNECTION WITH
THIS AGREEMENT FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, PUNITIVE, OR
EXEMPLARY
DAMAGES
(INCLUDING
LOST
PROFITS,
LOST
REVENUES,
AND
LOST
OPPORTUNRITY), WHETHER LIABILITY IS ASSERTED IN CONTRACT, TORT (INCLUDING
NEGLIGENCE AND STRICT PRODUCT LIABILITY), INDEMNITY, CONTRIBUTION, OR OTHERWISE,
AND IRRESPECTIVE OF WHETHER THAT PARTY OR ANY REPRESENTATIVE OF THAT PARTY HAS
BEEN ADVISED OF, OR OTHERWISE MIGHT HAVE ANTICIPATED THE POSSIBILITY OF, ANY SUCH
LOSS OR DAMAGE. NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS SECTION 12.4
(LIMITATION OF LIABILITY) IS INTENDED TO OR WILL LIMIT OR RESTRICT:
(A) THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF ANY PARTY UNDER SECTION 12.1
(INDEMNIFICATION BY GENFLEET) OR SECTION 12.2 (INDEMNIFICATION BY VERASTEM), AS
APPLICABLE, IN CONNECTION WITH ANY THIRD PARTY CLAIMS; (B) THE LIABILITY OF
GENFLEET FOR BREACH OF ITS EXCLUSIVITY OBLIGATIONS UNDER SECTION 2.3.1 (GENFLEET
EXCLUSIVITY); (C) DAMAGES AVAILABLE FOR A PARTY’S OR ITS AFFILIATE’S GROSS
NEGLIGENCE, RECKLESSNESS, INTENTIONAL MISCONDUCT, OR FRAUD; OR (D) LIABILITY OF
EITHER PARTY FOR BREACH OF Article 13 (CONFIDENTIALITY).
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12.5.
Insurance. Each Party will procure and maintain comprehensive general liability operations insurance, adequate to
cover its obligations hereunder and that is at all times sufficient to cover its obligations. During the period in which
any Collaboration Product or Licensed Product is being clinically tested in human subjects or commercially
distributed or sold by such Party pursuant to this Agreement, the Parties shall maintain clinical trial liability
insurance coverage in an amount of at least [***] per loss occurrence for any period during which the Parties or
their Affiliates or any of their Sublicensees are conducting a clinical trial and [***] for any period during which the
Parties or their Affiliates or any of their Sublicensees are selling Collaboration Product(s) or Licensed Product(s).
The Parties shall maintain workers’ compensation insurance in accordance with statutory requirements not less
than [***]. Each of the above insurance policies shall be primary insurance. It is understood that such insurance
will not be construed to create a limit of either Party’s liability with respect to its indemnification obligations under
this Article 12 (Indemnification). GenFleet shall name Verastem as an additional insured by endorsement on
product liability insurance policies and shall carry insurance with insurance companies with an A.M. Best’s rating
of A-VII or better. Each Party will provide the other Party with written evidence of such insurance upon request.
Each Party will provide the other Party with written notice at least 30 days prior to the cancellation, nonrenewal, or
material change in such insurance that materially adversely affects the rights of the other Party hereunder.
Notwithstanding any provision to the contrary set forth in this Agreement, Verastem may self-insure in whole or in-
part the insurance requirements described in this Section 12.5 (Insurance) in accordance with its own internal
policies for self-insurance.
ARTICLE 13
CONFIDENTIALITY
13.1.
Confidentiality. Except to the extent expressly authorized by this Agreement or otherwise agreed to by the Parties
in writing, during the Term and for seven years thereafter, the Parties agree that the receiving Party will keep
confidential and will not publish or otherwise disclose or use for any purpose other than as provided for in this
Agreement (a) the terms of this Agreement or (b) any information and materials furnished to the receiving Party by
or on behalf of the disclosing Party or any of its Affiliates or generated pursuant to this Agreement (collectively,
“Confidential Information”); provided that, for any Confidential Information that constitutes trade secrets of the
disclosing Party, the obligations set forth in this Article 13 (Confidentiality) will continue for as long as such
Confidential Information remains trade secrets pursuant to applicable law. Confidential Information of a Party or
any of its Affiliates will include all information and materials disclosed by such Party or any of its Affiliates or
their respective designees that (i) is marked as “Confidential,” “Proprietary,” or with a similar designation at the
time of disclosure, or (ii) by its nature can reasonably be expected to be considered Confidential Information by the
receiving Party. The receiving Party will keep the Confidential Information of the disclosing Party confidential
using at least the same degree of care with which the receiving Party holds its own confidential information (but in
no event less than a reasonable degree of care).
13.2.
Exceptions. Confidential Information of a disclosing Party will not be subject to the non-disclosure obligations in
this Article 13 (Confidentiality) to the extent that the receiving Party can demonstrate through competent evidence
that such information:
(a)
was already known to the receiving Party, other than under an obligation of confidentiality
(except to the extent such obligation has expired or an exception is applicable under the
relevant agreement pursuant to which such obligation was established), at the time of
disclosure;
(b)
was generally available to the public or otherwise part of the public domain at the time of
its disclosure to the receiving Party;
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(c)
became generally available to the public or otherwise part of the public domain after its
disclosure, other than through any act or omission of the receiving Party in breach of this
Agreement;
(d)
was independently developed by the receiving Party as demonstrated by written
documentation prepared contemporaneously with such independent development; or
(e)
was disclosed to the receiving Party, other than under an obligation of confidentiality
(except to the extent such obligation has expired or an exception is applicable under the
relevant agreement pursuant to which such obligation was established), by a Third Party
who had no obligation to the disclosing Party not to disclose such information to others.
13.3.
Permitted Disclosure. Except as expressly provided otherwise in this Agreement or agreed by the Parties, the
receiving Party may use and disclose Confidential Information of the disclosing Party solely as follows:
13.3.1. as permitted by and in accordance with Section 13.4.2 (Securities Filings; Disclosure under by Applicable
Law), to the U.S. Securities and Exchange Commission or any national securities exchange in any country
(each, a “Securities Regulator”);
13.3.2. in response to a valid order of a court of competent jurisdiction or other governmental authority or
Regulatory Authority or, if in the reasonable opinion of the receiving Party’s legal counsel, such disclosure
is otherwise required by applicable law; provided that, to the extent legally permissible, the receiving Party
will provide prior written notice to the disclosing Party and provide the disclosing Party a reasonable
opportunity to quash such order or to obtain a protective order or confidential treatment requiring that the
Confidential Information and documents that are the subject of such order or requirement be held in
confidence by such court, governmental authority, or Regulatory Authority or, if disclosed, be used only for
the purposes for which the order was issued and redacted in accordance with the disclosing Party’s
instruction; provided further that the Confidential Information disclosed in response to such court or
governmental order or applicable law will be limited to that information which is legally required to be
disclosed in response to such court or governmental order or applicable law;
13.3.3. solely to the extent reasonably necessary to exercise such receiving Party’s rights to prosecute and maintain
any Patent Rights for which it has a right under Section 10.2 (Prosecution and Maintenance); provided that
the receiving Party will provide the disclosing Party with at least 60 days’ prior written notice of any such
disclosure and take reasonable and lawful actions to avoid or minimize the degree of disclosure;
13.3.4. to a Regulatory Authority, as reasonably required or useful in connection with any filing, submission, or
communication with respect to any Compound or Product; provided that the receiving Party will take
reasonable measures to obtain confidential treatment of such information, to the extent such protection is
available;
13.3.5. disclosure (a) to any of its officers, employees, consultants, agents, advisors, or Affiliates who need to
know such Confidential Information to perform on behalf of such Party under this Agreement; or (b) to any
actual or potential collaborators, partners, licensees, Sublicensees, or contractors in connection with the
Exploitation of Compounds or Products or otherwise to the extent necessary or useful for the receiving
Party to exercise its rights or perform its obligations hereunder; provided that prior to any such disclosure
((a) or (b)) each such Person is bound by written obligations of
61
confidentiality, non-disclosure, and non-use no less restrictive than the obligations set forth in this Article
13 (Confidentiality) to maintain the confidentiality thereof and not to use such Confidential Information
except as expressly permitted by this Agreement; provided, however, that (i) in the case of prospective
investment bankers, investors, lenders or other financial partners, the terms of confidentiality may be
shortened to the customary period for the type and scope of such disclosure; provided, further, that, in each
of clauses (a) and (b) of this Section 13.3.5 (Permitted Disclosure), the receiving Party will remain
responsible for any failure by any Person who receives Confidential Information from such receiving Party
pursuant to this Section 13.3.5 (Permitted Disclosure) to treat such Confidential Information as required
under this Article 13 (Confidentiality); and
13.3.6. disclosure to its advisors (including attorneys and accountants) in connection with activities under this
Agreement; provided that prior to any such disclosure, each such Person is bound by written obligations of
confidentiality, non-disclosure, and non-use no less restrictive than the obligations set forth in this Article
13 (Confidentiality) or by professional codes of conduct to maintain the confidentiality thereof and not to
use such Confidential Information except as expressly permitted by this Agreement; provided, however,
that the receiving Party will remain responsible for any failure by any Person who receives Confidential
Information from such receiving Party pursuant to this Section 13.3.6 (Permitted Disclosure) to treat such
Confidential Information as required under this Article 13 (Confidentiality).
13.4.
Terms of this Agreement.
13.4.1. Terms Confidential. The Parties agree that this Agreement and the terms hereof will be deemed to be
Confidential Information of both GenFleet and Verastem, and each Party agrees not to disclose this
Agreement or any terms hereof without obtaining the prior written consent of the other Party; provided that
each Party may disclose this Agreement or any terms hereof in accordance with the provisions of Section
13.3 (Permitted Disclosure), Section 13.4.2 (Securities Filings; Disclosure under Applicable Law), or
Section 13.5 (Press Releases), as applicable.
13.4.2. Securities Filings; Disclosure under Applicable Law. Each Party acknowledges and agrees that the other
Party may submit this Agreement to, or file this Agreement with, the Securities Regulators or other
Persons as may be required by applicable law, and if a Party submits this Agreement to, or files this
Agreement with, any Securities Regulator or other Person as may be required by applicable law, such Party
agrees to consult with the other Party with respect to the preparation and submission of a confidential
treatment request for this Agreement. Notwithstanding the foregoing, if a Party is required by any
Securities Regulator or other Person as may be required by applicable law to make a disclosure of the
terms of this Agreement in a filing or other submission as required by such Securities Regulator or such
other Person, and such Party has: (a) provided copies of the disclosure to the other Party reasonably in
advance under the circumstances of such filing or other disclosure; (b) promptly notified the other Party in
writing of such requirement and any respective timing constraints; and (c) given the other Party reasonable
time under the circumstances from the date of provision of copies of such disclosure to comment upon and
request confidential treatment for such disclosure, then such Party will have the right to make such
disclosure at the time and in the manner reasonably determined by its counsel to be required by the
Securities Regulator or the other Person pursuant to applicable law. Notwithstanding the foregoing, if a
Party seeks to make a disclosure as required by a Securities Regulator or other Person as may be required
by applicable law as set forth in this Section 13.4.2 (Securities Filings; Disclosure under Applicable Law)
and the other Party provides comments in accordance with this Section 13.4.2 (Securities Filings;
Disclosure under Applicable Law), then the Party seeking to make such disclosure or its counsel, as the
case may be, will incorporate such comments to the extent legally permissible.
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13.5.
Press Releases.
13.5.1. Joint Press Release. The Parties will issue a press release substantially in the form attached hereto as
Schedule 13.5.1 (Form of Press Release) upon a mutually agreed-upon date after the Effective Date.
13.5.2. GenFleet’s Rights. GenFleet and its Affiliates will not make any other press release or other public
statement disclosing this Agreement, or the activities hereunder or thereunder, or the transactions
contemplated by this Agreement, without Verastem’s prior written consent. The contents of any press
release or other public statement that has been reviewed and approved by Verastem may be re-released by
GenFleet or its Affiliates in exactly the same language as previously approved by Verastem without first
obtaining Verastem’s prior written consent in accordance with this Section 13.5.2 (GenFleet’s Rights).
13.5.3. Verastem’s Rights. Verastem will have the right to issue any press release or other public statement
disclosing this Agreement, the activities under this Agreement or the transactions contemplated by this
Agreement, or information or results related to the Licensed Compound or Licensed Products, without first
obtaining the prior written consent of GenFleet; except that any press release or other public statement that
names GenFleet or includes the Confidential Information of GenFleet would require the prior written
consent of GenFleet. Without limiting the foregoing, the contents of any press release or other public
statement that has been reviewed and approved by GenFleet may be re-released by Verastem or its
Affiliates in exactly the same language as previously approved by Verastem or without first obtaining
Verastem’s prior written consent in accordance with this Section 13.5.3 (Verastem’s Rights).
