Verastem Q3 operating loss widens to $75.2M
A new revenue-note series has an initial 4.50% payment rate on sales of products combining avutometinib and defactinib.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Verastem, Inc. reported third-quarter net product revenue of $24.012 million, compared with $11.242 million in 2025. Its operating loss widened to $75.224 million from $40.715 million, while net loss was $74.723 million versus $98.518 million. Research and development expense was $68.806 million for the quarter.
Cash, cash equivalents and investments totaled $172.8 million as of September 30, 2026; net cash used in operating activities was $129.618 million for the first nine months. Verastem expects existing cash resources, proceeds from its October 2026 offering and expected product revenue to fund planned operations through 12 months from the statements’ issuance. It said the September cash position and October offering proceeds alleviated substantial doubt noted as of June 30, 2026.
An August amendment established Revenue Notes with an aggregate purchase price of up to $75.0 million in two tranches; $50.0 million was funded on August 28, 2026. The notes provide quarterly payments initially equal to 4.50% of net sales of products combining avutometinib and defactinib. The rate automatically decreases to 1.75% after December 31, 2031 if cumulative payments meet the stated test by that date.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointQ3 net product revenue reached $24.012 million, versus $11.242 million in 2025.
Negative
- Moderate pointQ3 operating loss widened to $75.224 million, from $40.715 million.
- Moderate pointNine-month operating cash use rose to $129.618 million, from $107.555 million.
Filing Explained
Verastem issued 3,842,191 shares through third-quarter at-the-market transactions; common shares outstanding were 94,468,699 on
Key Figures
Key Terms
Revenue Payment Percentage financial
Contingent Make-Whole Payment financial
fair value option financial
Level 3 financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How much product revenue did VSTM report in Q3 2026?
What are the terms of VSTM’s Revenue Notes?
AI-generated analysis. How Rhea-AI works. Not financial advice.
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| |
(Mark One) | |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| |
For the quarterly period ended | |
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:
(Exact name of registrant as specified in its charter)
|
|
|
|
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
| | |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
The Nasdaq Capital Market |
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.
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 such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the 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 ☐ |
| 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of November 2, 2026 there were
Table of Contents
TABLE OF CONTENTS
PART I—FINANCIAL INFORMATION | ||
Item 1. | Condensed Consolidated Financial Statements (unaudited) | 4 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 33 |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 45 |
Item 4. | Controls and Procedures | 46 |
PART II—OTHER INFORMATION | ||
Item 1. | Legal Proceedings | 46 |
Item 1A. | Risk Factors | 46 |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 47 |
Item 3. | Defaults Upon Senior Securities | 47 |
Item 4. | Mine Safety Disclosures | 47 |
Item 5. | Other Information | 47 |
Item 6. | Exhibits | 47 |
EXHIBIT INDEX | 48 | |
SIGNATURES | 49 | |
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FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q 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 Quarterly Report on Form 10-Q are forward-looking statements, including statements regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management. Such statements relate to, among other things, the commercial success of our marketed product AVMAPKI® FAKZYNJA® CO-PACK (avutometinib capsules; defactinib tablets), the development and activity of our programs and product candidates, avutometinib (rapidly accelerated fibrosarcoma (“RAF”)/ mitogen-activated protein kinase kinase (“MEK”) program), defactinib (focal adhesion kinase (“FAK”) program), and VS-7375 (a selective oral KRAS G12D dual ON/OFF inhibitor), the structure and potential clinical value of our completed, planned and pending clinical trials, including the RAMP 201, RAMP 201J, RAMP 205, RAMP 301, TARGET-D 101, TARGET-D 201, TARGET-D 202, TARGET-D 203 and TARGET-D 301; 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 our 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; 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 applications that may be filed for our product candidates and, if approved, whether our product candidates will be commercially successful in such jurisdictions; the impact of current and future healthcare reforms, including those affecting the delivery of or payment for healthcare products and services; 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 representative of more mature data or 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; actions or advice of regulatory agencies to maintain regulatory approval of AVMAPKI FAKZYNJA CO-PACK; that the market opportunities of AVMAPKI FAKZYNJA CO-PACK are based on internal and third-party estimates which may prove to be incorrect; that third-party payors (including government agencies) may not reimburse; the Company’s pro forma cash position; uncertainties related to the regulatory and policy actions proposed and enacted by the current U.S. presidential administration that may adversely affect our business; that there may be competitive developments affecting our product candidates; that data may not be available when expected; that enrollment of clinical trials may take longer than expected; that our marketed products and 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 we may not be able to confirm the results from the RAMP 201 study or expand the approved indication for AVMAPKI FAKZYNJA CO-PACK; 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 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 product development programs; that we may not attract and retain high quality personnel; that we or Pfizer, Inc. (“Pfizer”) may fail to fully perform under the license agreement covering certain Pfizer FAK inhibitors, including defactinib; 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
2
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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” contained in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the Securities and Exchange Commission (“SEC”) on March 4, 2026, and in any subsequent filings with the 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 Quarterly Report on Form 10-Q 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.
3
Table of Contents
PART I—FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (unaudited).
Verastem, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
| | | | | | |
| | | | | | |
| | September 30, | | December 31, | ||
| | 2026 | | 2025 | ||
Assets | | | | | | |
Current assets: | | | | | | |
Cash and cash equivalents | | $ | | | $ | |
Accounts receivable, net | | | | | | |
Inventory | | | | | | |
Grant receivable | | | | | | |
Prepaid expenses and other current assets | |
| | |
| |
Total current assets | |
| | |
| |
Right-of-use asset, net | | | | | | |
Restricted cash | | | | | | — |
Intangible assets, net | | | | | | |
Other assets | |
| | |
| |
Total assets | | $ | | | $ | |
Liabilities and stockholders’ equity | | | | | | |
Current liabilities: | | | | | | |
Accounts payable | | $ | | | $ | |
Accrued expenses | | | | |
| |
Vendor financing arrangement, short-term | | | | | | |
Lease liability, short-term | |
| | |
| |
Current portion of long-term debt | | | | | | — |
Total current liabilities | |
| | |
| |
Non-current liabilities: | |
| | |
| |
Long-term debt | | | | | | |
Vendor financing arrangement, long-term | | | | | | |
Lease liability, long-term | | | | | | — |
Warrant liability | | | — | | | |
Total liabilities | | | | | | |
Stockholders’ equity: | | | | | | |
Preferred stock, $ | |
| — | | | — |
Common stock, $ | |
| | |
| |
Additional paid-in capital | |
| | |
| |
Accumulated other comprehensive income | |
| | |
| |
Accumulated deficit | | | ( | | | ( |
Total stockholders’ equity | |
| | |
| |
Total liabilities and stockholders’ equity | | $ | | | $ | |
See accompanying notes to the condensed consolidated financial statements.
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Table of Contents
Verastem, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(unaudited)
(in thousands, except per share amounts)
| | | | | | | | | | | | |
| | Three months ended September 30, | | Nine months ended September 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Revenue: | | | | | | | | | | | | |
Product revenue, net | | $ | | | $ | | | $ | | | $ | |
Sale of COPIKTRA license and related assets | | | — | | | — | | | | | | — |
Total revenue | |
| | |
| | |
| | |
| |
Operating expenses: | | | | | | | | | | | | |
Cost of sales - product | | | | | | | | | | | | |
Cost of sales - intangible amortization | | | | | | | | | | | | |
Research and development | | | | | | | | | | | | |
Selling, general and administrative | |
| | | | | |
| | | | |
Total operating expenses | |
| | |
| | |
| | | | |
Loss from operations | |
| ( | |
| ( | |
| ( | | | ( |
Other expense | | | ( | | | ( | | | ( | | | ( |
Interest income | |
| | |
| | |
| | |
| |
Interest expense | |
| ( | |
| ( | |
| ( | |
| ( |
Loss on debt extinguishment | | | — | | | — | | | — | | | ( |
Change in fair value of warrant liability | | | — | | | ( | | | | | | ( |
Change in fair value of Notes | | | | | | ( | | | ( | | | ( |
Net loss before taxes | | | ( | | | ( | | | ( | | | ( |
Income tax expense | | | — | | | — | | | ( | | | — |
Net loss | | $ | ( | | $ | ( | | $ | ( | | $ | ( |
Net loss per share—basic | | $ | ( | | $ | ( | | $ | ( | | $ | ( |
Net loss per share—diluted | | $ | ( | | $ | ( | | $ | ( | | $ | ( |
| | | | | | | | | | | | |
Weighted average common shares outstanding used in computing net loss per share—basic | | | | | | | | | | | | |
Weighted average common shares outstanding used in computing net loss per share—diluted | | | | | | | | | | | | |
| | | | | | | | | | | | |
Net loss | | $ | ( | | $ | ( | | $ | ( | | $ | ( |
Change in fair value of Notes attributable to instrument specific credit risk | | | | | | | | | | | | ( |
Comprehensive loss | | $ | ( | | $ | ( | | $ | ( | | $ | ( |
See accompanying notes to the condensed consolidated financial statements.
