Verastem Reports Year-End 2012 Financial Results

  Verastem Reports Year-End 2012 Financial Results

--Advancing Clinical Development Programs Targeting Cancer Stem Cells through
                        FAK and PI3K/mTOR Inhibition--

Business Wire

CAMBRIDGE, Mass. -- March 27, 2013

Verastem, Inc., (NASDAQ: VSTM), a clinical-stage biopharmaceutical company
focused on discovering and developing drugs to treat cancer by the targeted
killing of cancer stem cells, reported financial results for the year ended
December 31, 2012, and also commented on corporate accomplishments and plans.

"Verastem achieved important milestones in our mission to bring new therapies
targeting cancer stem cells to patients during 2012," said Christoph Westphal,
M.D., Ph.D., Chairman and Chief Executive Officer of Verastem. "We have built
a strong foundation to translate the groundbreaking work of Bob Weinberg to
clinical practice. In addition to our ongoing combination study in ovarian
cancer, we are on track to initiate a potentially pivotal study of VS-6063 in
mesothelioma.”

“The Phase 1/1b trial of lead FAK inhibitor, VS-6063, in combination with
paclitaxel for patients with ovarian cancer is open and enrolling at all
sites,” said Dr. Joanna Horobin, Chief Medical Officer of Verastem. “In
addition to the potential benefit in ovarian cancer, the results from this
trial may allow us to expand into additional tumor types where the combined
use of a cancer stem cell inhibitor with the commonly used paclitaxel may be a
more effective treatment.”

Verastem plans to initiate a potentially pivotal trial of VS-6063 in
mesothelioma midyear 2013. Mesothelioma is a highly aggressive disease with an
approximate median overall survival of just 12 months from diagnosis of
advanced disease. Verastem studies have demonstrated that FAK inhibitors
strongly reduce cancer stem cells in preclinical models of mesothelioma. In
addition, in a recent third party Phase 1 clinical study of a FAK inhibitor,
the median progression-free survival for patients with recurrent mesothelioma
was tripled as compared to the reported historical median time to progression
on placebo.

“We will continue to expand our FAK franchise in 2013 with a Phase 1 trial of
VS-4718, our second FAK inhibitor, in advanced cancers, which is expected to
commence in the first half of this year,” continued Dr. Horobin. “In addition,
we are conducting IND-enabling studies to support the entry of our PI3K/mTOR
inhibitor, VS-5584, into a Phase 1 trial during the second half of the year.”

“During 2012, Verastem secured firm financial footing with our initial public
offering and accelerated our programs targeting cancer stem cells through
translational research and strategic product acquisitions,” said Robert
Forrester, President and Chief Operating Officer of Verastem. “We have
assembled a portfolio of cancer stem cell-targeting products for our FAK and
PI3K/mTOR inhibition programs and have made key additions to our management
team and Board of Directors. We believe that we have the capital, product
candidates and team in place to execute on our mission and feel that 2013 will
be an important year.”

2012 and Recent Accomplishments

Our significant accomplishments include the following:

  *Advanced the FAK inhibition program and defined a potential registration
    pathway

       *Designed the potentially pivotal trial in mesothelioma planned to
         initiate midyear 2013
       *Met with the regulatory agencies in the US and UK and, based on these
         discussions, we believe that positive results from our anticipated
         trial of VS-6063 in mesothelioma will enable us to seek regulatory
         approval
       *Advanced our diagnostic strategy through an agreement with LabCorp to
         develop a companion diagnostic to VS-6063 to stratify patients in the
         mesothelioma trial
       *Initiated a Phase 1/1b study of VS-6063 in combination with
         paclitaxel for patients with ovarian cancer in Q1 2013
       *Selected VS-4718 as our second FAK inhibitor product candidate for
         development and conducted IND-enabling toxicology studies to support
         entry into Phase 1 clinical development, which is currently planned
         for H1 2013

  *Progressed the dual PI3K/mTOR inhibition program. Conducted IND-enabling
    studies of VS-5584 with a goal of initiating Phase 1 clinical development
    in H2 2013
  *Entered into a research collaboration with Eisai. We are conducting a
    research collaboration with Eisai to generate novel inhibitors of
    Wnt/β-catenin signaling
  *Increased the understanding of cancer stem cell biology