13.6.
Use of Names. Except as otherwise expressly set forth herein, and subject to Section 13.5 (Press Releases), neither
Party (or any of its respective Affiliates) will use any corporate name or Trademark of the other Party or any of its
Affiliates, or its or their respective employees, in any publicity, promotion, news release, or other public disclosure
relating to this Agreement or its subject matter, without first obtaining the prior written consent of the other Party;
provided that such consent will not be required to the extent use thereof may be required by applicable law,
including the rules of any securities exchange or market on which a Party’s or its Affiliate’s securities are listed or
traded. Each Party will retain all rights, title and interests in and to all such corporate names and Trademarks of
such Party and its Affiliates.
13.7.
Publications. Within [***] following the Effective Date, the JSC will prepare a written joint publication strategy
for the Licensed Compounds and Licensed Products in the Territory and Retained Territory (the “Joint Publication
Strategy”). Either Party may propose updates to the Joint Publication Strategy at any time through the JSC;
provided that until such update is agreed by the Parties, the status quo under the then- current Joint Publication
Strategy will continue unless otherwise mutually agreed by the Parties in writing. During the Term and in
accordance with the Joint Publication Strategy, (a) Verastem will have the sole and exclusive right to publish
(whether through papers, oral presentations, abstracts, posters, manuscripts, or other presentations) with respect to
the Development and Exploitation of the Licensed Compounds and Licensed Products in the Field in the Territory;
and (b) GenFleet will have the sole and exclusive right to publish (whether through papers, oral presentations,
abstracts, posters, manuscripts, or other presentations) with respect to the Development and Exploitation of the
Licensed Compounds or Licensed Products in the Field in the Retained Territory. To the extent a Party has a right
pursuant to this Section 13.7 (Publications) to make a publication, the publishing Party will provide the other Party
an opportunity to review such publication to determine whether such publication contains the Confidential
Information of such other Party. The publishing Party will deliver to the reviewing Party a copy of any such
proposed publication (or, with respect to oral disclosures, an outline of the proposed oral disclosure, together with
any slides or other materials to be provided in connection with such oral disclosure (if any)), at least [***] prior to
63
submission for publication or presentation for review by the reviewing Party. The reviewing Party will have the
right, in its sole discretion, to: (i) require the removal of its Confidential Information from any such publication by
the publishing Party, or (ii) request a reasonable delay in publication or presentation in order to protect patentable
information. If the reviewing Party requests such a delay, then the publishing Party will delay submission or
presentation for a period of [***] after its provision of the copy of the proposed publication or disclosure to enable
patent applications protecting the reviewing Party’s rights in such information. For clarity, patent applications and
filings or correspondences with Regulatory Authorities will not constitute “publications” for purposes of this
Section 13.7 (Publications).
ARTICLE 14
TERM AND TERMINATION
14.1.
Term. This Agreement will commence on the Effective Date and, unless earlier terminated pursuant to this Article
14 (Term and Termination), will continue until (a) if Verastem does not exercise any of its Options, the expiration
of the Discovery Period, or (b) if Verastem exercises one or more of its Options, on a Licensed Product-by-
Licensed Product and country-by-country basis, until the expiration of the Royalty Term for such Licensed Product
in such country (the “Term”).
14.2.
Termination at Will. Verastem will have the right for any or no reason to terminate this Agreement: (a) in its
entirety; (b) in part on a Collaboration Program-by-Collaboration Program basis as set forth in Section 2.2.5
(Termination of an Option) or Licensed Program-by-Licensed Program basis; or (c) in part on a Licensed Product-
by-Licensed Product and country-by-country basis, in each case ((a) – (c)) by providing 90 days prior written
notice to GenFleet.
14.3.
Termination for Material Breach.
14.3.1. Termination Right. This Agreement may be terminated by a Party (a) in its entirety, if there is a material
breach of this Agreement by the other Party with respect to this Agreement as a whole, or
(b) in part on a Licensed Product-by-Licensed Product and country-by-country basis, if there is a material
breach of this Agreement by the other Party with respect to a particular country or Licensed Product, in
each case ((a) and (b)), following written notice (which notice will describe such material breach in
reasonable detail and will state the non-breaching Party’s intention to terminate this Agreement, in its
entirety or in part) to the breaching Party if the breaching Party has not cured such material breach within
60 days after the date of such written notice (the “Cure Period”). In the event that a material breach is
curable but the breaching Party demonstrates that such material breach cannot be reasonably cured within
the Cure Period despite the breaching Party’s diligent efforts, then the breaching Party will be allowed to
continue to cure such material breach using diligent efforts for an additional 60 days or such longer period
as mutually agreed upon by the Parties.
14.3.2. Disagreement as to Material Breach. Notwithstanding Section 14.3.1 (Termination Right), if the Parties
in good faith disagree as to whether there has been a material breach of this Agreement, then: (a) the
alleged breaching Party may contest the allegation by referring such matter, within [***] following its
receipt of notice of the alleged material breach, for resolution in accordance with Article 15 (Dispute
Resolution); (b) the relevant Cure Period with respect to such alleged material breach will be tolled from
the date on which the alleged breaching Party notifies the other Party of such dispute in accordance with
Article 15 (Dispute Resolution); and (c) during the pendency of such dispute, all of the terms and
conditions of this Agreement will remain in full force and effect and the Parties will continue to perform all
of their respective obligations hereunder.
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14.4.
Termination for Insolvency. In the event that either Party: (a) files for protection under the Bankruptcy Code or
any similar bankruptcy or insolvency law, foreign or domestic; (b) makes an assignment for the benefit of, or an
arrangement or composition generally with, its creditors; (c) appoints an examiner of or a receiver or trustee over
all or substantially all of its property or suffers the appointment of such party that is not discharged within 60 days
after such filing or appointment; (d) proposes a written agreement of composition or extension of its debts; (e)
proposes or is a party to any dissolution, liquidation or winding up; (f) has a petition filed against it under the
Bankruptcy Code or any similar bankruptcy or insolvency law that is not discharged or dismissed within 60 days of
the filing thereof; or (g) admits in writing its inability generally to meet its obligations as they fall due in the
ordinary course (each, an “Insolvency Event”), then the other Party may terminate this Agreement in its entirety
effective immediately upon written notice to such Party.
14.5.
Verastem’s Alternative Remedy in Lieu of Termination.
14.5.1. If during the Term, Verastem has the right to terminate this Agreement as described in Section 14.3
(Termination for Material Breach) or Section 14.4 (Termination for Insolvency), then in lieu of terminating
this Agreement Verastem may, in its sole discretion, exercise an alternative remedy as follows, which
GenFleet stipulates and agrees would be a reasonable remedy in such circumstance and not a penalty:
(a)
Verastem may retain all of its licenses and other rights granted under this Agreement,
subject to all of its payment and other obligations; provided that (i) the then-unearned Pre-
Option Development Milestone Payments, Development and Commercialization Milestone
Payments, Sales Milestone Payments, royalty payments, and Sublicense Fees payable
thereafter under this Agreement will be reduced by [***], effective from and after the
delivery of the applicable notice of breach or insolvency, and (ii) Verastem’s obligations
under Section 5.3.3 (Verastem Development Diligence Obligations) and Section 8.2
(Commercialization Diligence Obligations) will terminate; and
(b)
any Confidential Information of Verastem that is in GenFleet’s possession or control will
be promptly returned to Verastem (or, as directed by Verastem, destroyed), and Verastem
will be released from its ongoing disclosure and information exchange obligations under
this Agreement following the date of such election.
14.5.2. For the avoidance of doubt, except as set forth in this Section 14.5 (Verastem’s Alternative Remedy in Lieu
of Termination), if Verastem exercises the alternative remedy set forth above in this Section 14.5
(Verastem’s Alternate Remedy in Lieu of Termination), then all rights and obligations of both Parties under
this Agreement will continue unaffected, unless and until this Agreement subsequently expires or
terminates as described in this Article 14 (Term and Termination).
14.6.
Effects of Expiration or Termination.
14.6.1. Licensed Rights.
(a)
Upon Expiration. Following the end of the Term for the applicable Collaboration Program
or applicable Licensed Product in a country in the Territory by expiration (but not
termination), the licenses granted to Verastem under Section 2.1 (Discovery Period
License Grant) and Section 2.2.4(b) (License Grant to Verastem) will survive termination
and become perpetual, irrevocable, fully
65
paid-up, and royalty-free. Following such expiration, all rights and obligations of the
Parties under this Agreement with respect to such Collaboration Program or Licensed
Product and such country will cease except as otherwise set forth in this Section 14.6
(Effects of Expiration or Termination) or elsewhere in this Agreement. For clarity, such
expiration will not affect the Parties’ rights and obligations under this Agreement with
respect to other Collaboration Programs or Licensed Products or countries in the Territory
for which this Agreement has not expired.
(b)
Upon Termination. Upon any termination of this Agreement with respect to any
Collaboration Program that has been terminated pursuant to Section 14.2 (Termination
at Will), Terminated Product, or Terminated Country (as applicable), all rights and
obligations of the Parties under this Agreement with respect to such terminated
Collaboration Program, Terminated Product, and Terminated Country (as applicable)
(including any licenses granted by a Party hereunder, except as necessary for the other
Party to perform its surviving obligations hereunder) will cease except as otherwise set
forth in this Section 14.6 (Effects of Expiration or Termination) (including Section
14.6.2 (Sublicense Survival)) or elsewhere in this Agreement. For clarity, such termination
will not affect the Parties’ rights and obligations under this Agreement with respect to
other Collaboration Programs, Licensed Products, or countries in the Territory for which
this Agreement has not terminated.
14.6.2. Sublicense Survival. Upon termination of this Agreement in whole or in part, upon the request of any
Sublicensee, GenFleet will enter into a direct license from GenFleet to such Sublicensee on the same terms
as this Agreement, taking into account any difference in license scope, territory, and duration of sublicense
grant (each a “New License Agreement”); provided that such Sublicensee is not, at the time of such
termination, in breach of its sublicense agreement. Under any such New License Agreement between
GenFleet and such former Sublicensee, such Sublicensee will be required to pay to GenFleet the same
amounts in consideration for such direct grant as GenFleet would have received from Verastem pursuant to
this Agreement on account of such Sublicensee’s Exploitation of Licensed Compounds or Licensed
Products had this Agreement not been terminated. Notwithstanding the foregoing, GenFleet will not be
obligated to enter into a New License Agreement with a Sublicensee unless such Sublicensee notifies
GenFleet within [***] after the termination of this Agreement that it wishes to enter into a New License
Agreement.
14.6.3. Return of Confidential Information. Upon the termination of this Agreement with respect to any
Collaboration Program that has been terminated pursuant to Section 14.2 (Termination at Will), Terminated
Product, or Terminated Country, the receiving Party will return (or, as directed by the disclosing Party,
destroy) all Confidential Information of the disclosing Party to the disclosing Party that is related to such
Terminated Product and Terminated Country that is in the receiving Party’s possession or control (other
than any Confidential Information that is required for the receiving Party to continue to exercise its rights
that survive termination of this Agreement); provided, however, that copies of such Confidential
Information may be retained and stored by the receiving Party solely for the purpose of determining a
Party’s obligations under this Agreement, subject to the non-disclosure and non-use obligations under
Article 13 (Confidentiality) or as required by applicable law. Notwithstanding the foregoing, the receiving
Party will not be required to return or destroy Confidential Information contained in any computer system
back-up records made in the ordinary course of business; provided that such Confidential Information may
not be accessed without the disclosing Party’s prior written consent or as required by applicable law.
66
14.6.4. Other Remedies. Termination or expiration of this Agreement for any reason will not release either Party
from any liability or obligation that already has accrued prior to such expiration or termination, nor affect
the survival of any provision hereof to the extent it is expressly stated to survive such termination.
Termination or expiration of this Agreement for any reason will not constitute a waiver or release of, or
otherwise be deemed to prejudice or adversely affect, any rights, remedies or claims, whether for Damages
or otherwise, that a Party may have hereunder or that may arise out of or in connection with such
termination or expiration.
14.6.5. Survival. Termination or expiration of this Agreement will not affect rights or obligations of the Parties
under this Agreement that have accrued prior to the date of termination or expiration of this Agreement.