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Verastem, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(unaudited)
(in thousands, except share data)
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | Accumulated | | | | | | ||
| | | | | | | Additional | | other | | | | Total | ||||
| | Common stock | | paid-in | | comprehensive | | Accumulated | | stockholders' | |||||||
| | Shares | | Amount | | capital | | income | | (deficit) | | equity | |||||
Balance at December 31, 2025 | | | | | | | | | | | | | | ( | | $ | |
Net Loss | | — | | | — | | | — | | | — | | | ( | |
| ( |
Change in fair value of long-term debt attributable to instrument specific credit risk | | — | | | — | | | — | | | | | | — | |
| |
Stock-based compensation expense | | — | | | — | | | | | | — | | | — | | | |
Issuance of common stock under Employee Stock Purchase Plan | | | | | — | | | | | | — | | | — | | | |
Issuance of common stock resulting from vesting of restricted stock units | | | | | — | | | — | | | — | | | — | | | — |
Issuance of common stock upon exercise of options | | | | | — | | | | | | — | | | — | |
| |
Issuance of common stock upon exercise of warrants | | | | | | | | | | | — | | | — | | | |
Issuance of common stock upon exercise of pre-funded warrants | | | | | — | | | — | | | — | | | — | | | — |
Unrealized loss on available for sale securities | | — | | | — | | | — | | | ( | | | — | | | ( |
Balance at March 31, 2026 | | | | $ | | | $ | | | $ | | | $ | ( | | $ | |
Net Loss | | — | | | — | | | — | | | — | | | ( | |
| ( |
Change in fair value of long-term debt attributable to instrument specific credit risk | | — | | | — | | | — | | | ( | | | — | |
| ( |
Stock-based compensation expense | | — | | | — | | | | | | — | | | — | |
| |
Issuance of common stock resulting from vesting of restricted stock units | | | | | — | | | — | | | — | | | — | | | — |
Issuance of common stock upon exercise of options | | | | | — | | | | | | — | | | — | |
| |
Issuance of common stock upon exercise of pre-funded warrants | | | | | — | | | — | | | — | | | — | |
| — |
Unrealized gain on available for sale securities | | — | | | — | | | — | | | | | | — | |
| |
Balance at June 30, 2026 | | | | $ | | | $ | | | $ | | | $ | ( | | $ | |
Net Loss | | — | | | — | | | — | | | — | | | ( | |
| ( |
Change in fair value of long-term debt attributable to instrument specific credit risk | | — | | | — | | | — | | | | | | — | |
| |
Stock-based compensation expense | | — | | | — | | | | | | — | | | — | |
| |
Issuance of common stock resulting from at-the-market transactions | | | | | — | | | | | | — | | | — | | | |
Issuance of common stock resulting from vesting of restricted stock units | | | | | — | | | — | | | — | | | — | | | — |
Issuance of common stock under Employee Stock Purchase Plan | | | | | — | | | | | | — | | | — | | | |
Issuance of common stock from exercise of options | | | | | — | | | | | | — | | | — | | | |
Balance at September 30, 2026 | | | | $ | | | $ | | | $ | | | $ | ( | | $ | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | Accumulated | | | | | ||||
| | | | | | | Additional | | other | | | | Total | ||||
| | Common stock | | paid-in | | comprehensive | | Accumulated | | stockholders' | |||||||
| | Shares | | Amount | | capital | | income | | (deficit) | | equity (deficit) | |||||
Balance at December 31, 2024 | | | | $ | | | $ | | | $ | — | | $ | ( | | $ | ( |
Net loss | | — | | | — | | | — | | | — | | | ( | |
| ( |
Issuance of common stock resulting from vesting of restricted stock units | | | | | — | | | — | | | — | | | — | |
| — |
Stock-based compensation expense | | — | | | — | | | | | | — | | | — | |
| |
Change in fair value of Notes attributable to instrument specific credit risk | | — | | | — | | | — | | | | | | — | | | |
Issuance of common stock resulting from at-the-market transactions | | | | | | | | | | | — | | | — | |
| |
Issuance of common stock, net of issuance costs of $ | | | | | — | | | | | | — | | | — | | | |
Issuance of common stock upon exercise of warrants | | | | | — | | | | | | — | | | — | | | |
Issuance of common stock under Employee Stock Purchase Plan | | | | | — | | | | | | — | | | — | | | |
Balance at March 31, 2025 | | | | $ | | | $ | | | $ | | | $ | ( | | $ | ( |
Net loss | | — | | | — | | | — | | | — | | | ( | |
| ( |
Issuance of common stock resulting from vesting of restricted stock units | | | | | — | | | — | | | — | | | — | | | — |
Stock-based compensation expense | | — | | | — | | | | | | — | | | — | | | |
Change in fair value of Notes attributable to instrument specific credit risk | | — | | | — | | | — | | | ( | | | — | | | ( |
Issuance of common stock upon exercise of warrants | | | | | — | | | | | | — | | | — | | | |
Issuance of common stock upon exercise of pre-funded warrants | | | | | — | | | — | | | — | | | — | | | — |
Issuance of common stock upon conversion of Series A Preferred Stock | | | | | — | | | — | | | — | | | — | | | — |
Issuance of common stock, and pre-funded warrants, net of issuance cost of $ | | | | | | | | | | | — | | | — | | | |
Balance at June 30, 2025 | | | | $ | | | $ | | | $ | | | $ | ( | | $ | |
Net loss | | — | | | — | | | — | | | — | | | ( | |
| ( |
Change in fair value of Notes attributable to instrument specific credit risk | | — | | | — | | | — | | | ( | | | — | | | ( |
Stock-based compensation expense | | — | | | — | | | | | | — | | | — | |
| |
Issuance of common stock from exercise of options | | | | | — | | | | | | | | | — | |
| |
Issuance of common stock upon exercise of warrants | | | | | | | | | | | | | | — | |
| |
Issuance of common stock resulting from vesting of restricted stock units | | | | | — | | | — | | | — | | | — | | | — |
Issuance of common stock under Employee Stock Purchase Plan | | | | | — | | | | | | — | | | — | |
| |
Balance at September 30, 2025 | | | | $ | | | $ | | | $ | | | $ | ( | | $ | ( |
See accompanying notes to the condensed consolidated financial statements.
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Verastem, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
| | | | | | |
| | Nine months ended September 30, | ||||
| | 2026 | | 2025 | ||
Operating activities | | | | | | |
Net loss | | $ | ( | | $ | ( |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | |
Depreciation | |
| — | | | |
Amortization of acquired intangible assets | | | | | | |
Non-cash operating lease cost | | | | | | ( |
Stock-based compensation expense | |
| | |
| |
Amortization of deferred financing costs, debt discounts and premiums and discounts on available-for-sale marketable securities | | | ( | | | |
Change in fair value of warrant liability | | | ( | | | |
Non-cash change in fair value of Notes | | | ( | | | |
Loss on debt extinguishment | | | — | | | |
Changes in operating assets and liabilities: | | | | | | |
Accounts receivable, net | | | ( | | | ( |
Inventory | | | ( | | | ( |
Prepaid expenses, other current assets and other assets | |
| ( | |
| ( |
Accounts payable | |
| | |
| |
Accrued expenses and other liabilities | |
| | |
| |
Net cash used in operating activities | |
| ( | |
| ( |
Investing activities | | | | | | |
Purchases of intangible assets | | | ( | | | ( |
Purchases of investments | | | ( | | | — |
Maturities of investments | | | | |
| — |
Net cash used in investing activities | | | ( | |
| ( |
Financing activities | | | | | | |
Proceeds from the issuance of common stock and pre-funded warrants, net | | | | | | |
Repayment of vendor financing arrangement | | | ( | | | — |
Proceeds from exercise of warrants | | | | | | |
Proceeds from long-term debt | | | | | | |
Repayment of long-term debt | | | — | | | ( |
Proceeds from insurance premium financing | | | | | | |
Payments on insurance premium financing | | | ( | | | ( |
Proceeds from the exercise of stock options and employee stock purchase program | | | | | | |
Net cash provided by financing activities | |
| | | | |
(Decrease) increase in cash, cash equivalents and restricted cash | |
| ( | |
| |
Cash, cash equivalents and restricted cash at beginning of period | |
| | |
| |
Cash, cash equivalents and restricted cash at end of period | | $ | | | $ | |
Supplemental disclosure of non-cash investing and financing activities | | | | | | |
Conversion of warrant liability into additional paid-in capital upon warrant exercise | | $ | | | $ | |
Purchases of intangible asset in accounts payable and accrued expenses | | $ | — | | $ | |
Right of use assets obtained in exchange for operating lease liabilities | | $ | | | $ | — |
See accompanying notes to the condensed consolidated financial statements.
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Verastem, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Nature of business
Verastem, Inc. (the “Company”) is a biopharmaceutical company committed to the development and commercialization of new medicines to improve the lives of patients diagnosed with rat sarcoma (“RAS”)/ mitogen-activated protein kinase (“MAPK”) pathway-driven cancers. On May 8, 2025, the U.S. Food and Drug Administration (the “FDA”) approved AVMAPKI FAKZYNJA CO-PACK (avutometinib capsules; defactinib tablets) for the treatment of adult patients with Kirsten rat sarcoma viral oncogene homolog (“KRAS”) mutant (“KRAS mt”) recurrent low-grade serous ovarian cancer (“LGSOC”) who received prior systemic therapy. The Company markets AVMAPKI FAKZYNJA CO-PACK in the United States. 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 condensed 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, market acceptance and commercial success of AVMAPKI FAKZYNJA CO-PACK, or any of the Company’s product candidates following receipt of regulatory approval, inability to obtain marketing approval for additional indications or product candidates, protection of proprietary technology and the continued ability to obtain adequate financing to fund the Company’s future operations. If the Company does not successfully commercialize AVMAPKI FAKZYNJA CO-PACK or any of its other product candidates, it will be unable to generate sufficient product revenue or achieve profitability and may need to raise additional capital.
As of September 30, 2026, the Company had cash, cash equivalents, and investments of $
As of June 30, 2026, the Company had concluded that there was substantial doubt about its ability to continue as a going concern primarily due to anticipated operating losses for the foreseeable future. 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 execution activities. The Company’s increased cash and cash equivalents position as of September 30, 2026 plus net proceeds received from the Offering in October 2026 alleviated the substantial doubt.
The Company expects to finance its operations with its existing cash, cash equivalents and investments, through future net product revenues, through potential future milestones and royalties received pursuant to the Company’s Asset Purchase Agreement (“Secura APA”) with Secura, through a future potential issuance of Notes pursuant to the Company’s Note Purchase Agreement (as defined herein) (see Note 10. Debt), or through other strategic financing opportunities that could include, but are not limited to collaboration agreements, offerings of its equity, or the incurrence of debt. However, there is no guarantee that any of these strategic or financing opportunities will be executed or executed on favorable terms, and some could be dilutive to existing stockholders. If the Company fails to obtain additional capital or generate sufficient revenue from its commercialization activities in the future, it may be unable to complete its planned preclinical studies and clinical trials and obtain approval of certain investigational product candidates from the FDA or foreign regulatory authorities.
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2. Summary of significant accounting policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial reporting and as required by Regulation S-X, Rule 10-01 under the assumption that the Company will continue as a going concern for the next twelve months. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements, nor do they include any adjustments that might result from the uncertainty related to the Company’s ability to continue as a going concern. In the opinion of management, all adjustments (including those which are normal and recurring) considered necessary for a fair presentation of the interim financial information have been included. When preparing financial statements in conformity with GAAP, the Company must make estimates and assumptions that affect the reported amounts and related disclosures at the date of the financial statements. Actual results could differ from those estimates. Additionally, operating results for the three and nine months ended September 30, 2026 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2026. For further information, refer to the financial statements and footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on March 4, 2026.
Significant Accounting Policies
The significant accounting policies are described in Note 2. Significant accounting policies in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. During the nine months ended September 30, 2026, there were no material changes to the significant accounting policies.
Recently issued accounting standards updates
In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 condensed consolidated financial statements and related disclosures.
In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). This standard modernizes the accounting for internal-use software by removing references to prescriptive development stages and instead requiring capitalization of costs once (1) management has authorized and committed to funding the software project, and (2) it is probable the project will be completed and placed in service. Entities must evaluate whether there is “significant development uncertainty,” such as unresolved novel functionality or substantially revised performance requirements, before meeting this capitalization threshold. ASU 2025-06 is effective for annual reporting periods beginning after December 15, 2027, and interim periods within such annual reporting periods, with early adoption permitted. Entities may adopt the amendments prospectively, retrospectively, or under a modified transition approach. The Company is in the process of evaluating the impact that the adoption of this ASU may have on its condensed consolidated financial statements and related disclosures.
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 condensed consolidated financial statements upon future adoption.