       *Presented research results widely at major scientific conferences
         including AACR, ASCO, iMIG, EORTC and SABCS
       *Published data on PI3K/mTOR inhibitor VS-5584 in Molecular Cancer
         Therapeutics
       *Scientific cofounder and chair of the scientific advisory board,
         Robert Weinberg, Ph.D., published research in Cancer Discovery
         outlining the critical nature of FAK signaling for tumor formation

  *Strengthened our development team. Dr. Joanna Horobin joined as Chief
    Medical Officer. Dr. Horobin has 30 years of drug development experience
    and has overseen the development and introduction of 10 marketed
    compounds, including Taxotere® and Camptosar®
  *Completed an initial public offering. We completed an IPO raising $63.3
    million of gross proceeds
  *Board of Directors. Allison Lawton, Director of Cubist and former Senior
    Vice President and General Manager at Genzyme, S. Louise Phanstiel,
    Director of Myriad Genetics and former President of Specialty Products at
    Wellpoint, Michael Kauffman, M.D., Ph.D., former CMO of Onyx, and Stephen
    Sherwin, M.D., Oncologist, Director of Biogen and former Chair of the
    Biotechnology Industry Organization, joined our Board of Directors

2013 Milestones

Our planned upcoming clinical milestones include the following:

  *Initiate the potentially pivotal trial in mesothelioma for VS-6063 midyear
    2013
  *Complete the safety portion of the Phase 1/1b trial of VS-6063 plus
    paclitaxel in ovarian cancer
  *Begin enrollment of the expanded cohort of the Phase 1/1b trial of VS-6063
    plus paclitaxel in ovarian cancer
  *Initiate Phase 1 clinical development of VS-4718 H1 2013
  *Initiate Phase 1 clinical development of VS-5584 H2 2013

Full Year 2012 Financial Results

As of December 31, 2012, Verastem had cash, cash equivalents and investments
of $91.5 million compared to $56.8 million on December 31, 2011. The number of
outstanding common shares as of February 28, 2013, was 21,152,465.

Net loss for the year ended December 31, 2012, was $32.0 million, or $1.70 per
share applicable to common stockholders, as compared to $13.7 million, or
$10.59 per share applicable to common stockholders, for the year ended
December 31, 2011. Net loss for 2012 includes a $3.6 million license fee
payment of cash and stock pursuant to our agreement with Pfizer, Inc. and
non-cash stock-based compensation expense of $7.4 million for the year ended
December 31, 2012, as compared to $1.6 million for the year ended December 31,
2011.

Research and development expense for the year ended December 31, 2012, was
$21.7 million compared to $9.9 million for the year ended December 31, 2011.
The $11.8 million increase is primarily related to increased contract research
organization expense of $4.1 million, an increase of $3.6 million in license
fees due to our agreement with Pfizer, Inc., including the issuance of 192,012
shares of common stock, and an increase of $3.3 million for personnel costs,
including stock-based compensation of $2.0 million, which is primarily due to
a higher fair value of our common stock.

General and administrative expense for the year ended December 31, 2012, was
$10.5 million compared to $3.8 million for the year ended December 31, 2011.
The $6.7 million increase resulting from an increase of $4.6 million for
personnel costs, including stock-based compensation of $3.8 million, which is
primarily due to higher fair value of our common stock, and an increase of
$1.1 million in professional fees primarily related to additional legal and
accounting fees for being a publicly traded company.

Financial Guidance

Based on current operating plans, we expect to have sufficient cash, cash
equivalents, short-term investments and long-term investments to fund our
research and development programs and operations into H2 2015.

Conference Call Information

The Verastem management team will host a conference call discussing the
Company's financial results, recent developments and management’s outlook for
2013 on Wednesday, March 27, 2013, at 8:00 AM (ET). The call can be accessed
by dialing 1- 866-700-6293 five minutes prior to the start of the call and
providing the passcode 40173121. A replay will be available approximately two
hours after the completion of the call and can be accessed by dialing
1-888-286-8010 and providing the passcode 58773105. The replay will be
available for two weeks from the date of the live call.