Notwithstanding any provision to the contrary set forth in this Agreement, the following provisions will
survive and apply after expiration or termination of this Agreement in its entirety: Article 1 (Definitions),
Section 5.5 (Development Records), Section 6.8 (Remedial Actions), Section 9.4.1(c) (Invoicing and
Payment of Pre-Option Development Milestone Payments) (solely with respect to amounts that have
become due and payable prior to the effective date of termination), Section 9.4.2(c) (Invoicing and
Payment of Development and Commercialization Milestone Payments) (solely with respect to amounts that
have become due and payable prior to the effective date of termination), Section 9.4.3(c) (Invoicing and
Payment of Sales Milestone Payments) (solely with respect to amounts that have become due and payable
prior to the effective date of termination), Section 9.5.4 (Invoicing and Payment of Royalties) (solely with
respect to amounts that have become due and payable prior to the effective date of termination), Section
9.6.3 (Invoicing and Payment of Sublicense Fee) (solely with respect to amounts that have become due and
payable prior to the effective date of termination), Section 9.7 (Payment Reports) (solely with respect to
amounts that have become due and payable prior to the effective date of termination), Section 9.9
(Records; Audit Rights) (solely for the time periods set forth therein), Section 9.10 (Taxes) (solely with
respect to amounts that have become due and payable prior to the effective date of termination), Section
10.1 (Intellectual Property Ownership), Article 12 (Indemnification), Article 13 (Confidentiality) (solely
for the time period set forth therein), Section 14.6 (Effects of Expiration or Termination), Section 15.2
(Arbitration), Section 15.4 (Injunctive Relief), and Article 16 (Miscellaneous). In addition, the other
applicable provisions of Article 9 (Financials) will survive such expiration or termination of this
Agreement in its entirety to the extent required to make final reimbursements, reconciliations, or other
payments incurred or accrued prior to the date of termination or expiration. All provisions not surviving in
accordance with the foregoing will terminate upon expiration or termination of this Agreement and be of
no further force and effect.
ARTICLE 15
DISPUTE RESOLUTION
15.1.
Resolution by Executive Officers. In the event of any dispute between the Parties under this Agreement (other
than the matters that are subject to resolution by the JSC under Article 4 (Governance)), the Parties will first
attempt in good faith to resolve such dispute by negotiation and consultation between themselves. If such dispute is
not resolved on an informal basis within [***], then either Party may refer the matter to the Executive Officers of
the Parties for attempted resolution, whereupon the Executive Officers will confer and attempt in good faith to
resolve such dispute by negotiation and consultation for a [***] period following such referral.
15.2.
Arbitration. With the exception of legal actions, proceedings, or claims described in Section 15.4 (Injunctive
Relief) and Section 15.3 (Patent Right and Trademark Disputes) below, any legal action or proceedings to resolve a
dispute that was not resolved under Section 15.1 (Resolution by Executive Officers) shall be resolved through
arbitration as follows:
67
15.2.1. A Party may submit such dispute to arbitration by providing written notice to the other Party of such
dispute. Within [***] days after receipt of such notice, the Parties shall designate in writing a single
arbitrator to resolve the dispute; provided, however, that if the Parties cannot agree on an arbitrator within
such [***]-day period, then the arbitrator shall be selected by the Singapore office of the American
Arbitration Association-International Centre for Dispute Resolution (the “AAA- ICDR”). The arbitrator
shall not be an Affiliate, employee, consultant, officer, director, or stockholder of any Party and shall not
have worked for or with either Party in the five years preceding the selection of such arbitrator.
15.2.2. The arbitration shall be governed by the International Arbitration Rules & Procedures of the International
Centre for Dispute Resolution (“ICDR”), and unless otherwise mutually agreed by the Parties the
arbitration shall be conducted by a single arbitrator.
15.2.3. The arbitrator shall use his or her best efforts to rule within [***] after the completion of the hearing
described in Section 15.2.2 (Arbitration). The determination of the arbitrator as to the resolution of any
dispute shall be binding and conclusive upon all Parties. The arbitrator shall issue a reasoned opinion in
writing and shall deliver such opinion to the Parties. The Parties agree that the arbitrator may engage one or
more Experts to assist the arbitrator in making a decision, and the fees and expenses of such expert(s) shall
be deemed expenses of the arbitration for purposes of Section 15.2.4 (Arbitration). The arbitrator shall seek
to obtain the mutual agreement of the Parties regarding the selection of such Expert(s), but absent such
agreement, the Expert(s) shall be selected by the arbitrator. For such purposes, an “Expert” means a
disinterested individual who has expertise and experience with respect to the subject matter of dispute, as
determined by the arbitrator. Neither the Expert nor any of the Expert’s former employers shall be or have
been at any time an Affiliate, employee, officer or director of, or consultant for, either Party or any of its
Affiliates.
15.2.4. The arbitrator will be empowered to award Damages only to the extent of actual Damages suffered, and
only to the extent consistent with Section 12.4 (Limitation of Liability), in each case, regardless of whether
any such Damages are contained in a proposal. The arbitrator will not be authorized to reform, modify, or
materially change this Agreement. Each Party will bear (a) its own costs and expenses and attorneys’ fees
and (b) an equal share of the arbitrator’s fees and any administrative fees of arbitration, in each case, unless
the arbitrator determines that a Party has incurred unreasonable expenses due to vexatious or bad faith
positions taken by the other Party, in which event the arbitrators may make an award of all or any portion
of such expenses (including attorneys’ fees and expenses) so incurred.
15.2.5. Any arbitration pursuant to this Section 15.2 (Arbitration) shall be conducted in Singapore. Any arbitration
award may be entered in and enforced by any court of competent jurisdiction.
15.2.6. Nothing in this Section 15.2 (Arbitration) shall be construed as limiting in any way the right of a Party to
seek an injunction or other equitable relief with respect to any actual or threatened breach of this
Agreement or to bring an action in aid of arbitration. Should any Party seek an injunction or other equitable
relief, or bring an action in aid of arbitration, then for purposes of determining whether to grant such
injunction or other equitable relief, or whether to issue any order in aid of arbitration, the dispute
underlying the request for such injunction or other equitable relief, or action in aid of arbitration, may be
heard by the court in which such action or proceeding is brought.
15.2.7. Any award of the arbitrator may be entered in any court of competent jurisdiction for a judicial recognition
of the decision and applicable orders of enforcement.
68
15.3.
Patent Right and Trademark Disputes. Notwithstanding any provision to the contrary set forth in this
Agreement, any and all issues regarding the scope, construction, validity, and enforceability of any Patent Right or
Trademark relating to a Licensed Product will be determined in a court or other tribunal, as the case may be, of
competent jurisdiction under the applicable patent or trademark laws of the country in which such Patent Right or
Trademark were granted or arose.
15.4.
Injunctive Relief. Nothing in this Article 15 (Dispute Resolution) will preclude either Party from seeking equitable
relief or interim or provisional relief from a court of competent jurisdiction, including a temporary restraining
order, preliminary injunction, or other interim equitable relief, concerning a dispute either prior to or during any
proceeding if necessary to protect the interests of such Party or to preserve the status quo pending the proceeding.
ARTICLE 16
MISCELLANEOUS
16.1.
Entire Agreement; Amendment. This Agreement, including the Schedules hereto, sets forth the complete, final,
and exclusive agreement and all the covenants, promises, agreements, warranties, representations, conditions, and
understandings between the Parties hereto with respect to the subject matter hereof and supersedes all prior
agreements and understandings between the Parties existing as of the Effective Date with respect to the subject
matter hereof. There are no covenants, promises, agreements, warranties, representations, conditions, or
understandings, either oral or written, between the Parties other than as are set forth herein and therein. In the event
of a conflict between this Agreement and a Supply Agreement, this Agreement will govern. In the event of a
conflict between this Agreement and the Quality Agreement, this Agreement will govern, except that the Quality
Agreement will govern with regards to quality matters. In the event of a conflict between this Agreement and the
Pharmacovigilance Agreement, this Agreement will govern. No subsequent alteration, amendment, change, or
addition to this Agreement will be binding upon the Parties unless reduced to writing and signed by an authorized
officer of each Party.
16.2.
Assignment. Except as provided in this Section 16.2 (Assignment), this Agreement may not be assigned or
transferred, whether by operation of law or otherwise, nor may any right or obligation hereunder be assigned or
transferred, by either Party without the prior written consent of the other Party; provided, however, that,
notwithstanding any provision in this Agreement to the contrary, either Party may, without such consent, assign this
Agreement and its rights and obligations hereunder in whole or in part: (a) to an Affiliate; or (b) to its successor in
interest in a Change of Control transaction. Any attempted assignment not in accordance with this Section 16.2
(Assignment) will be null, void, and of no legal effect. Any permitted successor or assignee of rights or obligations
hereunder will, in a writing to the other Party, expressly assume performance of such rights or obligations (and in
any event, any Party assigning this Agreement to an Affiliate will remain bound by the terms and conditions
hereof). The terms of this Agreement will be binding upon, and will insure to the benefit of, the Parties and their
respective successors and permitted assigns. In the event that a permitted assignment of this Agreement by a Party
increases the tax liability of the other Party or any of its Affiliates over the amount of any taxes that otherwise
would have been payable in the absence of such assignment, the assigning Party will reimburse the other Party for
the amount of such increased tax liability.
16.3.
Force Majeure. Neither Party shall be held liable to the other Party nor be deemed to have defaulted under or
breached this Agreement for failure or delay in performing any obligation under this Agreement (other than the
obligation to pay any amounts when due) to the extent such failure or delay is caused by or results from causes
beyond the reasonable control of the affected Party, including pandemics, acts of terrorism, insurrections, riots,
civil commotions, strikes, lockouts or other labor disturbances (except for a strike, lockout or labor disturbance
with respect to the non-performing Party’s respective employees or agents), fire, floods, earthquakes or other acts
of God, or any generally applicable action or inaction by any
69
Regulatory Authority (but excluding any government action or inaction that is specific to such Party, its Affiliates
or Sublicensees, such as revocation or non-renewal of such Party’s license to conduct business), or omissions or
delays in acting by the other Party. The affected Party shall notify the other Party in writing of such force majeure
circumstances as soon as reasonably practical, and shall promptly undertake and continue diligently all reasonable
efforts necessary to cure such force majeure circumstances or to perform its obligations despite the ongoing
circumstances. The Parties agree the effects of the COVID-19 pandemic that is ongoing as of the Effective Date
may be invoked as a force majeure for the purposes of this Agreement, even though the pandemic is ongoing, to
the extent those effects are not reasonably foreseeable by the Parties as of the Effective Date.
16.4.
Notices. Any notice required or permitted to be given under this Agreement will be in writing, will specifically
refer to this Agreement, and will be addressed to the appropriate Party at the address specified below or such other
address as may be specified by such Party in writing in accordance with this Section 16.4 (Notices), and will be
deemed to have been given for all purposes: (a) when received, if hand- delivered or sent by a reputable
international expedited delivery service, or (b) five Business Days after mailing, if mailed by first class certified or
registered mail, postage prepaid, return receipt requested. This Section 16.4 (Notices) is not intended to govern the
day-to-day business communications necessary between the Parties in performing their obligations under the terms
of this Agreement.
If to GenFleet:
GenFleet Therapeutics (Shanghai), Inc.
1206 Zhangjiang Road, Suite A
Pudong District, Shanghai, 201203, P. R. China
Attention: John Chen
Email: johnchen@genfleet.com
If to Verastem:
Verastem, Inc.
117 Kendrick St., Suite 500
Needham, MA 02494
Attention: Daniel Paterson, President and COO
Email: dpaterson@Verastem.com
With copies to (which will not constitute notice):
Ropes & Gray LLP
800 Boylston Street; Prudential Tower
Boston, MA 02199
Attention: Abigail Gregor
Email: Abigail.Gregor@ropesgray.com
16.5.
No Strict Construction; Headings. This Agreement has been prepared jointly and will not be strictly construed
against either Party. Ambiguities, if any, in this Agreement will not be construed against any Party, irrespective of
which Party may be deemed to have authored the ambiguous provision. The headings of each Article, Section, and
Schedule in this Agreement have been inserted for convenience of reference only and are not intended to limit or
expand on the meaning of the language contained in the particular Article, Section, or Schedule.
70
16.6.