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Concentrations of credit risk and off-balance sheet risk
Cash, 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, 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 September 30, 2026 there were
For each of the three and the nine months ended September 30, 2026, there were
Proceeds from Grants
In May 2022, the Company was awarded the “Therapeutic Accelerator Award” grant from Pancreatic Cancer Action Network (“PanCAN”) for up to $
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3. Cash, cash equivalents and restricted cash
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows (in thousands):
| | | | | | |
| | September 30, 2026 | | December 31, 2025 | ||
Cash and cash equivalents | | $ | | | $ | |
Restricted cash | |
| | |
| |
Total cash, cash equivalents and restricted cash | | $ | | | $ | |
Amounts included in restricted cash as of September 30, 2026 and December 31, 2025 represent 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 $
4. 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 financial assets or liabilities and is not a measure of the 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):
| | | | | | | | | | | | |
| | September 30, 2026 | ||||||||||
Description | | Total | | Level 1 | | Level 2 | | Level 3 | ||||
Financial assets | | | | | | | | | | | | |
Cash equivalents | | $ | | | $ | | | $ | — | | $ | — |
Total financial assets | | $ | | | $ | | | $ | — | | $ | — |
Financial liabilities | | | | | | | | | | | | |
Initial Notes | | $ | | | $ | — | | $ | — | | $ | |
Revenue Notes | | $ | | | $ | — | | $ | — | | $ | |
Total financial liabilities | | $ | | | $ | — | | $ | — | | $ | |
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| | | | | | | | | | | | |
| | December 31, 2025 | ||||||||||
Description | | Total | | Level 1 | | Level 2 | | Level 3 | ||||
Financial assets | | | | | | | | | | | | |
Cash equivalents | | $ | | | $ | | | $ | — | | $ | — |
Total financial assets | | $ | | | $ | | | $ | — | | $ | — |
Financial liabilities | | | | | | | | | | | | |
Warrant liability | | $ | | | $ | — | | $ | — | | $ | |
Initial Notes | | $ | | | $ | — | | $ | — | | $ | |
Total financial liabilities | | $ | | | $ | — | | $ | — | | $ | |
The Company’s financial assets consist of cash equivalents, including U.S. Government money market funds and short-term investments comprised of commercial paper. The financial assets 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 September 30, 2026, or December 31, 2025.
Warrant Liability
A warrant liability was recorded as a result of the July 2024 Offering (as defined herein) (see Note 15. Capital Stock). The fair value measurement of the warrant liability was classified as Level 3 under the fair value hierarchy. The fair value of the warrant liability at inception 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 have resulted in a significantly lower or higher fair value measurement. During the first quarter of 2026, all outstanding Warrants were either exercised or expired. As a result,
Below are the inputs used to value the warrant liability at December 31, 2025:
| | | | |
| | | December 31, 2025 | |
Risk-free interest rate |
| | | % |
Volatility |
| | | % |
Dividend yield |
| | — | |
Remaining term (years) |
| | | |
The following table represents a reconciliation of the warrant liability (in thousands):
| | | | |
December 31, 2025 | | | $ | |
Fair value of warrants exercised | | | | ( |
Fair value adjustment | | | | ( |
September 30, 2026 | | | $ | — |
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Note Purchase Agreement
The Company elected the fair value option under Accounting Standards Codification (“ASC”) 825 for the Initial Notes and the Revenue Notes issued pursuant to the Note Purchase Agreement (see Note 10. Debt). Each series is measured at fair value on a recurring basis. Both measurements are classified within Level 3 of the fair value hierarchy because they incorporate significant unobservable inputs.
Initial Notes
The Company determined the fair value of the Initial Notes utilizing a discounted cash flow model of estimated future payments including interest, principal, Repayment Amount and Revenue Participation Payments (each as defined in the Note Purchase Agreement) (see Note 10. Debt) utilizing a discount rate calculated as the term matched risk-free rate plus credit spread. The fair value of the Initial Notes at September 30, 2026 and December 31, 2025 was $
Revenue Notes
The Company determined the fair value of the Revenue Notes using a Monte Carlo simulation under the income approach. The model simulates future product revenue in a risk-neutral framework and calculates payments under the contractual terms, including Revenue Payments, potential Contingent Make-Whole Payment and other applicable repayment provisions (each as defined in the Note Purchase Agreement) (see Note 10. Debt). The simulated payments are discounted using term-matched risk-free rates plus a credit spread, and the valuation reflects the average present value across the simulated outcomes. Significant unobservable inputs for the Revenue Notes include projected product revenue, regulatory approval probabilities, revenue volatility, revenue risk premium and the Company’s credit spread. The fair value of the Revenue Notes was determined to be $
5. Investments
Cash, cash equivalents, restricted cash and investments consist of the following (in thousands):
| | | | | | | | | | | | |
| | September 30, 2026 | ||||||||||
| | | | | Gross | | Gross | | | | ||
| | Amortized | | Unrealized | | Unrealized | | Fair | ||||
| | Cost | | Gains | | Losses | | Value | ||||
Cash, cash equivalents & restricted cash: | | | | | | | | | | | | |
Cash and money market accounts | | $ | | | $ | — | | $ | — | | $ | |
Total cash, cash equivalents & restricted cash | | $ | | | $ | — | | $ | — | | $ | |
| | | | | | | | | | | | |
| | December 31, 2025 | ||||||||||
| | | | | Gross | | Gross | | | | ||
|
| Amortized |
| Unrealized |
| Unrealized |
| Fair | ||||
| | Cost | | Gains | | Losses | | Value | ||||
Cash, cash equivalents & restricted cash: | | | | | | | | | | | | |
Cash and money market accounts | | $ | | | $ | — | | $ | — | | $ | |
Total cash, cash equivalents & restricted cash | | $ | | | $ | — | | $ | — | | $ | |
There were
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Company's investments. Accrued interest receivable of $
6. Accrued expenses
Accrued expenses consist of the following (in thousands):
| | | | | | |
| | September 30, 2026 | | December 31, 2025 | ||
| | | | | | |
Accrued clinical trial expenses | | $ | | | $ | |
Accrued milestone payments and royalties | | | | | | |
Accrued compensation and related benefits | |
| | |
| |
Accrued commercialization costs | |
| | |
| |
Accrued contract manufacturing expenses | | | | | | |
Accrued other research and development expenses | | | | | | |
Accrued consulting fees | |
| | |
| |
Accrued professional fees | |
| | |
| |
Accrued other | |
| | |
| |
Total accrued expenses | | $ | | | $ | |
7. Product revenue reserves and allowances
Since 2025, the Company’s sole source of product revenue has been from sales of AVMAPKI FAKZYNJA CO-PACK in the United States.
| | | | | | | | | | | | | | | |
| | Trade | | Third Party Payer | | Government | | | | | | | |||
| | discounts | | chargebacks, | | rebates and | | | | | | | |||
| | and | | discounts | | other | | | | | | | |||
| | allowances | | and fees | | incentives | | Returns | | Total | |||||
Balance at December 31, 2025 | | $ | | | $ | | | $ | | | $ | | | $ | |
Provision related to sales in the current year | |
| | | | | | | | | | | |
| |
Adjustments related to prior period sales | |
| — | | | — | | | ( | | | — | |
| ( |
Credits and payments made | |
| ( | | | ( | | | ( | | | ( | |
| ( |
Ending balance at September 30, 2026 | | $ | | | $ | | | $ | | | $ | | | $ | |
Trade discounts and payer chargebacks and discounts are recorded as a reduction to accounts receivable, net on the condensed consolidated balance sheets. Trade allowances and payer fees, government rebates, other incentives and returns are recorded as a component of accrued expenses on the condensed consolidated balance sheets.
8. Inventory
Inventory consists of the following (in thousands):
| | | | | | |
| | September 30, 2026 | | December 31, 2025 | ||
Raw materials | | $ | | | $ | — |
Work in process | |
| | |
| |
Finished goods | |
| | |
| |
Total inventory | | $ | | | $ | |
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At September 30, 2026, all of the Company’s inventory was related to AVMAPKI and FAKZYNJA. In May 2025, the FDA approved AVMAPKI FAKZYNJA CO-PACK, at which time the Company began to capitalize costs to manufacture AVMAPKI FAKZYNJA CO-PACK. Prior to FDA approval of AVMAPKI FAKZYNJA CO-PACK, all costs related to the manufacturing of AVMAPKI and FAKZYNJA and related material were charged to research and development expense in the period incurred. At September 30, 2026, the Company determined that a reserve related to inventory was not required.
9. Intangible Assets
The Company’s intangible assets consist of the following (in thousands):
| | | | | |
| | September 30, 2026 | | Weighted-Average Remaining Amortization Period (Years) | |
Acquired and in-licensed rights | | $ | | | |
Less: accumulated amortization | |
| ( | | |
Total intangible assets, net | | $ | | | |
The Company's finite-lived intangible assets are the result of milestone payments due under the Pfizer Agreement (defined herein) and the License Agreement (defined herein). Refer to Note 18. License, collaboration and commercial agreements for further discussion of the Pfizer Agreement and License Agreement.
The Company recorded approximately $
| | | |
Year ending December 31, | | Amount | |
2026 | | | |
2027 | | | |
2028 | | | |
2029 | | | |
2030 | | | |
Thereafter | | | |
Total future amortization | | $ | |
10. Debt
Note Purchase Agreement (Oberland)
On August 6, 2026 (the “Amendment Closing Date”), the Company entered into Amendment No. 3 (the “Third Amendment”) to that certain Note Purchase Agreement, dated as of January 13, 2025 (the “Original Closing Date”), as previously amended by Amendment No. 1 dated as of October 31, 2025 and Amendment No. 2 dated as of March 2, 2026 (as so amended, the “Note Purchase Agreement”) by and among the Company, certain funds managed by Oberland Capital Management LLC (together with other purchasers party thereto from time to time, the “Purchasers”) and RGCM SA LLC, as purchaser agent.
The Third Amendment amends the financing arrangement under the Note Purchase Agreement by establishing two separate series of senior secured notes: (i) the notes previously issued in an initial aggregate principal amount of $
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Revenue Notes, together, the “Notes”). The establishment of the Revenue Notes replaces the previous conditional second and third tranches of $
| Ø | Initial Notes |
On the Original Closing Date, the Company entered into a Note Purchase Agreement with the Purchasers, pursuant to which the Company could sell to the Purchasers, and the Purchasers could buy from the Company, Initial Notes in an aggregate principal amount not to exceed $
| i. | at the option of the Company, a second purchase (the “Second Purchase”) of $ |
| ii. | at the option of the Company, a third sale (the “Third Sale”) of up to $ |
The Initial 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
Beginning on January 13, 2025 and continuing until the Initial Notes Maturity Date, the Purchasers will receive
All of the Initial Notes may be redeemed prior to the Initial Notes Maturity Date at the option of the Company, subject to payment of the Repayment Amount for the Initial Notes (as defined in the Note Purchase Agreement).
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The Purchasers may demand redemption of the Initial Notes prior to the Initial Notes 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 for the Initial Notes. The Repayment Amount for the Initial Notes is due at the earlier of the Initial Notes Maturity Date and when payment of all obligations under the Note Purchase Agreement are otherwise due. The Repayment Amount for the Initial Notes is (a)
A portion of the proceeds of the Note Purchase Agreement were used to repay the Company’s obligations under the Loan Agreement (as defined below) in full. The Loan Agreement was terminated concurrently with entry into the Note Purchase Agreement.