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

About Verastem, Inc.

Verastem, Inc. (NASDAQ: VSTM) is a clinical-stage biopharmaceutical company
focused on discovering and developing drugs to treat cancer by the targeted
killing of cancer stem cells. Cancer stem cells are an underlying cause of
tumor recurrence and metastasis. Verastem is developing small molecule
inhibitors of signaling pathways that are critical to cancer stem cell
survival and proliferation: FAK, PI3K/mTOR and Wnt. For more information,
please visit www.verastem.com.

Taxotere® is a registered trademark of Sanofi-Aventis. Camptosar® is a
registered trademark of Yakult Honsha Company, Ltd.

Forward-looking statements:

This press release includes forward-looking statements about the Company’s
strategy, future plans and prospects, including statements regarding the
development of the Company’s compounds, including VS-6063, VS-4718 and
VS-5584, and the Company’s FAK and diagnostic programs generally, the timeline
for clinical development and regulatory approval of the Company’s compounds,
the structure of the Company’s planned clinical trials and estimates of the
Company’s ability to fund operations. The words “anticipate,” “appear,”
“believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,”
“project,” “target,” “potential,” “will,” “would,” “could,” “should,”
“continue,” and similar expressions are intended to identify forward-looking
statements, although not all forward-looking statements contain these
identifying words. Each forward-looking statement is subject to risks and
uncertainties that could cause actual results to differ materially from those
expressed or implied in such statement. Applicable risks and uncertainties
include the risks that the preclinical testing of the Company’s compounds may
not be predictive of the success of later clinical trials, that the Company
will be unable to successfully complete the clinical development of its
compounds, including VS-6063, VS-4718 and VS-5584, that the development of the
Company’s compounds will take longer or cost more than planned, and that the
Company’s compounds will not receive regulatory approval or become
commercially successful products. Other risks and uncertainties include those
identified under the heading “Risk Factors” in the Company’s Annual Report on
Form 10-K for the year ended December 31, 2012 and in any subsequent SEC
filings. The forward-looking statements contained in this presentation reflect
the Company’s current views with respect to future events, and the Company
does not undertake and specifically disclaims any obligation to update any
forward-looking statements.

Verastem, Inc.
(A development-stage company)
                                                                
Unaudited Condensed Consolidated Balance Sheets
                                                                      
(in thousands)
                                                                      
                                                      December 31,
                                                      2011            2012
                                                                      
Cash, cash equivalents and investments                $ 56,805        $ 91,520
Prepaid expenses and other current assets               130             506
Property and equipment, net                             709             811
Other assets                                            1,393           86
Total assets                                          $ 59,037        $ 92,923
                                                                      
Accounts payable and accrued expenses                 $ 3,146         $ 2,399
Other liabilities                                       516             58
Redeemable convertible preferred stock                  68,141          -
Stockholders’ (deficit) equity                          (12,766 )       90,466
Total liabilities and stockholders’ (deficit)         $ 59,037        $ 92,923
equity
                                                                        

Verastem, Inc.
(A development-stage company)
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
                                                         
                                              Year ended December 31,
                                              2011             2012
Operating expenses:
Research and development                      $ 9,883          $ 21,712
General and administrative                     3,815        10,518   
Total operating expenses                       13,698       32,230   
                                                               
Loss from operations                            (13,698  )       (32,230  )
Interest income                                15           246      
Net loss                                       ($13,683 )    ($31,984 )
                                                               
Accretion of preferred stock                   (32      )    (6       )
                                                               
Net loss applicable to common                  ($13,715 )    ($31,990 )
stockholders
                                                               
Net loss per share applicable to common        ($10.59  )    ($1.70   )
stockholders–basic and diluted
Weighted-average number of common
shares used in net loss per share              1,295          18,765   
applicable to common stockholders-basic
and diluted

Contact:

Investor contact:
Verastem, Inc.
Brian Sullivan, 617-252-9314
bsullivan@verastem.com
or
Media contact:
For Verastem, Inc.
Kari Watson, 781-235-3060
kwatson@macbiocom.com
 
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