Interpretation. Except where the context expressly requires otherwise, (a) the use of any gender herein shall be
deemed to encompass references to either or both genders, and the use of the singular shall be deemed to include
the plural (and vice versa), (b) the words “include”, “includes”, and “including” shall be deemed to be followed by
the phrase “without limitation”, (c) the word “will” shall be construed to have the same meaning and effect as the
word “shall” (and vice versa), (d) any definition of or reference to any agreement, instrument, or other document
herein shall be construed as referring to such agreement, instrument, or other document as from time to time
amended, supplemented, or otherwise modified (subject to any restrictions on such amendments, supplements, or
modifications set forth herein), (e) any reference herein to any Person shall be construed to include the Person’s
successors and assigns, (f) the words “herein”, “hereof”, and “hereunder”, and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any particular provision hereof, (g) all references
herein to Sections or Schedules shall be construed to refer to Sections or Schedules of this Agreement, and
references to this Agreement include all Schedules hereto, (h) the word “notice” means notice in writing (whether
or not specifically stated) and shall include notices, consents, approvals, and other written communications
contemplated under this Agreement, (i) provisions that require that a Party or the Parties “agree”, “consent”, or
“approve” or the like shall require that such agreement, consent, or approval be specific and in writing, whether by
written agreement, letter, approved minutes, or otherwise (but excluding e-mail and instant messaging), (j)
references to any specific law, rule or regulation, or Section, section or other division thereof, shall be deemed to
include the then-current amendments thereto or any replacement or successor law, rule or regulation thereof, and
(k) the term “or” shall be interpreted in the inclusive sense commonly associated with the term “and/or.”
16.7.
Performance by Affiliates. Each Party may perform any obligations and exercise any right hereunder through any
of its Affiliates; provided that such Party will remain primarily responsible to the other Party hereunder. Each Party
hereby guarantees the performance by any of its Affiliates of such Party’s obligations under this Agreement, and
will cause its Affiliates to comply with the provisions of this Agreement in connection with such performance. Any
breach by a Party’s Affiliate of any of such Party’s obligations under this Agreement will be deemed a breach by
such Party, and the other Party may proceed directly against such Party without any obligation to first proceed
against such Party’s Affiliate.
16.8.
Language; Translations. All communications and notices to be made or given by one Party to the other Party
pursuant to this Agreement and any dispute proceeding related to or arising hereunder, will be in the English
language. If any data, information, documentation, or other materials required to be delivered by GenFleet to
Verastem under this Agreement are not already in English, then, together with the original form, GenFleet will
provide to Verastem a full certified English translation of such data, information, documentation, or other materials
at GenFleet’s cost and expense. GenFleet will provide any data, information, documentation, or other materials
required to be delivered by GenFleet to Verastem under this Agreement (a) in electronic format over secure
systems that include adequate encryption safeguards to prevent unauthorized access and maintain data security or
(b) in such other format as is requested by Verastem (including, if so requested, hard copies).
16.9.
Further Actions. Each Party agrees to execute, acknowledge, and deliver such further instruments, and to do all
such other acts, as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement.
16.10. Choice of Law. This Agreement will be governed by, and enforced and construed in accordance with, the laws of
the state of Delaware, without regard to its conflicts of law provisions.
16.11.
Severability. If any one or more of the provisions of this Agreement is held to be invalid or unenforceable by an
arbitrator or by any court of competent jurisdiction from which no appeal can be or is taken, then the provision will
be considered severed from this Agreement and will not serve to invalidate any remaining
71
provisions hereof. The Parties will make a good faith effort to replace any invalid or unenforceable provision with
a valid and enforceable one such that the objectives contemplated by the Parties when entering into this Agreement
may be realized.
16.12. No Waiver. Any delay in enforcing a Party’s rights under this Agreement or any waiver as to a particular default or
other matter will not constitute a waiver of such Party’s rights to the future enforcement of its rights under this
Agreement, except with respect to an express written and signed waiver relating to a particular matter for a
particular period of time.
16.13. Independent Contractors. Each Party will act solely as an independent contractor, and nothing in this Agreement
will be construed to give either Party the power or authority to act for, bind, or commit the other Party in any way.
Nothing herein will be construed to create the relationship of partners, principal and agent, or joint-venture partners
between the Parties.
16.14. Counterparts. This Agreement may be executed in counterparts, all of which taken together will be regarded as
one and the same instrument. Counterparts may be delivered via electronic mail, including Adobe™ Portable
Document Format (PDF) or any electronic signature complying with the U.S. Federal ESIGN Act of 2000, and any
counterpart so delivered will be deemed to be original signatures, will be valid and binding upon the Parties, and,
upon delivery, will constitute due execution of this Agreement.
[The remainder of the page has been intentionally left blank. The signature page follows.]
IN WITNESS WHEREOF, the Parties have executed this Agreement by their duly authorized representatives as
of the Effective Date.
VERASTEM, INC.
GENFLEET THERAPEUTICS (SHANGHAI),
INC.
By:
/s/ Daniel Paterson
By:
/s/ Qiang Lu
Name:Daniel Paterson
NameQiang Lu
Title: President
Title: Chairman of Board
[Signature Page to Collaboration and Option Agreement]
Schedule 1.15
Available Targets
[***]
Schedule 1.46
Discovery Development Plan
[***]
Schedule 1.69
GenFleet Patent Rights
[***]
Schedule 1.103
Option Data Package
[***]
Schedule 6.6.3
Access to Data: HGRAC
Data Transfer and Deliverables
[***]
Schedule 11.2
Exceptions to Representations and Warranties of GenFleet
None
Schedule 11.2.13
Existing In-Licenses
None
Schedule 13.5.1
Form of Press Release
[***]
Exhibit 10.45
Name:
[_________]
Number of Restricted Stock Units:
[_________]
Date of Grant:
[_________]
Vesting Commencement Date:
[_________]
VERASTEM, INC.
2021 EQUITY INCENTIVE PLAN
Restricted Stock Unit Agreement
This agreement (this “Agreement”) evidences a grant (the “Award”) of Restricted Stock
Units (“RSUs”) by Verastem, Inc., a Delaware corporation (the “Company”), to the individual
named above (the “Participant”), pursuant to and subject to the terms of Verastem, Inc. 2021
Equity Incentive Plan (as from time to time amended and in effect, the “Plan”). Except as
otherwise defined herein, all capitalized terms used herein have the same meaning as in the Plan.
1.
Grant of RSUs. On the date of grant set forth above (the “Date of Grant”), the
Company granted to the Participant the number of Restricted Stock Units (“RSUs”) set forth
above, giving the Participant the conditional right to receive, without payment and pursuant to and
subject to the terms and conditions set forth in this Agreement and in the Plan, one share of Stock
(a “Share”) with respect to each RSU subject to this Award, subject to adjustment pursuant to
Section 7 of the Plan in respect of transactions occurring after the date hereof.
The RSUs are granted to the Participant in connection with the Participant’s Employment.
2.
Vesting. Unless earlier terminated, forfeited, relinquished or expired, the RSUs will
vest as to [ ] (with the number of RSUs that vest on each such date being rounded down to the
nearest whole RSU and with the Award becoming vested as to one hundred percent (100%) of the
RSUs on the final vesting date), in each case, subject to the Participant’s continued Employment
through the applicable vesting date. In the event of a Change in Control, all RSUs outstanding and
unvested immediately prior to such Change in Control will become fully vested immediately prior
to (and subject to the consummation of) such Change in Control. For purposes of this Agreement,
“Change in Control” shall mean (i) the acquisition of beneficial ownership (as defined in Rule
13d-3 under the Exchange Act) directly or indirectly by any “person” (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) of securities of the Company representing a
majority or more of the combined voting power of the Company’s then outstanding securities,
other than an acquisition of securities for investment purposes pursuant to a bona fide financing of
the Company; (ii) a merger or consolidation of the Company with any other corporation in which
the holders of the voting securities of the Company prior to the merger or consolidation do not own
more than fifty (50) percent of the total voting securities of the surviving corporation; or (iii) the
sale or disposition by the Company of all or substantially all of the Company’s assets other than a
sale or disposition of assets to an affiliate of the Company or a holder of securities of the Company.
-2-
3.
Cessation of Employment. If the Participant’s Employment ceases for any reason,
except as expressly provided in a written employment, change of control or severance-benefit
agreement between the Participant and the Company or one of its affiliates that is in effect at the
time of such cessation of Employment, the RSUs, to the extent not then vested, will be
immediately forfeited for no consideration.
4.
Dividends. The RSUs shall have no rights with respect to dividends declared by the
Company with respect to its capital stock; provided, that, the foregoing shall not prohibit or
otherwise limit the adjustment of the terms of this Agreement by the Administrator in accordance
with Section 7 of the Plan.
5.
Delivery of Shares. The Company shall, as soon as practicable upon the vesting of
any RSUs (but in no event later than thirty (30) days following the date on which such RSUs vest),
effect delivery of the Shares with respect to such vested RSUs to the Participant (or, in the event of
the RSUs have passed to the estate or beneficiary of the Participant or a permitted transferee, to
such estate or beneficiary or permitted transferee).
6.
Restrictions on Transfer. The RSUs may not be transferred except as expressly
permitted under Section 6(a)(3) of the Plan.
7.
Forfeiture; Recovery of Compensation. By accepting, or being deemed to have
accepted, the RSUs, the Participant expressly acknowledges and agrees that his or her rights, and
those of any permitted transferee, with respect to the RSUs, including the right to any Shares
acquired in respect of the RSUs and any amounts received in respect thereof, are subject to Section
6(a)(5) of the Plan (including any successor provision). The Participant further agrees to be bound
by the terms of any applicable clawback or recoupment policy of the Company. Nothing in the
preceding sentence will be construed as limiting the general application of Section 9 of this
Agreement.
8.
Taxes.
(a)
The Participant expressly acknowledges that the vesting and/or settlement of the
RSUs acquired hereunder may give rise to “wages” subject to withholding. The
number of shares of Stock necessary to satisfy the minimum statutory withholding
tax obligations on the vesting date or settlement date, as applicable, will
automatically be released by the Participant from the Shares otherwise deliverable
to the Participant hereunder on such date to a broker or other third-party
intermediary acceptable to the Company (the “Broker”) and sold in order to satisfy
such withholding tax obligations (“Sell to Cover”). The Participant hereby
authorizes the Company to instruct the Broker to sell such Shares. The Participant
will be responsible for all third-party administration processing fees in connection
with such Sell to Cover. In addition, the Participant may be subject to and taxed in
respect of short-term capital gains or losses that reflect the difference in the
withholding tax liability determined on the date that the Award vests and/or settles
hereunder and the sales price actually achieved.
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(b)
Notwithstanding anything in this Agreement to the contrary, the Participant
acknowledges and agrees that the Sell to Cover provision may not cover the
Participant’s full tax liability as it relates to the vesting and settlement of the Award
and that the Participant shall remain fully responsible for his or her tax obligations
in respect of the Award in all cases.
(c)
The Participant further acknowledges and agrees as follows:
(i)
The instruction to the Broker to sell in connection with the Sell to
Cover provision is intended to comply with the requirements of Rule 10b5-
1(c)(1)(i)(B) under the Exchange Act, and is to be interpreted to comply
with the requirements of Rule 10b5-1(c)(1) under the Exchange Act,
including the applicable cooling-off period(s) described therein.
(ii)
The Participant is not aware of any material, nonpublic information
with respect to the Company or any securities of the Company as of the date
of this Agreement. The Participant entered into this Agreement in good
faith and not as part of a plan or scheme to evade the prohibitions of Rule
10b5-1 under the Exchange Act.
(iii)
The Sell to Cover contemplated by this Agreement is adopted to (A)
be effective as of the Date of Grant and (B) permit the Participant to sell a
number of Shares issued upon the vesting or settlement of the Award
sufficient to pay the statutory minimum amount of withholding taxes that
become due as a result of the vesting or settlement of the Award.
(iv)
The Broker is under no obligation to arrange for any sale in
connection with the Sell to Cover provision at any particular price.
(v)
The Participant hereby authorizes the Broker to remit directly to the
Company the proceeds necessary to cover the Participant’s tax liability as it
relates to the vesting and settlement of the Award as provided in Section 8(a)
above, and to retain the amount required to cover all applicable fees and
commissions due to, or required to be collected by, the Broker relating to the
Sell to Cover.
(vi)
The Participant hereby appoints the Company as his or her agent and
attorney-in-fact to instruct the Broker with respect to the number of Shares
to be sold under the Sell to Cover contemplated by this Agreement.