The Company assessed the terms and features of the Initial Notes and determined that the Company is eligible to elect the fair value option under ASC 825, Financial Instruments. The Initial Notes contain various embedded features and the election of the fair value option allows the Company to bypass analysis of potential embedded derivatives and further analysis of bifurcation of any recognized financial liabilities. Under the fair value option, the financial liability is initially measured at its fair value on the issuance date and subsequently remeasured at estimated fair value on a recurring basis at each reporting date. Changes in the fair value of the Initial Notes, which include accrued interest, if any, are recorded as a component of change in fair value of Notes in the condensed consolidated statements of operations. The Company has not elected to present interest expense separately from changes in fair value and therefore will not separately present interest expense associated with the Initial Notes. Changes in fair value caused by instrument-specific credit risk are presented separately in other comprehensive income or loss within the condensed statements of equity (deficit). The portion of total changes in fair value of Notes attributable to changes in instrument-specific credit risk is determined through specific measurement of periodic changes in the discount rate assumption exclusive of base market changes and is presented as a component of comprehensive income (loss) in the accompanying condensed consolidated statements of operations and comprehensive loss. The change in fair value attributable to instrument specific credit risk recorded during the nine months ended September 30, 2026, September 30, 2025 and cumulatively life to date for the debt was a decrease of $
The following table reconciles the change in fair value of the Initial Notes during the nine months ended September 30, 2026 (in thousands):
| | | | |
Beginning fair value balance at December 31, 2025 | | | $ | |
Change in fair value reported in statements of operations | | | | |
Change in fair value reported in comprehensive loss | | | | ( |
Interest and revenue participation payments | | | | ( |
Ending fair value at September 30, 2026 | | | $ | |
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As of September 30, 2026, future principal payments under the Initial Notes are due as follows (in thousands):
| | | |
2026 | | | — |
2027 | | | — |
2028 | | | — |
2029 | | | — |
2030 | | | — |
2031 | | | |
2032 | | | |
Total principal payments | | $ | |
| Ø | Third Amendment – Revenue Notes |
The Third Amendment provides for:
| i. | an initial tranche of $ |
| ii. | at the option of the Company, a second tranche of $ |
The Revenue Notes are a separate series of Notes which, rather than bearing fixed interest, entitle the Purchasers to quarterly payments (the “Revenue Payments”) equal to the “Revenue Payment Percentage” of net sales of the Company’s products that combine avutometinib and defactinib for such fiscal quarter, including any monetary damages recovered from a third party in any action brought for such third party’s infringement of any intellectual property related to such products, but only to the extent such damages are awarded for lost sales of the product and are net of specified enforcement expenses and amounts required to be allocated to licensors or sublicensees. The Revenue Payment Percentage will initially be
The maturity date for the Revenue Notes is June 30, 2033 (the “Revenue Notes Maturity Date”). All of the Revenue Notes may be redeemed prior to the Revenue Notes Maturity Date at the option of the Company, subject to payment of the “Repayment Amount for the Revenue Notes” (as defined in the Note Purchase Agreement). If the Revenue Notes are redeemed or repaid, the Repayment Amount for the Revenue Notes will be: (a)
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the Cap Amount decreases to
The Note Purchase Agreement, as amended, has no financial covenants. The Revenue Notes are subject to the same customary affirmative and negative covenants described above with regard to the Initial Notes (including limits on asset sales, mergers, debt, liens, dividends, stock repurchases and investments, subject to exceptions) and share in the first-priority security interest, subject to permitted liens, on substantially all assets of the Company and its subsidiaries, including intellectual property related to avutometinib and defactinib. Upon an Event of Default, the Purchasers may require immediate payment of all outstanding obligations, including the applicable Repayment Amount for the Initial Notes and the applicable Repayment Amount for the Revenue Notes.
The Company assessed the terms and features of the Third Amendment and determined that the Initial Notes and the Revenue Notes are separate freestanding financial instruments.
The Company assessed the terms and features of the Revenue Notes and determined that the Company is eligible to elect the fair value option under ASC 825. The Revenue Notes contain various embedded features, including the Revenue Payments, the Contingent Make-Whole Payment and the Repayment Amount for the Revenue Notes provisions, and the election of the fair value option allows the Company to bypass analysis of potential embedded derivatives and further analysis of bifurcation of any recognized financial liabilities. Under the fair value option, the Revenue Notes were initially measured at their fair value on August 28, 2026, (the “Funding Date”), which the Company determined to be equal to the transaction price of $
The following table reconciles the change in fair value of the Revenue Notes from August 28, 2026 through September 30, 2026 (in thousands):
| | | |
Beginning fair value balance at August 28, 2026 | | $ | |
Change in fair value reported in statements of operations | | | ( |
Change in fair value reported in comprehensive loss | | | ( |
Revenue Payments | | | ( |
Ending fair value at September 30, 2026 | | $ |
The fair value of the Revenue Notes is recorded as $
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Loan Agreement (Oxford)
On March 25, 2022 (the “Loan Agreement Closing Date”), the Company entered into a loan and security agreement (the “Original Loan Agreement”) with Oxford Finance, LLC (“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 agreed to lend the Company up to an aggregate principal amount of $
Pursuant to the Loan Agreement, the Company received an initial Term Loan of $
The Company was required to make a final payment of
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 $
The following table sets forth total interest expense for the three and nine months ended September 30, 2026 and 2025 (in thousands):
| | | | | | | | | | | | |
| | Three months ended September 30, | | Nine months ended September 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Contractual Interest | | $ | | | $ | | $ | | | $ | | |
Amortization of debt discount and issuance costs | | | — | | | — | | | — | | | |
Amortization of Final Payment Fee | | | — | | | — | | | — | | | — |
Total | | $ | | | $ | | | $ | | | $ | |
11. Leases
On April 15, 2014, the Company entered into a lease agreement for approximately
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rent amount was approximately $
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 condensed 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 September 30, 2026, a right-of-use asset of $
| | | | | | | | | | | | |
| | Three months ended September 30, | | Nine months ended September 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Lease Expense | | | | | | | | | | | | |
Operating lease expense | | $ | | | $ | | | $ | | | $ | |
Total Lease Expense | | $ | | | $ | | | $ | | | $ | |
Other Information - Operating Leases | | | | | | | | | | | | |
Operating cash flows paid for amounts included in measurement of lease liabilities | | $ | — | | $ | | | $ | | | $ | |
| | |
| | September 30, 2026 |
Other Balance Sheet Information - Operating Leases | | |
Weighted average remaining lease term (in years) | | |
Weighted average discount rate | | |
Maturity Analysis | | |
2026 | | |
2027 | | |
2028 | | |
2029 | | |
Total | $ | |
Less: Present value discount | | ( |
Lease Liability | $ | |
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12. Notes Payable
In February 2026, the Company entered into a finance agreement with AFCO Premium Credit LLC (“AFCO”). Pursuant to the agreement, AFCO loaned the Company the principal amount of $
13. Vendor Financing Arrangement
The Company and IQVIA, Inc. (“IQVIA”) entered into a master services agreement (“IQVIA Master Services Agreement”) for the Company’s strategic collaboration with IQVIA to leverage IQVIA’s infrastructure and established commercialization solutions to complement the Company’s launch strategy for AVMAPKI FAKZYNJA CO-PACK in patients with KRAS mutant recurrent LGSOC. Pursuant to the IQVIA Master Services Agreement, the Company has extended payment terms with respect to a portion of the services provided and has recorded a vendor financing arrangement liability of $
14. Segment Reporting
The Company has
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The table below is a summary of segment net loss including significant segment expenses for the three and nine months ended September 30, 2026 and 2025 (in thousands):
| | | | | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, | ||||||||
| 2026 | | 2025 | | 2026 | | 2025 | ||||
Revenue: | | | | | | | | | | | |
Product revenue, net | $ | | | $ | | | $ | | | $ | |
Sale of COPIKTRA license and related assets | | — | | | — | | | | | | — |
Expenses: | | | | | | | | | | | |
Cost of sales - product | | | | | | | | | | | |
Cost of sales - intangible amortization | | | | | | | | | | | |
Research and development expenses(1) | | | | | | | | | | | |
Commercial expenses(1) | | | | | | | | | | | |
Medical affairs expenses(1) | | | | | | | | | | | |
General and administrative expenses(1) | | | | | | | | | | | |
Stock-based compensation expense | | | | | | | | | | | |
Depreciation expense | | — | | | | | | — | | | |
Interest income | | ( | |
| ( | | | ( | |
| ( |
Interest expense |
| | |
| | |
| | |
| |
Loss on debt extinguishment | | — | | | — | | | — | | | |
Change in fair value of warrant liability | | — | | | | | | ( | | | |
Change in fair value of Notes | | ( | | | | | | | | | |
Other segment items(2) | | | | | | | | | | | |
Income tax expense | | — | | | — | | | | | | — |
Net loss | $ | ( | | $ | ( | | $ | ( | | $ | ( |
| (1) | This category is exclusive of non-cash stock-based compensation and severance expense. |
| (2) |
15. Capital stock
November 2025 Public Offering
On November 13, 2025, the Company entered into an underwriting agreement with several underwriters to sell in a public offering
The exercise price of each November 2025 Pre-Funded Warrant equals $
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Funded Warrant is subject to appropriate adjustment in the event of certain stock dividends, stock splits, stock combinations, or similar events affecting the Company’s common stock. The November 2025 Pre-Funded Warrants are exercisable in cash or by means of a cashless exercise and will not expire until the date the November 2025 Pre-Funded Warrants are fully exercised. The November 2025 Pre-Funded Warrants may not be exercised if the aggregate number of shares of common stock beneficially owned by the holder thereof (together with its affiliates) immediately following such exercise would exceed a specified beneficial ownership limitation.
The November 2025 Pre-Funded Warrants cannot require cash settlement, are freestanding financial instruments that are legally detachable and separately exercisable from the shares of common stock with which they were issued, are immediately exercisable, 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 November 2025 Pre-Funded Warrants do not provide any guarantee of value or return. Accordingly, the November 2025 Pre-Funded Warrants are classified as a component of permanent equity. The net proceeds of the November 2025 Public Offering were approximately $
April 2025 Private Placement
On April 25, 2025, the Company entered into a securities purchase agreement with certain institutional accredited investors (the “PIPE Investors”), pursuant to which the Company sold to the PIPE Investors, in a private placement (the “2025 Private Placement”), an aggregate of
The exercise price of each April 2025 Pre-Funded Warrant equals $
The April 2025 Pre-Funded Warrants cannot require cash settlement, are freestanding financial instruments that are legally detachable and separately exercisable from the shares of common stock with which they were issued, are immediately exercisable, 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 April 2025 Pre-Funded Warrants do not provide any guarantee of value or return. Accordingly, the April 2025 Pre-Funded Warrants are classified as a component of permanent equity. The net proceeds of the 2025 Private Placement were approximately $
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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 certain funds managed by Oberland Capital Management LLC and affiliates thereof (the “SPA Investors”), pursuant to which the SPA Investors purchased an aggregate of
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)
Pre-Funded Warrants
Each July 2024 Pre-Funded Warrant has an exercise price equal to $
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 $
Warrants
Each Warrant had an exercise price equal to $
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The Warrants met the definition of a derivative pursuant to FASB ASC 815, Derivatives and Hedging, and did not meet the derivative scope exception given the Warrants did 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 $
On January 25, 2026,
Series A Convertible Preferred Stock
On November 4, 2022, the Company entered into an 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
Each share of the Series A Convertible Preferred Stock was convertible into
In June 2025, holders of the Series A Convertible Preferred Stock elected to convert all
At-the-market equity offering program
In August 2021, the Company entered into a sales agreement with Cantor pursuant to which the Company can offer and sell up to $
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16. Stock-based compensation
Stock options
A summary of the Company’s stock option activity and related information for the nine months ended September 30, 2026 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, 2025 |
| | | $ | |
| | $ | | |
Granted |
| | | | | | | | | |
Exercised/released |
| ( | | | | | | | | |
Forfeited/cancelled |
| ( | | | | | | | | |
Outstanding at September 30, 2026 |
| | | $ | |
| | $ | | |
Vested at September 30, 2026 |
| | | $ | | | | $ | | |
The fair value of each stock option granted during the nine months ended September 30, 2026 and 2025 was estimated on the grant date using the Black-Scholes option-pricing model using the following weighted-average assumptions:
| | | | | | |
| | Nine months ended September 30, | ||||
| | 2026 | | 2025 | ||
Risk-free interest rate |
| | % | | | % |
Volatility |
| | % | | | % |
Dividend yield |
| — | | | — | |
Expected term (years) |
| | | | ||
Restricted stock units
A summary of the Company’s restricted stock unit activity and related information for the nine months ended September 30, 2026 is as follows:
| | | | | | |
| | | Shares | | Weighted-average grant date fair value per share | |
Outstanding at December 31, 2025 | |
| | | $ | |
Granted | |
| | | $ | |
Vested | |
| ( | | $ | |
Forfeited/cancelled | | | ( | | $ | |
Outstanding at September 30, 2026 | |
| | | $ | |
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 and, effective May 30, 2023, in connection with the reverse stock split, the board of directors amended and restated the 2018 ESPP to account for the adjustments to the share reserves. At the Company’s 2026 Annual General Meeting of Shareholders in May 2026, the Company’s shareholders approved the Amended and Restated 2018 ESPP (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
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common stock on (a) the date the option is granted, which is the first day of the purchase period, and (b) the exercise date, which is the last business day of the purchase period. The Amended and Restated 2018 ESPP generally allows for
| | | | | | |
| | Nine months ended September 30, | ||||
| | 2026 | | 2025 | ||
Risk-free interest rate |
| | % | | | % |
Volatility |
| | % | | | % |
Dividend yield |
| | | | | |
Expected term (years) |
| | | | ||
For the nine months ended September 30, 2026 and 2025, the Company recognized $
17. Net loss per share
Basic 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 July 2024, April 2025 and November 2025, 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 employee stock purchase plan shares (using the “treasury stock” method), and the Series A Convertible Preferred Stock (using the “if-converted” method), unless their effect on net loss per share is anti-dilutive.