(vii)
The Participant hereby waives any claims he or she may have against
the Company and its directors, officers or employees now or in the future
related to Company’s instructions to the Broker or any actions taken by the
Broker in effecting sales or otherwise and shall indemnify and hold the
Company and its directors, officers, employees and agents harmless from
any losses, costs, damages, or expenses relating to any sale under the Sell to
Cover contemplated by this Agreement.
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(viii)
It may not be possible to sell Shares due to, among other reasons,
(A) a legal or contractual restriction applicable to the Participant or to the
Broker, (B) a market disruption, (C) rules governing order execution priority
on the Nasdaq Global Market or (D) if the Company determines that sales
may not be effected hereunder.
(d)
No Shares will be delivered pursuant to the Award unless and until the Participant
has remitted to the Company in cash or by check (or by such other means as may be
acceptable to the Administrator) an amount sufficient to satisfy all taxes required to
be withheld in connection with such vesting or settlement, whether through the Sell
to Cover (to the extent available) or otherwise. The Participant authorizes the
Company and its subsidiaries to withhold any amounts due in respect of any
required tax withholdings or payments from any amounts otherwise owed to the
Participant, but nothing in this sentence may be construed as relieving the
Participant of any liability for satisfying his or her obligation under the preceding
provisions of this Section 8.
(e)
The Award is intended to be exempt from Section 409A of the Code as a short-term
deferral thereunder and shall be construed and administered in accordance with that
intent. Notwithstanding the foregoing, in no event will the Company have any
liability relating to the failure or alleged failure of any payment or benefit under this
Agreement to comply with, or be exempt from, the requirements of Section 409A.
9.
Provisions of the Plan. This Agreement is subject in its entirety to the provisions of
the Plan, which are incorporated herein by reference. A copy of the Plan as in effect on the Date of
Grant has been made available to the Participant. By accepting, or being deemed to have accepted,
the Award, the Participant agrees to be bound by the terms of the Plan and this Agreement. In the
event of any conflict between the terms of this Agreement and the Plan, the terms of the Plan will
control.
10.
Acknowledgements. The Participant acknowledges and agrees that (i) this
Agreement may be executed in two or more counterparts, each of which will be an original and all
of which together will constitute one and the same instrument; (ii) this Agreement may be
executed and exchanged using facsimile, portable document format (PDF) or electronic signature,
which, in each case, will constitute an original signature for all purposes hereunder; and (iii) such
signature by the Company will be binding against the Company and will create a legally binding
agreement when this Agreement is countersigned by the Participant.
[Signature page follows.]
Signature Page to Restricted Stock Unit Agreement
The Company, by its duly authorized officer, and the Participant have executed this
Agreement.
VERASTEM, INC.
By:
Name:
Title:
Agreed and Accepted:
By_______________________________
[Participant’s Name]
Exhibit 19.1
Insider Trading Policy
1.
BACKGROUND AND PURPOSE
This Insider Trading Policy (the “Policy”) governs transactions in the securities of
Verastem, Inc. (together with its subsidiaries, the “Company”) and the companies with which the
Company engages in transactions or does business and the misuse of related confidential
information. The Company’s Board of Directors has adopted this Policy to promote compliance
with U.S. federal, state and foreign securities laws that prohibit certain persons who are aware of
material nonpublic information about a company from: (i) engaging in transactions in the securities
of that company; or (ii) providing material nonpublic information to other persons who may trade
on the basis of that information. These laws impose severe sanctions on individuals who violate
them. In addition, the Securities & Exchange Commission (“SEC”) has the authority to impose
large fines on the Company and on members of the Company’s Board of Directors (each a
“Director”), executive officers, controlling stockholders, and other supervisory personnel if the
Company’s employees engage in insider trading and the Company has failed to take appropriate
steps to prevent it (so-called “controlling person” liability). As such, this Policy has been
distributed or made available to all Directors, executive officers, employees, and consultants of the
Company. In addition, it is the policy of the Company to comply with all applicable securities laws
when transacting in its own securities.
This Policy is being adopted in light of these legal requirements, and with the goal of
helping:
●
prevent inadvertent violations of the insider trading laws;
●
avoid embarrassing proxy disclosure of reporting violations by persons subject to
Section 16 of the Securities Exchange Act of 1934 (the “Exchange Act”);
●
avoid even the appearance of impropriety on the part of those employed by, or
associated with, the Company;
●
protect the Company from controlling person liability; and
●
protect the reputation of the Company, its Directors, executive officers and employees.
As detailed below, this Policy applies to family members and certain other persons and
entities with whom Directors, executive officers, employees, and consultants have relationships.
The prohibition on insider trading in this Policy applies to trading in the Company’s securities as
well as securities of other firms, such as customers or suppliers of the Company and those firms
with which the Company may be negotiating major transactions, such as a license, collaboration,
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acquisition, investment, or sale. Transactions subject to this Policy include purchases, sales and
bona fide gifts of Company securities.
2.
PENALTIES FOR VIOLATION; RESPONSIBILITY
2.1.
Civil and Criminal Penalties. Potential penalties for insider trading violations
include:
●
Imprisonment for up to 20 years;
●
Criminal fines of up to $5 million for an individual; and
●
Civil fines of up to three times the profit gained or loss avoided.
2.2.
Controlling Person Liability. If the Company fails to take appropriate steps to
prevent illegal insider trading, the Company may, among other things, have “controlling person”
liability for a trading violation, subjecting it to the following penalties:
●
Civil penalties of up to the greater of $1 million and three times the profit gained or loss
avoided; and
●
Criminal fines of up to $25 million.
The civil penalties can extend personal liability to the Company’s Directors, executive
officers, controlling stockholders, and other supervisory personnel if they fail to take appropriate
steps to prevent insider trading.
2.3.
Company Sanctions. Violation of any of the foregoing rules is also grounds for
disciplinary action by the Company, including termination of employment for cause.
2.4.
Responsibility. Persons subject to this Policy have ethical and legal obligations to
maintain the confidentiality of information relating to the Company and to not engage in
transactions in Company securities while in possession of material nonpublic information. Persons
subject to this Policy must not engage in illegal trading. Each individual is responsible for making
sure that he, she or they complies with this Policy, and that any family member, household member
or entity whose transactions are subject to this Policy, as discussed below, also comply with this
Policy. In all cases, the responsibility for determining whether an individual is in possession of
material nonpublic information rests with that individual, and any action on the part of the
Company, an Insider Trading Contact (as defined below) or any other employee or director
pursuant to this Policy (or otherwise) does not in any way constitute legal advice or insulate an
individual from liability under applicable securities laws. You could be subject to severe legal
penalties and disciplinary action by the Company for any conduct prohibited by this Policy or
applicable securities laws.
3.
DEFINITION OF MATERIAL NONPUBLIC INFORMATION
Inside information has two important elements: materiality and public availability.
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3.1.
Material Information. Information is considered material if a reasonable investor
would consider it important in deciding whether to buy, hold, or sell a security. Any information
that could reasonably be expected to affect the price of the security should be considered material.
Both positive and negative information can be material. Common examples of material
information are:
●
Projections of future earnings or losses or other earnings guidance
●
Earnings that are inconsistent with consensus expectations of the investment
community, including changes to previously announced earnings guidance, or the
decision to suspend earnings guidance
●
Financial results of a completed period
●
A pending or proposed merger, joint venture, material license, acquisition, or tender
offeror an acquisition or disposition of significant assets
●
A change in management
●
Clinical trial results
●
Pending FDA or other regulatory action
●
Significant new products or discoveries, or significant developments with regard to
existing products or product candidates
●
Significant related party transactions
●
Major events regarding the Company’s securities, including the declaration of a stock
split or dividend or the offering of additional securities
●
Bank borrowings or other financing transactions out of the ordinary course
●
Severe financial liquidity problems
●
Actual or threatened major litigation, the resolution of such litigation, criminal
indictments, or government investigations
●
New major contracts, orders, suppliers, customers or finance sources, or the loss thereof
●
Substantial changes in accounting methods or policies
●
Expansion or curtailment of significant operations
●
Cybersecurity incidents that materially affect the Company’s products, services,
relationships, or competitive conditions
Other types of information may also be material; no complete list can be given.
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Because trading that receives scrutiny will be evaluated after the fact with the benefit of
hindsight, when in doubt as to a particular item of information, you should presume it to be
material, and trading should be avoided. Do not hesitate to contact the principle financial officer
(usually the Chief Financial Officer) or the officer principally responsible for regulatory
compliance, or their respective designees (each an “Insider Trading Contact” and together, the
“Insider Trading Contacts”) if you have any questions.
3.2.
Nonpublic Information. Nonpublic information is information that is not generally
known or available to the public. One common misconception is that material information loses its
“nonpublic” status as soon as a press release is issued disclosing the information. In fact,
information is considered to be available to the public only when it has been released broadly to
the marketplace (such as by a press release or an SEC filing) and the investing public has had time
to absorb the information fully. As a general rule, information is considered nonpublic until the
second business day after the day on which the information is publicly announced in a press
release. If the information relates to the Company’s financial performance, the information is
considered nonpublic until the completion of the second business day after the Company publishes
its annual or quarterly earnings report.
Material nonpublic information is not made public by selective dissemination. Material
information improperly disclosed only to institutional investors or to an analyst or a favored group
of analysts may retain its status as “nonpublic” information, the use of which is subject to insider
trading laws. Similarly, partial disclosure does not constitute public dissemination. So long as any
material component of the “inside” information has yet to be publicly disclosed, the information is
deemed “nonpublic” and may not be traded upon. Information not material to the Company may
nevertheless be material to the companies with which the Company engages in transactions or does
business (and vice versa). In addition, the same information may be material to the Company and
one or more companies with which the Company engages in transactions or does business.
4.
PROHIBITIONS RELATING TO TRANSACTIONS IN THE COMPANY’S
SECURITIES
4.1.
Covered Persons. This Section 4 applies to:
●
all Directors, executive officers and employees of, and consultants engaged by,
the Company (each an “Insider” and, together, the “Insiders”);
●
all family members of Insiders who share the same address as, who are
financially dependent on, such Insider or who do not live in their households but
whose transactions in the Company securities are directed by them or are
subject to their influence or control (such as parents or children who consult
with them before trading in Company securities) and any other person who
shares the same address as an Insider (such persons, “Family Members”) (other
than (x) an employee or tenant of an Insider or (y) another unrelated person
whom an Insider Trading Contact determines should not be covered by this
Policy);
-5-
●
all corporations, partnerships, trusts or other entities influenced or controlled by
any of the above persons (such entities “Controlled Entities”), unless the entity
has implemented policies or procedures designed to ensure that such person
cannot influence transactions by the entity involving Company securities or the
securities of companies with which the Company engages in transactions or
does business; and
●
any other persons from time to time who, by written notice have been
specifically designated as a person subject to this Policy by an Insider Trading
Contact.
4.2.
Prohibition on Trading While Aware of Material Nonpublic Information.
(a)
Prohibited Activities. Except as provided in Section 4.2(b), no person or
entity covered by Section 4 may:
●
purchase, sell or otherwise engage in any transaction involving any securities of
the Company while he or she is aware of any material nonpublic information
concerning the Company;
●
disclose to any other person any material nonpublic information concerning the
Company or recommend to any other person the purchase or sale of, or to
otherwise recommend that they engage in any transaction involving, any
securities of the Company while aware of any material nonpublic information
concerning the Company (known as “tipping”);
●
purchase or sell, or to otherwise engage in any transaction involving, any
securities of another company while he or she is aware of any material
nonpublic information concerning such other company which he or she learned
in the course of his or her service as a Director, executive officer, employee, or
consultant of the Company;
●
disclose to any other person any material nonpublic information concerning
another company which he or she learned in the course of his or her service as a
Director, executive officer, employee, or consultant of the Company or
recommend to any other person the purchase or sale, or to otherwise
recommend that they engage in any transaction involving, of any securities of
such company while aware of such information; or
●
assist anyone engaged in the above activities.
(b)
Exceptions. The prohibitions in Sections 4.2(a) and 5.3 on purchases and
sales of Company securities do not apply to:
●
exercises of stock options or other equity awards or the surrender of shares to
the Company or the retention and withholding from delivery of shares by the
Company (i.e., a so-called “net settlement”) in payment of the exercise price or
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in satisfaction of any tax withholding obligations, in each case in a manner
permitted by the applicable equity award agreement; provided, however, that the
securities so acquired may not be sold (either outright or in connection with a
“cashless” exercise transaction through a broker (1) while the Insider is aware of
material nonpublic information or (2) during a blackout period (as defined in
Section 5.3), to the extent the holder is one of the persons or entities identified
in Section 5.1;
●
the vesting of restricted stock, or the exercise of a tax withholding right pursuant
to which you elect to have the Company withhold shares of stock to satisfy tax
withholding requirements upon the vesting of any restricted stock (the Policy
does apply, however, to any market sale of restricted stock);
●
purchases of the Company’s securities under the Company’s Employee Stock
Purchase Plan (the “ESPP”) that are made as the result of an election made at
the beginning of the option period. The Policy would apply, however, to an
initial decision to participate in the ESPP or a decision to change the level of
contribution in a subsequent option period. It would also apply to any sales of
securities purchased under the ESPP;
●
other purchases of securities from the Company or sales of securities to the
Company; and
●
purchases or sales made pursuant to a binding contract, written plan or specific
instruction (a “trading plan”) which is adopted and operated in compliance
with Rule 10b5-1; provided that: (a) such trading plan is in writing; and (2) was
not adopted or amended in any material respect while the Insider was aware of
material nonpublic information; and (b) any adoption, amendment, suspension
or termination of a trading plan must be submitted to an Insider Trading Contact
for pre-approval;
●
bona fide gifts of the Company’s securities, provided that (1) you do not have
reason to believe that the recipient intends to sell the Company’s securities
while you are aware of material nonpublic information relating to the Company
and (2) if you are a Pre-Clearance Person (as defined below) you have complied
with the requirements set forth in Section 5 below; and
●
transactions in mutual funds, exchange-traded funds, index funds or other
“broad basket” funds that own or hold the Company’s securities as one of many
investments are not subject to this Policy.
(c)
Application of Policy After Cessation of Service. If a person ceases to be a
Director, executive officer or employee of, or consultant engaged by the Company at a time when
he or she is aware of material nonpublic information concerning the Company, the prohibition on
purchases and sales of Company securities in Section 4.2(a) shall continue to apply to such person
until that information has become public or is no longer material.
-7-
4.3.
Prohibition on Pledges, Short Sales, Derivative Transactions, Hedging and Standing
Orders. No person or entity covered by this Section 4 may engage in any of the following types of
transactions:
●
holding Company securities in a margin account, or pledges of Company
securities as collateral for a loan;
●
short sales of Company securities, including short sales “against the box”;
●
purchases or sales of puts, calls or other derivative securities based on the
Company’s securities; or
●
hedging transactions, including through the use of financial instruments such as
prepaid variable forwards, equity swaps, collars and exchange funds.
4.4.
Underwritten Public Offering. Nothing in this Policy is intended to limit the ability
of any person to sell Company securities as a selling stockholder in an underwritten public offering
pursuant to an effective registration statement in accordance with applicable securities law.
5.
ADDITIONAL PROHIBITIONS APPLICABLE TO DIRECTORS, EXECUTIVE
OFFICERS AND EMPLOYEES
5.1.
Covered Persons. This Section 5 applies to:
●
all Directors and executive officers of the Company;
●
all employees of the Company; and
●
all Family Members and Controlled Entities of such Directors, executive
officers and employees,
(each a “Pre-Clearance Person” and, together, the “Pre-Clearance Persons”).
5.2.
Notice and Pre-Clearance of Transactions.
(a)
Pre-Transaction Clearance. No Pre-Clearance Person may purchase or sell
or otherwise engage in a transaction involving any securities of the Company, other than in a
transaction permitted under Section 4.2(b) (other than a gift, which is subject to these pre-clearance
procedures), without first obtaining written pre-clearance (including by email) of the transaction
from an Insider Trading Contact. A request for pre-clearance shall be in writing (including by e-
mail), should be made at least two business days in advance of the proposed transaction and should
include the identity of the Pre-Clearance Person, the type of proposed transaction (for example, an
open market purchase, a privately negotiated sale, the sales of shares purchased through the ESPP,
etc.), the proposed date of the transaction and the number and type of the Company’s securities to
be involved. In addition, the Pre-Clearance Person must certify to an Insider Trading Contact that
he, she or they are not aware of material nonpublic information about the Company. Each Insider
Trading Contact shall have sole discretion to decide whether to clear any proposed transaction.
-8-
(The Chief Executive Officer shall have sole discretion to decide whether to clear transactions by
an Insider Trading Contact or persons or entities subject to this Policy as a result of their
relationship with an Insider Trading Contact. An Insider Trading Contract may not approve or
clear his, her or their own transactions. All trades that are pre-cleared must be effected within five
business days of receipt of the pre- clearance unless a specific exception has been granted by an
Insider Trading Contact. A pre- cleared trade (or any portion of a pre-cleared trade) that has not
been effected during the five- business day- period must be pre-cleared again prior to execution.
Any person who has requested pre-clearance may not disclose the approval or denial of the request
to any other person. Under certain very limited circumstances, pre-clearance for a proposed
transaction may be granted during a blackout period, but only if an Insider Trading Contact
concludes the Pre-Clearance Person does not in fact possess material nonpublic information.
Notwithstanding receipt of pre-clearance, the decision to trade is the responsibility of the Pre-
Clearance Person, and if the Pre-Clearance Person is aware of or becomes aware of material
nonpublic information, the transaction may not be completed. The use of a broker to effect the
trade does not excuse the Pre-Clearance Person from the obligations under this Section 5.2(a).
(b)
Post-Transaction Notice. Each person or entity covered by this Section 5
who is subject to reporting obligations under Section 16 of the Exchange Act shall also notify an
Insider Trading Contact of the occurrence of any purchase, sale or other transaction involving
securities of the Company as soon as possible following the transaction, but in any event within
one (1) business day after the transaction. Such notification must be in writing by e-mail and
should include the identity of the covered person, the type of transaction, the date of the
transaction, the number and type of the Company’s securities involved, the purchase or sale
price(s) and any other information requested by the Company. The use of a broker to effect the
trade does not excuse the Pre-Clearance Person from the obligations under this Section 5.2(b).
(c)
Deemed Time of a Transaction. For purposes of this Section 5.2, a purchase,
sale or other acquisition or disposition shall be deemed to occur at the time the person becomes
irrevocably committed to it (for example, in the case of an open market purchase or sale, this
occurs when the trade is executed, not when it settles).
5.3.
Blackout Periods. The Company may from time to time notify Insiders that a
blackout period (a “blackout period”) is in effect in view of significant events or developments
involving the Company. In such event, except as permitted in Section 4.2(b), no such individual
may purchase or sell any securities of the Company during such blackout period or inform anyone
else that a blackout period is in effect. If you are subject to a blackout period, you will be notified
when the blackout has been lifted. Even if a blackout period is not in effect (or you have not been
notified that you are subject to a blackout period), at no time may you trade in Company securities
if you are aware of material nonpublic information about the Company.
6.
LIMITATION ON LIABILITY
None of the Company, the Insider Trading Contacts or the Company’s other employees will
have any liability for any delay in reviewing, or refusal of, a trading plan submitted pursuant to
Section 4.2(b) or a request for pre-clearance submitted pursuant to Section 5.2(a). Notwithstanding
any review of a trading plan pursuant to Section 4.2(b), or pre-clearance of a transaction pursuant
to Section 5.2(a), none of the Company, the Insider Trading Contacts or the
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Company’s other employees assumes any liability for the legality or consequences of such trading
plan or transaction to the person engaging in or adopting such trading plan or transaction.
7.
CERTIFICATIONS
All Insiders must annually certify their understanding of and intent to comply with this
Policy. This certification may be done by an electronic acknowledgement.
8.
REPORTING OF VIOLATIONS
If you know or have reason to believe that this Policy, including the trading policies and
procedures for Directors and executive officers described above, has been or is about to be
violated, you should bring the actual or potential violation to the attention of an Insider Trading
Contact. You may also report the potential violation by contacting the Company’s Compliance
Hotline at verastem.ethicspoint.com or by calling (800) 218-6127.
9.
MODIFICATIONS; WAIVERS
The Company reserves the right to amend or modify this Policy, and the trading policies
and procedures for Insiders set forth herein, or adopt such other policies or procedures which it
considers appropriate to carry out the purposes of its policies regarding insider trading and the
disclosure of Company information, at anytime. Notice of any such change will be delivered by
regular or electronic mail (or other delivery option used by the Company) by the Company.
Waiver of any provision of this Policy in a specific instance may be authorized in writing
by an Insider Trading Contact or their designees, and any such waiver shall be reported to the
Board of Directors of the Company at its next regularly scheduled meeting.
Updated and Effective as of January 2025.
Exhibit 21.1
List of Registrant’s Subsidiaries
Verastem Securities Company, incorporated in Massachusetts, a wholly owned subsidiary.
Verastem Europe GmbH, incorporated in Germany, a wholly owned subsidiary.
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the following Registration Statements:
(1)
Registration Statement (Form S-8 No. 333-180475) pertaining to the 2010 Equity Incentive Plan and the 2012 Incentive
Plan of Verastem, Inc.,
(2)
Registration Statement (Form S-8 No. 333-190578) pertaining to the 2012 Incentive Plan of Verastem, Inc.,
(3)
Registration Statement (Form S-8 No. 333-201075) pertaining to the 2014 Inducement Award Program of Verastem, Inc.,
(4)
Registration Statement (Form S-8 No. 333-201076) pertaining to the 2012 Incentive Plan of Verastem, Inc.,
(5)
Registration Statement (Form S-8 No. 333-211235) pertaining to the 2012 Incentive Plan of Verastem, Inc.,
(6)
Registration Statement (Form S-8 No. 333-218768) pertaining to the 2014 Inducement Award Program of Verastem, Inc.,
(7)
Registration Statement (Form S-8 No. 333-218769) pertaining to the 2012 Incentive Plan of Verastem, Inc.,
(8)
Registration Statement (Form S-8 No.333-223616) pertaining to the 2014 Inducement Award Program of Verastem, Inc.,
(9)
Registration Statement (Form S-8 No.333-228309) pertaining to the 2014 Inducement Award Program of Verastem, Inc.,
(10) Registration Statement (Form S-8 No.333-229430) pertaining to the 2018 Employee Stock Purchase Plan, 2012
Amended and Restated Incentive Plan, and 2014 Inducement Award Program of Verastem, Inc.,
(11) Registration Statement (Form S-8 No. 333-238877) pertaining to the Amended and Restated 2012 Incentive Plan of
Verastem, Inc.,
(12) Registration Statement (Form S-3 No. 333-237332) of Verastem, Inc.,
(13) Registration Statement (Form S-8 No. 333-257111) pertaining to the 2021 Equity Incentive Plan of Verastem, Inc.,
(14) Registration Statement (Form S-3 No. 333-270794) of Verastem, Inc.,
(15) Registration Statement (Form S-3 No. 333-275408) of Verastem, Inc.,
(16) Registration Statement (Form S-8 No. 333-277948) pertaining to the 2014 Inducement Award Program of Verastem, Inc.,
and
(17) Registration Statement (Form S-8 No. 333-279826) pertaining to the Amended and Restated 2021 Equity Incentive Plan
of Verastem, Inc.
of our report dated March 20, 2025 with respect to the consolidated financial statements of Verastem, Inc. included in this Annual
Report (Form 10-K) of Verastem, Inc. for the year ended December 31, 2024.
/s/ Ernst & Young LLP
Boston, Massachusetts
March 20, 2025
Exhibit 31.1
CERTIFICATIONS
I, Daniel W. Paterson certify that:
1.
I have reviewed this Annual Report on Form 10-K of Verastem, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the
period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented
in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrant’s internal control over financial reporting
that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of
an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal
control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
/s/ Daniel W. Paterson
Daniel W. Paterson
President and Chief Executive Officer
Date: March 20, 2025
Exhibit 31.2
CERTIFICATIONS
I, Daniel Calkins, certify that:
1.
I have reviewed this Annual Report on Form 10-K of Verastem, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the
period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented
in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrant’s internal control over financial reporting
that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of
an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal
control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
/s/ DANIEL CALKINS
Daniel Calkins
Chief Financial Officer
Date: March 20, 2025
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K of Verastem, Inc. (the “Company”) for the period ended
December 31, 2024 as filed with the Securities and Exchange Commission (the “SEC”) on the date hereof (the “Report”),
the undersigned, Daniel W. Paterson, President and Chief Executive Officer of the Company, hereby certify, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1)
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 as amended; and
(2)
the information contained in the Report fairly presents, in all material respects, the financial
condition and results of operations of the Company.