| | | | | | | | | | | | |
| | Three months ended September 30, | | Nine months ended September 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Net loss |
| $ | ( |
| $ | ( | | $ | ( |
| $ | ( |
Less: Change in fair value of warrant liability | | | — | | | — | | | ( | | | — |
Adjusted diluted net loss | | $ | ( | | $ | ( | | $ | ( | | $ | ( |
| | | | | | | | | | | | |
Weighted average shares outstanding | | | | | | | | | | | | |
Add: Dilutive effect of the Warrants | | | — | | | — | | | | | | — |
Weighted average diluted shares outstanding |
| | |
| | | | | |
| | |
| | | | | | | | | | | | |
Net loss per share - basic | | $ | ( | | $ | ( | | $ | ( | | $ | ( |
Net loss per share - diluted | | $ | ( | | $ | ( | | $ | ( | | $ | ( |
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The following potentially dilutive securities were excluded from the calculation of diluted net loss per share for the periods indicated because including them would have had an anti-dilutive effect:
| | | | | | | | |
| | | | | | | | |
| | Three months ended September 30, | | Nine months ended September 30, | ||||
| | | | | ||||
Outstanding stock options |
| |
| | | |
| |
Outstanding restricted stock units | | | | | | | | |
Warrants | | — | | | | — | | |
Employee stock purchase plan | | | | | | | | |
Total potentially dilutive securities |
| 6,870,908 |
| 13,389,715 | | 6,870,908 |
| 13,389,715 |
18. License, collaboration and commercial agreements
Pfizer, Inc.
On July 11, 2012, the Company entered into a license agreement (the “Pfizer Agreement”) with Pfizer under which Pfizer granted the Company 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. The Company has the right to grant sublicenses under the foregoing licensed rights, subject to certain restrictions.
Upon entering into the Pfizer Agreement, the Company made a one-time cash payment to Pfizer in the amount of $
License Agreement
In the second quarter of 2025, the Company entered into an agreement with a third party to obtain an exclusive license for certain patents and intellectual property related to avutometinib and defactinib (the “License Agreement”). This agreement covers
GenFleet Therapeutics (Shanghai), Inc.
On August 24, 2023, the Company entered into the GenFleet Agreement, 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 GenFleet Options were exercisable on a program-by-program basis. In
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January 2025, the Company exercised its GenFleet Option with respect to VS-7375 and made a $
On July 27, 2026, the Company entered into the First Amendment to the GenFleet Agreement (the “GenFleet Amendment” and, together with the GenFleet Agreement, the “Amended GenFleet Agreement”) pursuant to which, among other things, the Company (i) discontinued a previously selected “First Additional Program” (as defined within the Amended GenFleet Agreement) due to technical futility, (ii) exercised its GenFleet Option for an undisclosed “Second Additional Program” (as defined within the Amended GenFleet Agreement) under certain amended payment terms, and (iii) as a result, obtained exclusive development and commercialization rights to the Second Additional Program in the Territory. The Territory for the Second Additional Program will expand worldwide if GenFleet does not timely elect to develop the program in mainland China, Hong Kong, Macau, and Taiwan (the “Retained Territory”) following receipt of the Company’s Phase 1a clinical data package. No option exercise fee was required for the Company to obtain rights to the Second Additional Program and proceed with further development; however a milestone is due when Company decides to continue development beyond Phase 1a. As of September 30, 2026, under the Amended GenFleet Agreement, the Company may be required to make future milestone payments to GenFleet up to $
The Company may terminate the Amended 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 Amended 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 Amended GenFleet Agreement in its entirety upon certain insolvency events involving the other party.
The Company recognized the $
Secura Bio
On August 10, 2020, the Company and Secura Bio 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 Pharmaceuticals, Inc.
Pursuant to the terms of the Secura APA, Secura paid the Company an up-front payment of $
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COPIKTRA in the European Union for the treatment of peripheral T-cell lymphoma, (ii) sales milestone payments of up to $
The Company evaluated the Secura APA in accordance with ASC 606, Revenue from Contracts with Customers, 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.
The Company has determined that the upfront payment of $
During the nine months ended September 30, 2026, Secura achieved $
19. Income taxes
The Company recorded income tax expense of $
20. Commitments and contingencies
The Company entered into a lease agreement for approximately
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Agreement, November 2024 Amended Lease Agreement, and March 2026 Amended Lease Agreement, the Company has provided a security deposit in the form of a letter of credit in the amount of $
As of September 30, 2026, the Company has a remaining commitment to spend approximately $
21. Subsequent events
The Company reviews all activity subsequent to the end of the quarter but prior to issuance of the condensed consolidated financial statements for events that could require disclosure or that could impact the carrying value of assets or liabilities as of the balance sheet date. The Company is not aware of any material subsequent events other than the following:
Underwriting Agreement
On October 14, 2026, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Jefferies LLC and Guggenheim Securities, LLC, as representatives of the several underwriters (the “Underwriters”), relating to the underwritten offering, issuance and sale by the Company of
Termination of ATM Prospectus
Effective October 14, 2026, the Company suspended and terminated the prospectus relating to the August 2025 ATM (see Note 15. Capital stock). As a result, the Company will not make any sales of its securities pursuant to the sales agreement for the August 2025 ATM, unless and until a new prospectus, prospectus supplement, or a new registration statement relating to the shares of the Company’s common stock is filed. The sales agreement for the August 2025 ATM otherwise remains in full force and effect, and
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Item 2. 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 condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. 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 elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for our fiscal year ended December 31, 2025. Please also refer to the sections under headings “Forward-Looking Statements” and “Risk Factors” in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for our fiscal year ended December 31, 2025.
OVERVIEW
We are a biopharmaceutical company committed to developing and commercializing new medicines to improve the lives of patients diagnosed with challenging RAS/MAPK pathway-driven cancers. We market AVMAPKI FAKZYNJA CO-PACK (avutometinib capsules; defactinib tablets) in the United States (“U.S.”), the first treatment specifically FDA-approved for adults with KRAS-mutated LGSOC who have received prior systemic therapy.
Our pipeline includes clinical-stage programs, preclinical research programs and externally partnered research programs. Our focus is on novel small molecule drugs developed both as monotherapy and in combination, which inhibit critical signaling pathways in cancer that promote cancer cell survival and tumor growth, including targeting RAS directly with KRAS G12D inhibition, targeting the pathway downstream with RAF/MEK inhibition, and targeting the parallel pathway that drives resistance with FAK inhibition. Our goal is to expeditiously develop and deliver transformative therapies that truly change outcomes for people living with RAS/MAPK pathway-driven cancers.
COMMERCIAL PRODUCTS
AVMAPKI FAKZYNJA CO-PACK
AVMAPKI FAKZYNJA CO-PACK is the first treatment specifically approved by the FDA for adults with KRAS-mutated recurrent LGSOC who have received prior systemic therapy. AVMAPKI (avutometinib) inhibits MEK kinase activity while also blocking the compensatory reactivation of MEK by upstream RAF. RAF and MEK proteins are regulators of the RAS/RAF/MEK/ERK (MAPK) pathway. Blocking RAF and/or MEK activates FAK, a key mediator of drug resistance. FAKZYNJA (defactinib) is a FAK inhibitor and together, the avutometinib and defactinib combination was designed to provide a more complete blockade of the signaling that drives the growth and drug resistance of RAS/MAPK pathway-dependent tumors.
The combination is being evaluated in an ongoing international Phase 3 trial, RAMP 301, in recurrent LGSOC with or without a KRAS mutation. The trial was fully enrolled as of December 2025 and serves as a confirmatory study for the initial indication and has the potential to expand the indication regardless of KRAS mutation status. The results will also be leveraged for potential geographic expansion.
| Ø | In September 2026, we announced that two-year results evaluating the efficacy and safety of AVMAPKI FAKZYNJA CO-PACK in women with recurrent LGSOC from the RAMP 201 study were published in and have since appeared in the October 2026 printed issue of Gynecologic Oncology, the official journal of the Society of Gynecologic Oncology. In the updated analysis, with ongoing patients presenting a median follow-up of 24.9 months, efficacy measures, including median duration of response and median progression free survival (“PFS”), and safety, are consistent with the primary analysis, which was conducted more than 13 months prior. |
| Ø | In October 2026, we communicated that the FDA had accepted the New Drug Application (“NDA”) for the AVMAPKI FAKZYNJA CO-PACK Blister Pack, granting it priority review with a FDA decision by February 7, 2027. We believe the new package presentation is an important step in further supporting patient convenience and adherence. |
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| Ø | In October 2026, new data from our Phase 2 RAMP 201 clinical trial of avutometinib plus defactinib in patients with recurrent LGSOC was presented at the International Gynecologic Cancer Society 2026 Annual Global Meeting. The RAMP 201 molecular profiling analysis showed clinically meaningful activity in KRAS wild-type recurrent LGSOC, including overall response rates (“ORR”) of 22% in patients with neuroblastoma rat sarcoma viral oncogene homolog (“NRAS”) or B-rapidly accelerated fibrosarcoma (“BRAF”) mutated tumors and 18% in patients with KRAS/NRAS/BRAF triple wild-type tumors. Additionally, an external control arm analysis of RAMP 201 showed higher weighted ORR and statistically significant improvements in PFS versus conventional care in both KRAS-mutated and KRAS wild-type subgroups. |
CLINICAL PIPELINE
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 has a differentiated profile compared to other RAS inhibitors. Based on preclinical data, VS-7375 offers dual, potent inhibition of both ON and OFF states of KRAS G12D. We believe this correlates with better in vivo efficacy and durability versus ON-only RAS inhibitors. VS-7375 has demonstrated a high affinity for KRAS G12D with long residence time (18-24 hours) in preclinical models. We believe this correlates with a more rapid and durable suppression of pERK signaling (which controls growth and cell survival) when compared to other ON-only KRAS G12D inhibitors in tumor cell lines. The selective inhibition of VS-7375 to KRAS G12D has shown, in preclinical models, to spare T cell proliferation to maintain a normal healthy immune response, versus a RAS-multi-inhibitor, which impairs T cell proliferation at increasing concentrations of drug. The once daily (“QD”) oral dosing of VS-7375 achieves exposures corresponding to maximal tumor regressions across preclinical models for pancreatic, lung and colorectal cancers. The FDA granted Fast Track Designation (“FTD”) to VS-7375 in KRAS G12D-mutated pancreatic ductal adenocarcinoma (“PDAC”) in July 2025 for both first-line (“1L”) treatment of locally advanced or metastatic disease and treatment after at least one prior line of standard systemic therapy and, in June 2026, for KRAS G12D-mutated non-small cell lung cancer (“NSCLC”) in adult patients with unresectable locally advanced or metastatic disease who have received platinum-based chemotherapy and an anti-PD-(L)1 antibody, either concurrently or sequentially.