/s/ DANIEL W. PATERSON
Daniel W. Paterson
President and Chief Executive Officer
Date: March 20, 2025
A signed original of this written statement required by Section 906 has been provided to the Company and will be
retained by the Company and furnished to the SEC or its staff upon request.
Exhibit 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K of Verastem, Inc. (the “Company”) for the period ended
December 31, 2024 as filed with the Securities and Exchange Commission (the “SEC”) on the date hereof (the “Report”),
the undersigned, Daniel Calkins, Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1)
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 as amended; and
(2)
the information contained in the Report fairly presents, in all material respects, the financial
condition and results of operations of the Company.
/s/ DANIEL CALKINS
Daniel Calkins
Chief Financial Officer
Date: March 20, 2025
A signed original of this written statement required by Section 906 has been provided to the Company and will be
retained by the Company and furnished to the SEC or its staff upon request.
Exhibit 99.1
Verastem Oncology Reports Fourth Quarter and Full Year 2024 Financial Results and Highlights
Recent Business Updates
Avutometinib plus defactinib granted priority review by FDA in December 2024, under the accelerated
approval pathway, for KRAS mutant recurrent LGSOC; PDUFA action date set for June 30, 2025
Filed an investigational new drug application in the U.S. for VS-7375, an oral KRAS G12D (ON/OFF)
inhibitor
RAMP 205 trial in 1L metastatic pancreatic cancer continues to progress with an additional dose cohort
added and enrollment across all dose-level cohorts on track to complete in Q1
Company cash, cash equivalents, and investments of $88.8 million as of December 31, 2024; pro forma
$151.3 million including debt refinancing and equity issuance with Oberland, and equity issuance under
at-the-market facility
BOSTON--(BUSINESS WIRE)--March 20, 2025--Verastem Oncology (Nasdaq: VSTM), a biopharmaceutical
company committed to advancing new medicines for patients with cancer, today reported financial
results for the three months and full year ended December 31, 2024, and highlighted recent progress.
“In 2024, we made tremendous progress across our pipeline programs, most notably the NDA
acceptance of our novel-novel combination of avutometinib plus defactinib for Priority Review under the
accelerated approval pathway for KRAS mutant recurrent low-grade serous ovarian cancer,” said Dan
Paterson, president and chief executive officer of Verastem Oncology. “2025 is expected to be a
transformational year with our potential to launch the first FDA-approved treatment specifically for
KRAS mutant recurrent low-grade serous ovarian cancer and become a fully integrated commercial-stage
company. In addition, we anticipate advancing our pipeline programs in pancreatic cancer and non-small
cell lung cancer and expect to initiate a Phase 1/2a study for VS-7375, our recently licensed KRAS G12D
(ON/OFF) inhibitor.”
Fourth Quarter 2024 and Recent Highlights
Avutometinib and Defactinib Combination in Low-Grade Serous Ovarian Cancer (LGSOC)
●
On December 30, 2024, the U.S. Food and Drug Administration (FDA) accepted the Company’s New
Drug Application (NDA) under the accelerated approval pathway and granted Priority Review for
avutometinib in combination with defactinib in adult patients with KRAS mutant recurrent LGSOC
and designated June 30, 2025, as the Prescription Drug User Fee Act (PDUFA) action date.
●
The NDA was based on the positive, mature safety and efficacy data from the RAMP 201 trial
as presented at the International Gynecologic Cancer Society (IGCS) 2024 Annual Meeting in
October 2024. The NDA also includes supportive data from the FRAME Phase 1 trial, the first study
conducted with the combination therapy in recurrent LGSOC.
●
The Company continued its commercial preparation activities for a potential U.S. launch in mid-
2025.
●
Presented the RAMP 201 primary analysis with additional subgroup analysis by KRAS mutational
status at the Society of Gynecologic Oncology 2025 Annual Meeting on Women’s Cancer on March
17, 2025. The subgroup analysis showed clinically meaningful responses were observed in patients
with and without prior MEK inhibitor treatment, with and without prior bevacizumab treatment, as
well as patients receiving multiple lines of therapy (1-3 and >3 prior lines).
●
RAMP 301, which is currently enrolling patients with recurrent LGSOC regardless of KRAS mutation
status across the U.S., UK, EU, Canada, Korea, and Australia, will serve as a confirmatory study for
the initial indication and has potential to expand the indication regardless of KRAS mutation status.
The Company plans to complete enrollment in RAMP 301 by the end of 2025.
●
The Japanese Gynecologic Oncology Group (JGOG) dosed the first patient in a Phase
2 Verastem sponsored clinical trial, called RAMP201J, evaluating the safety and efficacy of
avutometinib in combination with defactinib for recurrent LGSOC in Japan in October 2024.
Key Milestones Expected for 2025:
●
Plan for FDA decision on NDA submitted for the combination of avutometinib plus defactinib in KRAS
mutant recurrent LGSOC, expected by June 30, 2025.
●
Plan to submit for NCCN guideline inclusion upon FDA approval.
●
Primary analysis from both the FRAME and RAMP 201 clinical trials anticipated to be published in H1
2025.
●
Complete enrollment for the international Phase 3 confirmatory RAMP 301 clinical trial for patients
with recurrent LGSOC regardless of KRAS mutation status by the end of 2025.
●
Report initial data from the RAMP 201J Phase 2 clinical trial being conducted in Japan with JGOG in
H2 2025.
●
Continue to advance the regulatory pathway in Japan and Europe.
RAMP 205: Avutometinib Plus Defactinib in Combination with Chemotherapy in First-Line Metastatic
Pancreatic Cancer
●
Today, Verastem announced an interim update on RAMP 205:
o
A new dose level “0” was added to evaluate the doses of avutometinib and defactinib used
in LGSOC, 3.2 mg of avutometinib, 200 mg of defactinib, in combination with 800 mg/m2 of
gemcitabine and 100 mg/m2 of Nab-paclitaxel on a schedule of day 1, 8, and 15.
o
All dose levels have been expanded to 12 patients each, including six additional patients
recently enrolled to dose level 1, where 5/6 patients reported an objective response at the
ASCO 2024 annual meeting. In dose level 1, of the six additional patients, 5 remain on
therapy and continue to be monitored for response given the initial length of time to
respond.
o
59 of 60 patients have been treated and enrollment is on track to be completed in Q1.
o
Based on the initial safety and efficacy data from these cohorts, dose level 1 or 0 is
anticipated to be chosen for expansion.
o
Adverse events across all dose cohorts remained generally consistent with the previously
announced safety and tolerability profile, and no new safety signals have emerged.
Key Milestones Expected for 2025:
●
Present additional data at a medical meeting mid-year 2025.
●
Select the recommended Phase 2 Dose (RP2D) for trial expansion in H1 2025.
RAMP 203: Avutometinib Plus Defactinib in Combination with a KRAS G12C Inhibitor in Non-Small
Cell Lung Cancer (NSCLC)
●
Enrollment to the KRAS G12C inhibitor, prior-treated Stage 1 Part B doublet cohort on track to
complete in Q1 2025. Patients enrolled in the doublet cohorts continue to be followed for safety and
efficacy results (both the prior-treated and treatment-naïve cohorts).
●
Enrollment in the triplet combination continues in the dose evaluation cohort.
●
In December 2024, the Company announced preliminary clinical data for the triplet combination
cohort of avutometinib and LUMAKRAS™ (sotorasib) plus defactinib in the RAMP 203 Phase 1/2
study in KRAS G12C mutant advanced NSCLC. No dose-limiting toxicities (DLTs) have been observed
in the triplet combination.
Key Milestones Expected for 2025:
●
Plan to present an interim update of both doublet and triplet data at a medical meeting in H2 2025.
VS-7375, an Oral KRAS G12D (ON/OFF) Inhibitor, in Advanced Solid Tumors
●
Verastem filed an investigational new drug (IND) application in the U.S. for VS-7375 in the first
quarter of 2025.
●
Verastem announced on January 14, 2025, that it has exercised its option early to license GFH375
(VS-7375) from GenFleet. In addition, the Company announced preliminary clinical data from the
Phase 1 dose-escalation study conducted by GenFleet in China. In the study, VS-7375, demonstrated
oral bioavailability, no DLTs across six dose levels, and several partial responses, including multiple
patients with pancreatic and lung cancers. Enrollment in the Phase 1 dose-escalation cohort is
ongoing.
Key Milestones Expected for 2025:
●
Initiate a Phase 1/2a trial in the U.S. by mid-2025.
●
Share preclinical and clinical data from the Phase 1 study of VS-7375 in China in H1 2025.
Corporate Updates
●
Strengthened the executive leadership team with the appointment of Matthew E. Ros to Chief
Operating Officer on January 15, 2025.
●
Verastem announced on January 14, 2025, that it has exercised its option early to license VS-7375
from GenFleet.
●
Verastem announced on January 13, 2025, agreements with Oberland Capital and IQVIA. The
agreements with Oberland Capital include a debt refinancing and an equity investment,
strengthening the Company’s cash position and will help fund commercialization past FDA approval
and other pipeline programs. The strategic collaboration with IQVIA leverages IQVIA’s world-class
infrastructure and commercialization solutions to complement the Company’s launch strategy in
recurrent LGSOC.
Fourth Quarter 2024 Financial Results
Verastem Oncology ended the fourth quarter of 2024 with cash, cash equivalents and investments of
$88.8 million. On a pro forma basis, taking into account the initial $75.0 million of notes and $7.5
million of equity to be purchased by Oberland Capital at closing, repayment of amounts owed under the
Company’s
existing loan with Oxford Finance of $42.7 million, and net proceeds from equity issuance under the
Company’s at-the-market facility in January 2025 of $22.7 million, cash, cash equivalents and
investments were $151.3 million as of December 31, 2024. These additional sources of capital along
with the existing cash, cash equivalents, and investments provide an expected cash runway through a
potential launch of avutometinib and defactinib for recurrent LGSOC into Q4 2025.
Total operating expenses for the three months ended December 31, 2024 (the “2024 Quarter”) were
$31.6 million, compared to $31.1 million for the three months ended December 31, 2023 (the “2023
Quarter”).
Research & development expenses for the 2024 Quarter were $20.8 million, compared to $22.5 million
for the 2023 Quarter. The decrease of $1.7 million, or 7.6%, primarily resulted from decreased contract
research organization costs and decreased drug substance and drug product costs.
Selling, general & administrative expenses for the 2024 Quarter were $10.8 million, compared to $8.6
million for the 2023 Quarter. The increase of $2.2 million, or 25.6%, was primarily related to increased
personnel costs, including non-cash stock compensation and increased consulting and professional fees.
Net loss for the 2024 Quarter was $64.6 million, or $1.33 per share (basic and diluted), compared to a
net loss of $27.4 million, or $1.02 per share (basic and diluted) for the 2023 Quarter.
For the 2024 Quarter, non-GAAP adjusted net loss was $29.3 million, or $0.60 per share (diluted),
compared to non-GAAP adjusted net loss of $29.6 million, or $1.10 per share (diluted) for the 2023
Quarter. Please refer to the GAAP to Non-GAAP Reconciliation attached to this press release.
Full-Year 2024 Financial Results
Total operating expenses for the year ended December 31, 2024 (the “2024 Period”) were $125.0
million, compared to $92.1 million for the year ended December 31, 2023 (the “2023 Period”).
Research & development expenses for the 2024 Period were $81.3 million, compared to $61.4 million
for the 2023 Period. The increase of $19.9 million, or 32.4%, was primarily related to increased contract
research organization costs, increased investigator fee costs, increased consulting fees and increased
personnel costs, including non-cash stock compensation.
Selling, general & administrative expenses for the 2024 Period were $43.6 million, compared to $30.7
million for the 2023 Period. The increase of $12.9 million, or 42.0%, was primarily related to increased
personnel costs, including non-cash stock compensation, additional costs in anticipation of a potential
launch of avutometinib and defactinib in LGSOC, and a one-time cost associated with July 2024 financing
activities.
Net loss for the 2024 Period was $130.6 million, or $3.66 per share (basic and diluted), compared to
$87.4 million, or $3.96 per share (basic and diluted, each as adjusted for the Company’s reverse stock
split) for the 2023 Period.
For the 2024 Period, non-GAAP adjusted net loss was $107.4 million, or $3.01 per share (diluted)
compared to non-GAAP adjusted net loss of $85.2 million, or $3.86 per share (diluted, as adjusted for
the Company’s reverse stock split), for the 2023 Period. Please refer to the GAAP to non-GAAP
Reconciliation attached to this press release.