PHASE I/II
Verastem announced in April 2025 that the U.S. Investigational New Drug (“IND”) application for VS-7375-101 was cleared and initiated a Phase 1/2 clinical trial in June 2025 in patients with advanced KRAS G12D mutant solid tumors, including PDAC, NSCLC and colorectal cancer (“CRC”).
In April 2026, we branded the trials as the VS-7375 TARGET-D Clinical Trial Program. TARGET-D 101 (VS-7375-101) is a Phase 1/2 dose escalation, dose expansion and combination-evaluation trial. In the TARGET-D 101 Phase 1/2 study, we cleared multiple monotherapy dose levels, including the 1200 mg QD dose with no dose-limiting toxicities (“DLTs”) and no major toxicities. Patients continue to be evaluated at the 1200 mg QD dose level. We also cleared multiple dose levels in combination with cetuximab with no DLTs. We completed targeted enrollment in patients with pancreatic and lung cancer monotherapy cohorts and the colorectal cancer combination cohort with cetuximab in the Phase 1/2 study. Following feedback from the FDA, we amended our Phase 1/2 trial protocol to separate out disease-specific Phase 2 registration-directed trials for KRAS G12D mutated second line (“2L”) PDAC, 2L/ third line (“3L”) NSCLC and 2L or later CRC.
| Ø | In October 2026, we reported initial efficacy and updated safety and tolerability data for VS-7375 in pancreatic, lung, and colorectal cancers from the ongoing Phase 1/2 TARGET-D 101 clinical development program. |
| 1. | In metastatic pancreatic ductal adenocarcinoma (“mPDAC”), VS-7375 900 mg QD monotherapy achieved a confirmed ORR of 50% (4/8) in the second line (2L) setting, a 41% (9/22) in second line or later (2L+) setting, including two complete responses, one confirmed and one unconfirmed (treatment ongoing), and 36% cORR (5/14) patients in the third and fourth line (3L/4L) setting. The disease control rate (DCR) was 86%, and the six-month landmark PFS rate was 67%. |
| 2. | In NSCLC, VS-7375 600 mg QD monotherapy achieved a cORR of 43% (10/23) in the 2L+ setting. In preliminary first line (1L) data, VS-7375 600 mg in combination with standard-of-care carboplatin, pemetrexed, |
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| and pembrolizumab achieved an ORR of 75% (6/8) in 1L KRAS G12D adenocarcinoma of the lung. The 900 mg QD dose level is currently being evaluated in the TARGET-D 202 Phase 2 registration-directed advanced NSCLC trial. |
| 3. | In early data in 3L+ metastatic colorectal cancer (mCRC), VS-7375 900 mg in combination with anti-EGFR therapy achieved an ORR of 33% (2/6; one confirmed and one unconfirmed response). |
| 4. | Across TARGET-D 101 monotherapy and combination cohorts, VS-7375 demonstrated a favorable and manageable safety profile at both the 600 mg (n=73) and 900 mg dose levels (n=48), with no clinically significant cumulative toxicities observed. At 900 mg QD, the adverse event-related discontinuation rate was 2%, median relative dose intensity was 97%, and treatment-related adverse events (“TRAEs”) were primarily low-grade gastrointestinal events; Grade 3 TRAEs occurred in 10% of patients. Combination regimens with standard of care therapies were generally consistent with the safety profiles of the individual agents, with no new or meaningful overlapping toxicities observed. |
PHASE II
In the first half of 2026, we initiated three Phase 2 registration-directed trials of VS-7375, our oral KRAS G12D (ON/OFF) inhibitor, dosing the first patients in TARGET-D 201 (PDAC) in June 2026, and both TARGET-D 202 (NSCLC) and TARGET-D 203 (CRC) in July 2026. Each trial evaluates VS-7375 at 900 mg QD. TARGET-D 201 is evaluating VS-7375 as monotherapy and in combination with cetuximab in second-line PDAC, and in combination with cetuximab in the first-line setting. TARGET-D 202 is evaluating VS-7375 in advanced NSCLC after one to two prior lines of therapy and in patients with asymptomatic untreated brain metastasis, while TARGET-D 203 is evaluating VS-7375 as monotherapy and in combination with cetuximab or panitumumab in 2L+ metastatic CRC, and in combination with cetuximab and chemotherapy in the first-line setting.
PHASE III
| Ø | In October 2026, we shared that we had reached alignment with the FDA on the design of TARGET-D 301, a three-arm Phase 3 pivotal trial in 1L mPDAC evaluating VS-7375 900 mg in combination with anti-EGFR therapy (chemotherapy-free option) and VS-7375 900 mg in combination with gemcitabine and nab-paclitaxel versus investigator’s choice of standard-of-care chemotherapy. |
Expected key milestones:
| Ø | We expect the FDA’s decision on our NDA submitted for the AVMAPKI FAKZYNJA CO-PACK Blister Pack by February 7, 2027. |
| Ø | We expect to report a topline readout of the primary endpoint in the RAMP 301 trial of avutometinib plus defactinib in patients with recurrent LGSOC in the middle of 2027. |
| Ø | We expect to continue to pursue regulatory paths for potential expansion of recurrent LGSOC into Europe and Japan. |
| Ø | We expect to report mature data from the TARGET-D 101 mCRC cohort evaluating VS-7375 900 mg in combination with anti-EGFR therapy in the first quarter of 2027 to allow for additional patient follow-up. |
| Ø | We expect to report initial data from the TARGET-D 101 mPDAC cohort evaluating VS-7375 600 mg plus cetuximab in early 2027, with the data intended for presentation at a medical meeting. |
| Ø | We expect to meet with the FDA before the end of 2026 to review Phase 3 pivotal trial designs in 1L mCRC (TARGET-D 303) and 1L advanced NSCLC (TARGET-D 302). |
| Ø | We expect to open the TARGET-D 301 1L mPDAC trial by year-end 2026 as well as enroll the first patient in the TARGET-D 302 and TARGET-D 303 in the first half of 2027. |
| Ø | We expect to report initial data from the 1L mPDAC combination with gemcitabine/nab-paclitaxel at the start of the second quarter of 2027, with the data intended for presentation at a medical meeting. |
| Ø | We expect to complete enrollment in both the TARGET-D 201 (PDAC) Phase 2 trial and the TARGET-D 203 (CRC) Phase 2 trial by the end of 2026, and complete enrollment in the TARGET-D 202 (NSCLC) Phase 2 trial in the second quarter of 2027. |
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| Ø | We expect to report initial data from Phase 2 TARGET-D 201 2L PDAC in the second quarter of 2027. Additionally, we expect to report initial data from the Phase 2 TARGET-D 202 2L NSCLC and TARGET-D 203 2L CRC trials in the second half of 2027. |
FINANCIAL OPERATIONS OVERVIEW
As of September 30, 2026, we had an accumulated deficit of $1,311.0 million. Our net loss was $74.7 million, $146.0 million, $98.5 million, $176.6 million for the three and nine months ended September 30, 2026 and 2025, respectively. As of September 30, 2026, we had cash, cash equivalents, and investments of $172.8 million. In accordance with applicable accounting standards, we are required to evaluate whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within twelve months after the date of the issuance of these condensed consolidated financial statements.
We expect our existing cash resources including proceeds from the Offering in October 2026, along with revenue we expect to generate from sales of AVMAPKI FAKZYNJA CO-PACK, will be sufficient to fund our planned operations through 12 months from the date of issuance of these condensed consolidated financial statements.
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, through future product revenues or through other strategic financing opportunities that could include, but are not limited to collaboration agreements, offerings of our equity, or the incurrence of debt. If we fail to obtain additional capital or generate sufficient revenue from our commercialization activities in the future, 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.
CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT JUDGMENTS AND ESTIMATES
Our discussion and analysis of our financial condition and results of operations is based upon our condensed consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles. The preparation of these condensed 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, and the amounts of revenues and expenses during the reported periods.
We believe that several accounting policies are important to understanding our historical and future performance. We refer to these policies as “critical” because these specific areas generally require us to make judgments and estimates about matters that are uncertain at the time we make the estimate, and different estimates—which also would have been reasonable—could have been used, which would have resulted in different financial results.
The critical accounting policies we identified in our most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2025, related to revenue recognition, accrued and prepaid research and development expenses, stock-based compensation and fair value of Notes.
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RESULTS OF OPERATIONS
Comparison of the three months ended September 30, 2026 and 2025
| | | | | | | | | | | |
| | Three months ended September 30, | |||||||||
| | (dollar amounts in thousands) | |||||||||
| | 2026 | | 2025 | | Change | | % Change | |||
Revenue: | | | | | | | | | | | |
Product revenue, net | | $ | 24,012 | | $ | 11,242 | | $ | 12,770 | | 114% |
Total revenue | |
| 24,012 | |
| 11,242 | |
| 12,770 | | 114% |
Operating expenses: | | | | | | | | | | | |
Cost of sales - product | | | 3,666 | | | 1,670 | | | 1,996 | | 120% |
Cost of sales - intangible amortization | | | 279 | | | 290 | | | (11) | | (4)% |
Research and development | | | 68,806 | | | 28,989 | | | 39,817 | | 137% |
Selling, general and administrative | | | 26,485 | | | 21,008 | | | 5,477 | | 26% |
Total operating expenses | |
| 99,236 | |
| 51,957 | |
| 47,279 | | 91% |
Loss from operations | |
| (75,224) | |
| (40,715) | |
| (34,509) | | (85)% |
Other expense | | | (56) | | | (37) | | | (19) | | (51)% |
Interest income | |
| 765 | |
| 1,182 | |
| (417) | | (35)% |
Interest expense | |
| (212) | |
| (319) | |
| 107 | | 34% |
Change in fair value of warrant liability | | | — | | | (55,881) | | | 55,881 | | 100% |
Change in fair value of Notes | | | 4 | | | (2,748) | | | 2,752 | | 100% |
Net loss | | $ | (74,723) | | $ | (98,518) | | $ | 23,795 | | 24% |
Product revenue, net.
We began commercial sales of AVMAPKI FAKZYNJA CO-PACK within the United States in May 2025, following receipt of FDA marketing approval on May 8, 2025. For the three months ended September 30, 2026 (the “2026 Quarter”) we recorded approximately $24.0 million of net product revenue. For the three months ended September 30, 2025 (the “2025 Quarter”) we recorded approximately $11.2 million of net product revenue. The $12.8 million increase was primarily driven by an increase in the product shipments for AVMAPKI FAKZYNJA CO-PACK.
Cost of sales – product.
Cost of sales – product for the 2026 Quarter was $3.7 million compared to $1.7 million for the 2025 Quarter. Cost of sales – product for the 2026 Quarter and 2025 Quarter consisted of costs associated with the manufacturing of AVMAPKI FAKZYNJA CO-PACK, royalties owed on such sales, and certain period costs including inventory write downs. The Company began capitalizing inventory upon receiving FDA approval for AVMAPKI FAKZYNJA CO-PACK on May 8, 2025. Prior to the FDA approval of AVMAPKI FAKZYNJA CO-PACK, expenses associated with the manufacturing of AVMAPKI FAKZYNJA CO-PACK were recorded as research and development expense. Certain costs of AVMAPKI FAKZYNJA CO-PACK units recognized as revenue during the 2026 Quarter and 2025 Quarter, or approximately $0.1 million and less than $0.1 million, respectively, were expensed prior to obtaining regulatory approval, and, therefore, are not included in cost of sales – product during this period. We expect cost of sales - product to increase in relation to product revenues as we deplete these inventories.
Cost of sales – intangible amortization.
Cost of sales – intangible amortization for both the 2026 Quarter and 2025 Quarter of approximately $0.3 million was related to finite-lived intangible assets related to AVMAPKI FAKZYNJA CO-PACK which we recognized and began amortizing during the second quarter of 2025.
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Research and development expense.
Research and development expense for the 2026 Quarter was $68.8 million, compared to $29.0 million for the 2025 Quarter. The $39.8 million increase was primarily driven by a $14.6 million increase in investigator fees, a $14.4 million increase in drug substance and drug product manufacturing costs, a $5.5 million increase in contract research organization (“CRO”) costs, a $3.2 million increase in personnel costs including non-cash stock-based compensation, and a $2.1 million increase in clinical supply costs.
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 record expenses related to external research and development services, such as CROs, clinical sites, pass-through fees such as investigator fees, 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; |
| ● | direct costs related to VS-7375 that are not specific to a clinical trial such as the costs relating to contract manufacturing operations including manufacturing costs in connection with producing VS-7375 are included within “VS-7375 manufacturing and non-clinical trial specific” as the cost to manufacture VS-7375 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 2026 Quarter and the 2025 Quarter.
| | | | | | | | | | |
| Three months ended September 30, | |||||||||
| (dollar amounts in thousands) | |||||||||
| 2026 | | 2025 | | Change | | % Change | |||
Product/ product candidate / project specific costs | | | | | | | | | | |
Avutometinib + defactinib - LGSOC | $ | 7,021 | | $ | 9,148 | | $ | (2,127) | | (23)% |
Avutometinib + defactinib - other indications | | 2,263 | | | 3,222 | | | (959) | | (30)% |
Avutometinib and defactinib manufacturing and non-clinical trial specific |
| 1,857 | |
| 2,914 | | | (1,057) | | (36)% |
VS-7375 - clinical trials | | 25,900 | | | 1,301 | | | 24,599 | | 1891% |
VS-7375 manufacturing and non-clinical trial specific | | 20,847 | | | 4,231 | | | 16,616 | | 393% |
Unallocated costs | | | | | | | | | | |
Personnel costs, excluding stock-based compensation | | 7,140 | | | 4,755 | | | 2,385 | | 50% |
Stock-based compensation expense | | 1,430 | | | 576 | | | 854 | | 148% |
Other unallocated expenses | | 2,348 | | | 2,842 | | | (494) | | (17)% |
Total research and development expense | $ | 68,806 | | $ | 28,989 | | $ | 39,817 | | 137% |
The $24.6 million increase in VS-7375 clinical trial expenses was primarily attributable to higher CRO costs, investigator fees and clinical supply costs resulting from increased enrollment in the TARGET-D 101 trial, increased startup and enrollment for the three Phase 2 TARGET-D trials and increased study initiation activities for the Phase 3 TARGET-D 301 trial. The $16.6 million increase in VS-7375 manufacturing and non-clinical trial specific costs was primarily attributable to increases in drug manufacturing and drug supply costs in support of the growing TARGET-D program. The $2.4 million increase in personnel costs, excluding stock-based compensation, and $0.9 million increase in stock-based compensation were primarily attributable to increased headcount. These increases were partially offset by decreases in CRO, manufacturing and investigator fee costs of $2.1 million, $1.1 million and $1.0 million in avutometinib and defactinib research within LGSOC, manufacturing and non-clinical trial specific and other indications, respectively.
Selling, general and administrative expense
Selling, general and administrative expense for the 2026 Quarter was $26.5 million compared to $21.0 million for the 2025 Quarter. The $5.5 million increase was primarily driven by a $3.4 million increase in personnel costs including non-cash stock-based compensation expense, a $2.7 million increase in commercial operations expenses, and a $1.5 million increase in other general and administrative expenses. These increases were partially offset by a $2.1 million decrease in consulting and professional fees.
Other expense
Other expense for the 2026 Quarter was $0.1 million compared to less than $0.1 million for the 2025 Quarter. Other expense for the 2026 Quarter and 2025 Quarter consisted of transaction losses due to changes in foreign currency exchange rates.
Interest income
Interest income for the 2026 Quarter was $0.8 million, compared to $1.2 million for the 2025 Quarter. The $0.4 million decrease was primarily driven by a decrease in investment balances on short-term investments and cash equivalents.
Interest expense
Interest expense for the 2026 Quarter was $0.2 million compared to $0.3 million for the 2025 Quarter. The $0.1 million decrease from the 2025 Quarter to the 2026 Quarter was primarily driven by reductions in amounts owed related to vendor financing arrangements.
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Change in fair value of warrant liability
There was no change in fair value of the warrant liability for the 2026 Quarter compared to $55.9 million expense for the 2025 Quarter. There was no change in the fair value of the warrant liability for the 2026 Quarter as all the outstanding Warrants were either exercised or expired as of January 25, 2026. The $55.9 million expense for the 2025 Quarter was comprised of the mark-to-market adjustment for the liability classified Warrants issued as part of the July 2024 Offering. The increase was driven by an increase in fair value per Warrant from June 30, 2025 to the exercise date for the 5,166,666 Warrants exercised during the 2025 Quarter and an increase in fair value per Warrant for the 8,962,503 Warrants that remained outstanding at September 30, 2025, due to an increase in our stock price during the 2025 Quarter.
Change in fair value of Notes
The change in fair value of Notes was less than $0.1 million for the 2026 Quarter compared to $2.7 million for the 2025 Quarter. We elected the fair value option for both the Initial Notes and Revenue Notes and therefore changes in fair value, including interest, other than changes that are directly attributable to instrument specific credit risk are recorded as change in fair value of Notes in the condensed statements of operations and comprehensive loss. The change in fair value of Notes for the 2026 Quarter of less than $0.1 million was primarily driven by increases in the fair value option debt interest expense due to the addition of the Revenue Notes, offset by decreases in the fair value of both the Initial Notes and Revenue Notes due to increases in the risk-free rate during the 2026 Quarter. The change in fair value for the 2025 Quarter of $2.7 million was primarily driven by interest on the Notes and a reduction in the risk-free rate during the 2025 Quarter.
Comparison of the nine months ended September 30, 2026 and 2025
| | | | | | | | | | | |
| | Nine months ended September 30, | |||||||||
| | (dollar amounts in thousands) | |||||||||
| | 2026 | | 2025 | | Change | | % Change | |||
Revenue: | | | | | | | | | | | |
Product revenue, net | | $ | 67,761 | | $ | 13,379 | | $ | 54,382 | | 406% |
Sale of COPIKTRA license and related assets | | | 15,000 | | | — | | | 15,000 | | N/M |
Total revenue | |
| 82,761 | |
| 13,379 | |
| 69,382 | | 519% |
Operating expenses: | | | | | | | | | | | |
Cost of sales - product | | | 10,200 | | | 1,988 | | | 8,212 | | 413% |
Cost of sales - intangible amortization | | | 838 | | | 418 | | | 420 | | 100% |
Research and development | | | 148,361 | | | 82,925 | | | 65,436 | | 79% |
Selling, general and administrative | | | 76,193 | | | 56,702 | | | 19,491 | | 34% |
Total operating expenses | |
| 235,592 | |
| 142,033 | |
| 93,559 | | 66% |
Loss from operations | |
| (152,831) | |
| (128,654) | |
| (24,177) | | (19)% |
Other expense | | | (168) | | | (186) | | | 18 | | 10% |
Interest income | |
| 3,170 | |
| 2,964 | |
| 206 | | 7% |
Interest expense | |
| (955) | |
| (723) | |
| (232) | | (32)% |
Loss on debt extinguishment | | | — | | | (1,826) | | | 1,826 | | 100% |
Change in fair value of warrant liability | | | 9,323 | | | (37,977) | | | 47,300 | | 125% |
Change in fair value of Notes | | | (3,710) | | | (10,153) | | | 6,443 | | 63% |
Net loss before taxes | | | (145,171) | | | (176,555) | | | 31,384 | | 18% |
Income tax expense | | | (816) | | | — | | | (816) | | N/M |
Net loss | | $ | (145,987) | | $ | (176,555) | | $ | 30,568 | | 17% |
“N/M” - Percentage change is not meaningful (N/M) where the prior period amount is zero or not comparable.
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Product Revenue, Net.
We began commercial sales of AVMAPKI FAKZYNJA CO-PACK within the United States in May 2025, following receipt of FDA marketing approval on May 8, 2025. For the nine months ended September 30, 2026 (the “2026 Period”) we recorded approximately $67.8 million of net product revenue. For the nine months ended September 30, 2025 (the “2025 Period”) we recorded approximately $13.4 million of net product revenue. The $54.4 million increase was primarily driven by an increase in the product shipments for AVMAPKI FAKZYNJA CO-PACK.
Sale of COPIKTRA license and related assets
Sale of COPIKTRA license and related assets revenue for the 2026 Period was $15.0 million compared to $0.0 million for the 2025 Period. Sale of COPIKTRA license and related assets revenue for the 2026 Period consisted of one sales milestone of $15.0 million due to Secura achieving cumulative worldwide net sales of COPIKTRA exceeding $200.0 million since the closing of the Secura APA during the 2026 Period. The $15.0 million milestone payment was received by us in July 2026.
Cost of sales – product.
Cost of sales – product for the 2026 Period was $10.2 million compared to $2.0 million for the 2025 Period. Cost of sales – product for the 2026 Period and 2025 Period consisted of costs associated with the manufacturing of AVMAPKI FAKZYNJA CO-PACK, royalties owed on such sales, and certain period costs including inventory write downs. The Company began capitalizing inventory upon receiving FDA approval for AVMAPKI FAKZYNJA CO-PACK on May 8, 2025. Prior to the FDA approval of AVMAPKI FAKZYNJA CO-PACK, expenses associated with the manufacturing of AVMAPKI FAKZYNJA CO-PACK were recorded as research and development expense. Certain costs of AVMAPKI FAKZYNJA CO-PACK units recognized as revenue during the 2026 Period and 2025 Period, or approximately $0.4 million and less than $0.1 million, respectively, were expensed prior to obtaining regulatory approval, and, therefore, are not included in cost of sales – product during this period. We expect cost of sales - product to increase in relation to product revenues as we deplete these inventories.