Use of Non-GAAP Financial Measures
To supplement Verastem Oncology’s condensed consolidated financial statements, which are prepared
and presented in accordance with generally accepted accounting principles in the United States (GAAP),
the Company uses the following non-GAAP financial measures in this press release: non-GAAP adjusted
net loss and non-GAAP net loss per share. These non-GAAP financial measures exclude certain amounts
or expenses from the corresponding financial measures determined in accordance with GAAP.
Management believes this non-GAAP information is useful for investors, taken in conjunction with the
Company’s GAAP financial statements, because it provides greater transparency and period-over- period
comparability with respect to the Company’s operating performance and can enhance investors’ ability
to identify operating trends in the Company’s business. Management uses these measures, among other
factors, to assess and analyze operational results and trends and to make financial and operational
decisions. Non-GAAP information is not prepared under a comprehensive set of accounting rules and
should only be used to supplement an understanding of the Company’s operating results as reported
under GAAP, not in isolation or as a substitute for, or superior to, financial information prepared and
presented in accordance with GAAP. In addition, these non-GAAP financial measures are unlikely to be
comparable with non-GAAP information provided by other companies. The determination of the
amounts that are excluded from non-GAAP financial measures is a matter of management judgment and
depends upon, among other factors, the nature of the underlying expense or income amounts.
Reconciliations between these non-GAAP financial measures and the most comparable GAAP financial
measures for the three months and year ended December 31, 2024 and 2023 are included in the tables
accompanying this press release after the unaudited condensed consolidated financial statements.
About the Avutometinib and Defactinib Combination
Avutometinib is an oral RAF/MEK clamp that potently inhibits MEK1/2 kinase activities and induces
inactive complexes of MEK with ARAF, BRAF, and CRAF, potentially creating a more complete and durable
anti-tumor response through maximal RAS/MAPK pathway inhibition. In contrast to currently available
MEK-only inhibitors, avutometinib blocks both MEK kinase activity and the ability of RAF to
phosphorylate MEK. This unique mechanism allows avutometinib to block MEK signaling without the
compensatory activation of MEK that appears to limit the efficacy of the MEK-only inhibitors.
Defactinib is an oral, selective inhibitor of focal adhesion kinase (FAK) and proline-rich tyrosine kinase-2
(Pyk2), the two members of the focal adhesion kinase family of non-receptor protein tyrosine kinases.
FAK and Pyk2 integrate signals from integrin and growth factor receptors to regulate cell proliferation,
survival, migration, and invasion. FAK activation has been shown to mediate resistance to multiple anti-
cancer agents, including RAF and MEK inhibitors.
Verastem Oncology is currently conducting clinical trials with avutometinib with and without defactinib
in RAS/MAPK-driven tumors as part of its Raf And Mek Program or RAMP. Verastem is currently enrolling
patients and activating sites for RAMP 301 (GOG-3097/ENGOT-ov81/NCRI) (NCT06072781), an
international Phase 3 confirmatory trial evaluating the combination of avutometinib and defactinib
versus standard chemotherapy or hormonal therapy for the treatment of recurrent low-grade serous
ovarian cancer (LGSOC).
Verastem was granted Priority Review and a Prescription Drug User Fee Act (PDUFA) date of June 30,
2025, for its New Drug Application (NDA) to the U.S. Food and Drug Administration (FDA), for the
investigational combination of avutometinib and defactinib in adults with recurrent KRAS mutant LGSOC
who received at least one prior systemic therapy. Verastem initiated a rolling NDA in May 2024 to the
FDA and completed its NDA submission in October 2024. The FDA granted Breakthrough Therapy
Designation for the treatment of patients with recurrent LGSOC after one or more prior lines of therapy,
including platinum-based chemotherapy, in May 2021. Avutometinib alone or in combination with
defactinib was also granted Orphan Drug Designation by the FDA for the treatment of LGSOC.
Verastem Oncology has established a clinical collaboration with Amgen to evaluate LUMAKRAS™
(sotorasib) in combination with avutometinib and defactinib in both treatment-naïve patients and in
patients whose KRAS G12C mutant non-small cell lung cancer progressed on a G12C inhibitor as part of
the RAMP 203 trial (NCT05074810). Verastem has received Fast Track Designation from the FDA for the
triplet combination in April 2024. RAMP 205 (NCT05669482), a Phase 1b/2 clinical trial evaluating
avutometinib and defactinib with gemcitabine/nab-paclitaxel in patients with front-line metastatic
pancreatic cancer, is supported by the PanCAN Therapeutic Accelerator Award. FDA granted Orphan
Drug Designation to the avutometinib and defactinib combination for the treatment of pancreatic
cancer.
About VS-7375, an Oral KRAS G12D (ON/OFF) Inhibitor
VS-7375 is a potential best-in-class, potent, and selective oral KRAS G12D dual ON/OFF inhibitor. VS-
7375 is the lead program from the Verastem Oncology discovery and development collaboration with
GenFleet Therapeutics. GenFleet’s IND for VS-7375 (known as GFH375 in China) was approved
in China in June 2024, and the first patient was dosed in a Phase 1/2 study in July 2024.
About the GenFleet Therapeutics Collaboration
The collaboration with GenFleet Therapeutics aims to advance three oncology discovery programs
related to RAS/MAPK pathway-driven cancers. The collaboration provides Verastem with an exclusive
option to obtain a license for each of the three compounds in the collaboration after the successful
completion of pre-determined milestones in a Phase 1 trial. Verastem selected VS-7375 (also known as
GFH375), an oral KRAS G12D (ON/OFF) inhibitor, as its lead program in December 2023 and the license
for VS-7375 that was exercised in January 2025 is the first one from this collaboration. The licenses
would give Verastem development and commercialization rights outside the GenFleet markets of
mainland China, Hong Kong, Macau, and Taiwan.
About Verastem Oncology
Verastem Oncology (Nasdaq: VSTM) is a late-stage development biopharmaceutical company committed
to the development and commercialization of new medicines to improve the lives of patients diagnosed
with RAS/MAPK pathway-driven cancers. Our pipeline is focused on novel small molecule drugs that
inhibit critical signaling pathways in cancer that promote cancer cell survival and tumor growth,
including RAF/MEK inhibition, FAK inhibition and KRAS G12D inhibition. For more information, please
visit www.verastem.com and follow us on LinkedIn.
Forward-Looking Statements
This press release includes forward-looking statements. These forward-looking statements generally can
be identified by the use of words such as “anticipate,” “expect,” “plan,” “could,” “may,” “believe,”
“estimate,” “forecast,” “goal,” “project,” and other words of similar meaning. Such forward-looking
statements address various matters about, among other things, Verastem Oncology’s programs and
product candidates, strategy, future plans and prospects, including statements related to the potential
for and timing of commercialization of product candidates, the anticipated timing for the IND application
for VS-7375/GFH375, the expected outcome and benefits of the Company’s collaboration with GenFleet
Therapeutics (Shanghai), Inc., the timing of commencing and completing trials and compiling data, the
expected timing of the presentation of data by the Company and the potential clinical value of various of
the Company’s clinical trials. Each forward-looking statement contained in this press release is subject to
risks and uncertainties that could cause actual results to differ materially from those expressed or
implied by such statement. Applicable risks and uncertainties include, among others: the uncertainties
inherent in research and development, such as the possibility of negative or unexpected results of
clinical trials; that we may not see a return on investment on the payments we have and may continue
to make pursuant to the collaboration and option agreement with GenFleet, or that GenFleet may fail to
fully perform under the agreement; that the development and commercialization of our product
candidates may take longer or cost more than planned, including as a result of conducting additional
studies or our decisions regarding execution of such commercialization; that data may not be available
when expected; risks associated with preliminary and interim data, which may not be representative of
more mature data; that our product candidates may not receive regulatory approval, become
commercially successful products, or result in new treatment options being offered to patients; and the
risks identified under the heading "Risk Factors" as detailed in the Company’s Annual Report on Form
10-K for the year ended December 31, 2024, as filed with the Securities and Exchange Commission (SEC)
on March 20, 2025, as well as the other information we file with the SEC, are possibly realized. We
caution investors not to place considerable reliance on the forward-looking statements contained in this
press release. You are encouraged to read our filings with the SEC, available at www.sec.gov, for a
discussion of these and other risks and uncertainties. The forward-looking statements in this press
release speak only as of the date of this press release, and we undertake no obligation to update or
revise any of these statements. Our business is subject to substantial risks and uncertainties, including
those referenced above. Investors, potential investors, and others should give careful consideration to
these risks and uncertainties.
For Investor and Media Inquiries:
Julissa Viana
Vice President, Corporate Communications,
Investor Relations & Patient Advocacy
investors@verastem.com or
media@verastem.com
Verastem Oncology
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
December 31,
2024
December 31, 2023
Cash, cash equivalents, & investments
$
88,818
$
137,129
Grants receivable
200
—
Prepaid expenses and other current assets
5,943
6,553
Property and equipment, net
32
37
Right-of-use asset, net
1,405
1,171
Restricted cash and other assets
5,140
4,828
Total assets
$
101,538
$
149,718
Current Liabilities
30,973
$
26,380
Long term debt
40,724
40,086
Lease liability, long-term
535
530
Preferred stock tranche liability
—
4,189
Warrant Liability
58,199
—
Convertible preferred stock
—
21,159
Stockholders’ equity
(28,893)
57,374
Total liabilities, convertible preferred stock and stockholders’
equity
$
101,538
$
149,718
Verastem Oncology
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
Three months ended December 31,
Year ended December 31,
2024
2023
2024
2023
Revenue
Sale of COPIKTRA license and related
assets
$
—
$
— $
10,000 $
—
Total revenue
—
—
10,000
—
Operating expenses:
Research and development
20,811
22,502
81,334
61,356
Selling, general and administrative
10,779
8,637
43,622
30,728
Total operating expenses
31,590
31,139
124,956
92,084
Loss from operations
(31,590)
(31,139)
(114,956)
(92,084)
Other income (expense)
9
(49)
(123)
(109)
Interest income
968
1,869
4,149
6,214
Interest expense
(1,146)
(1,120)
(4,562)
(4,139)
Change in fair value of preferred stock
tranche liability
—
3,071
4,189
2,751
Change in fair value of warrant liability
(32,606)
—
(19,149)
—
Net loss before taxes
(64,365)
(27,368)
(130,452)
(87,367)
Income tax expense
(185)
—
(185)
—
Net Loss
$
(64,550)
$
(27,368) $
(130,637) $
(87,367)
Net loss per share—basic and diluted
$
(1.33)
$
(1.02) $
(3.66) $
(3.96)(1)
Weighted average common shares
outstanding used in computing:
Net loss per share – basic and diluted
48,709
26,808
35,713
22,054(1)
(1) Amounts have been retroactively restated to reflect the 1-for-12 reverse stock split effected on May
31, 2023
Verastem Oncology
Reconciliation of GAAP to Non-GAAP Financial Information
(in thousands, except per share amounts)
(unaudited)
Three months ended December
31,
Year ended December 31,
2024
2023
2024
2023
Net loss reconciliation:
Net loss (GAAP basis)
$
(64,550)
$
(27,368) $
(130,637)
$
(87,367)
Adjust:
Stock-based compensation expense
2,019
1,598
7,342
5,860
Non-cash interest, net
207
(837)
(5)
(1,132)
Change in fair value of preferred
stock tranche liability
—
(3,071)
(4,189)
(2,751)
Change in fair value of warrant
liability
32,606
—
19,149
—
Severance and other
371
113
990
199
Adjusted net loss (non-GAAP basis)
$
(29,347)
$
(29,565) $
(107,350)
$
(85,191)
Reconciliation of net loss per share
Net loss per share – diluted (GAAP
basis)
$
(1.33)
$
(1.02) $
(3.66)
$
(3.96)
(1)
Adjust per diluted share
Stock-based compensation expense
0.04
0.06
0.21
0.26(1)
Non-cash interest, net
0.01
(0.03)
—
(0.05)(1)
Change in fair value of preferred
stock tranche liability
—
(0.11)
(0.12)
(0.12)(1)
Change in fair value of warrant
liability
0.67
—
0.53
—
Severance and other
0.01
—
0.03
0.01(1)
Adjusted net loss per share – diluted
(non-GAAP basis)
$
(0.60)
$
(1.10) $
(3.01)
$
(3.86)(1)
Weighted average common shares
outstanding used in computing net loss
per share—diluted
$
48,709
$
26,808
$
35,713
$ 22,054(1)
(1) Amounts have been retroactively restated to reflect the 1-for-12 reverse stock split effected on May
31, 2023