Cost of sales – intangible amortization.
Cost of sales – intangible amortization for the 2026 Period and 2025 Period of approximately $0.8 million and $0.4 million, respectively, was related to finite-lived intangible assets related to AVMAPKI FAKZYNJA CO-PACK which we recognized and began amortizing during the second quarter of 2025.
Research and development expense.
Research and development expense for the 2026 Period was $148.4 million, compared to $82.9 million for the 2025 Period. The $65.4 million increase was primarily driven by a $26.7 million increase in investigator fees, a $20.2 million increase in drug substance and drug product manufacturing costs, a $13.7 million increase in CRO costs, a $6.7 million increase in personnel costs including non-cash stock-based compensation, a $5.1 million increase in clinical supply costs and a $0.5 million increase in other research and development costs. These increases were partially offset by a $6.0 million decrease in license fees, reflecting an option exercise fee payment made during the 2025 Period pursuant to the GenFleet Agreement, and a $1.5 million decrease in consulting expenses.
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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 2026 Period and the 2025 Period.
| | | | | | | | | | |
| Nine months ended September 30, | |||||||||
| (dollar amounts in thousands) | |||||||||
| 2026 | | 2025 | | Change | | % Change | |||
Product/ product candidate / project specific costs | | | | | | | | | | |
Avutometinib + defactinib - LGSOC | $ | 25,397 | | $ | 26,893 | | $ | (1,496) | | (6)% |
Avutometinib + defactinib - other indications | | 6,584 | | | 8,377 | | | (1,793) | | (21)% |
Avutometinib and defactinib manufacturing and non-clinical trial specific |
| 6,415 | |
| 8,028 | | | (1,613) | | (20)% |
VS-7375 - clinical trials | | 49,853 | | | 2,239 | | | 47,614 | | 2127% |
VS-7375 manufacturing and non-clinical trial specific | | 29,828 | | | 13,539 | | | 16,289 | | 120% |
Unallocated costs | | | | | | | | | | |
Personnel costs, excluding stock-based compensation | | 19,238 | | | 13,809 | | | 5,429 | | 39% |
Stock-based compensation expense | | 3,242 | | | 1,982 | | | 1,260 | | 64% |
Other unallocated expenses | | 7,804 | | | 8,058 | | | (254) | | (3)% |
Total research and development expense | $ | 148,361 | | $ | 82,925 | | $ | 65,436 | | 79% |
The $47.6 million increase in VS-7375 clinical trial expenses was primarily attributable to higher CRO costs, investigator fees and clinical supply costs resulting from increased enrollment in the TARGET-D 101 trial, increased startup and enrollment for the three Phase 2 TARGET-D trials and increased study initiation activities for the Phase 3 TARGET-D 301 trial. The $16.3 million increase in VS-7375 manufacturing and non-clinical trial specific costs was primarily attributable to increases in drug manufacturing and drug supply costs in support of the growing TARGET-D program. The $5.4 million increase in personnel costs, excluding stock-based compensation, and $1.3 million increase in stock-based compensation were primarily attributable to increased headcount. These increases were partially offset by decreases in CRO, manufacturing and investigator fee costs of $1.8 million, $1.6 million and $1.5 million in avutometinib and defactinib research within other indications, manufacturing and non-clinical trial specific and LGSOC, respectively.
Selling, general and administrative expense
Selling, general and administrative expense for the 2026 Period was $76.2 million compared to $56.7 million for the 2025 Period. The $19.5 million increase was primarily driven by a $10.8 million increase in personnel costs, including non-cash stock-based compensation expense, a $9.2 million increase in commercial operations expenses and a $3.5 million increase in other general and administrative expenses. These increases were partially offset by a $3.2 million decrease in consulting and professional fees and $0.8 million in financing fees related to the Note Purchase Agreement and other expenses incurred in the 2025 Period.
Other expense
Other expense for the 2026 Period and 2025 Period was $0.2 million in both periods. Other expense for the 2026 Period and 2025 Period consisted of transaction losses due to changes in foreign currency exchange rates.
Interest income
Interest income for the 2026 Period was $3.2 million, compared to $3.0 million for the 2025 Period. The $0.2 million increase was primarily driven by higher balances of cash equivalents and investments during the 2026 Period compared to the 2025 Period.
Interest expense
Interest expense for the 2026 Period was $1.0 million compared to $0.7 million for the 2025 Period. The $0.3 million increase from the 2025 Period was primarily driven by interest expense incurred as part of the vendor financing arrangement.
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Loss on debt extinguishment.
There was no loss on debt extinguishment in the 2026 Period. The loss on debt extinguishment for the 2025 Period of $1.8 million represents the loss recognized on early extinguishment of our Loan Agreement. On January 13, 2025, we repaid in full all principal, accrued and unpaid interest, fees, and expenses under the Loan Agreement in an aggregate amount of $42.7 million (the “Payoff Amount”). The Payoff Amount, excluding accrued interest, exceeded the carrying amount of the Term Loans on January 13, 2025 by $1.8 million which was recorded as a loss on debt extinguishment.
Change in fair value of warrant liability
The change in fair value of the warrant liability was $9.3 million income for the 2026 Period compared to $38.0 million expense for the 2025 Period. The $9.3 million income for the 2026 Period and $38.0 million expense for the 2025 Period consisted of the mark-to-market adjustment for the liability classified Warrants issued as part of the July 2024 Offering. The liability classified warrants decreased in value from December 31, 2025 to when 8,391,666 Warrants were exercised in January 2026 and the expiration of 37,500 Warrants primarily driven by a reduction in our stock price, resulting in $9.3 million income during the 2026 Period. The $38.0 million expense for the 2025 Period was driven by an increase in fair value per Warrant from December 31, 2024 to the exercise date for the 9,120,831 Warrants exercised during the 2025 Period and an increase in fair value per Warrant for the 8,962,503 Warrants that remained outstanding at September 30, 2025, due to an increase in our stock price.
Change in fair value of Notes
The change in fair value of Notes was $3.7 million for the 2026 Period compared to $10.2 million during the 2025 Period. We elected the fair value option for both the Initial Notes and the Revenue Notes and therefore changes in fair value, including interest, other than changes that are directly attributable to instrument specific credit risk are recorded as change in fair value of Notes in the condensed statements of operations and comprehensive loss. The change in fair value of Notes for the 2026 Period of $3.7 million was primarily driven by interest and Revenue Participation Payments on the Notes offset by decreases in the fair value of the Notes driven by increases in the risk free rate during the 2026 Period. The change in fair value of Notes for the 2025 Period of $10.2 million was primarily driven by interest on the Notes and a reduction in the risk free rate during the 2025 Period resulting in higher valuation of the Notes.
Income tax expense.
Income tax expense for the 2026 Period was $0.8 million compared to no income tax expense in the 2025 Period. The income tax expense within the 2026 Period was primarily a result of interest owed under IRC section 453A related to the $15.0 million milestone payment from Secura because it was an installment sale.
LIQUIDITY AND CAPITAL RESOURCES
Sources of liquidity
We have financed our operations to date primarily through public and private offerings of our common stock, pre-funded warrants, and warrants, offerings of convertible notes, sales of common stock under our at-the-market equity offering program, our Note Purchase Agreement, former loan agreements, 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, we have financed a portion of our operations through product revenue, including from AVMAPKI FAKZYNJA CO-PACK, beginning with our U.S. commercial launch in May 2025, and from COPIKTRA, from its U.S. commercial launch in September 2018 through our sale of the COPIKTRA license in September 2020. We expect to finance a portion of our business through future potential milestones and royalties received pursuant to the Secura APA.
As of September 30, 2026, we had $172.8 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.
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Risks and uncertainties include those identified under Item 1A. Risk Factors, in our Annual Report on Form 10-K for the year ended December 31, 2025 as filed with the SEC on March 4, 2026, and under “Risk Factors” in this Quarterly Report on Form 10-Q.
Cash flows
The following table sets forth the primary sources and uses of cash for the 2026 Period and the 2025 Period (in thousands):
| | | | | | |
| | Nine months ended September 30, | ||||
| | 2026 | | 2025 | ||
Net cash (used in) provided by: | | | | | | |
Operating activities | | $ | (129,618) | | $ | (107,555) |
Investing activities | |
| (7,265) | |
| (8,279) |
Financing activities | |
| 104,694 | |
| 164,722 |
(Decrease) increase in cash, cash equivalents and restricted cash | | $ | (32,189) | | $ | 48,888 |
Operating activities
The use of cash in both periods resulted primarily from our net losses adjusted for non-cash charges and changes in the components of working capital. Our cash outflow from net losses adjusted for non-cash charges and adjustments was $147.3 million for the 2026 Period and $123.3 million for the 2025 Period. Non-cash charges and adjustments for the 2026 Period were primarily related to the change in fair value of common stock warrant liability, stock-based compensation expense and the change in fair value of the Notes. Non-cash charges and adjustments for the 2025 Period were primarily related to the change in fair value of warrant liability, non-cash changes in fair value of the Notes, loss on debt extinguishment and stock-based compensation expense.
Our cash inflows from operating activities due to changes in operating assets and liabilities were $17.7 million and $15.8 million for the 2026 Period and the 2025 Period, respectively. Cash inflow due to changes in operating assets and liabilities for the 2026 Period was primarily driven by an increase of $24.1 million in accrued expenses and other liabilities, an increase of $7.8 million in accounts payable, partially offset by an increase of $12.8 million in prepaid expenses, other current assets and other assets, and a combined increase of $1.5 million in accounts receivable and inventory. Cash inflow due to changes in operating assets and liabilities for the 2025 Period was primarily driven by an increase of $21.6 million in accrued expenses and other liabilities, and an increase of $4.5 million in accounts payable, partially offset by an increase of $6.7 million in accounts receivable, an increase of $1.9 million in prepaid expenses, other current assets and other assets, and an increase of $1.8 million in inventory. The increases in both periods in prepaid expenses, other current assets, and other assets are exclusive of cash received from PanCAN and used on the RAMP 205 study. Cash used in operating activities was $129.6 million and $107.6 million for the 2026 Period and the 2025 Period, respectively.
Investing activities
The cash used in investing activities was $7.3 million for the 2026 Period. The cash used in investing activities for the 2026 Period relates to the purchase of investments of $16.0 million and purchase of intangible assets of $7.5 million, partially offset by $16.3 million of maturities of investments. The cash used in investing activities for the 2025 Period relates to the purchase of intangible assets of $8.3 million.
Financing activities
The cash provided by financing activities for the 2026 Period represents $50.0 million of proceeds received pursuant to the Note Purchase Agreement, $29.4 million of proceeds from the exercise of Warrants, $28.8 million of net proceeds from issuance of common stock, $0.7 million of proceeds received from insurance premium financing, and $0.3 million of proceeds received from the exercise of stock options and our employee stock purchase plan. These inflows were partially offset by $3.8 million of repayments under the vendor financing arrangement and $0.7 million of payments for
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insurance premium financing. The cash provided by financing activities for the 2025 Period represents $100.1 million of proceeds from issuance of common stock and pre-funded warrants, $75.0 million of proceeds received pursuant to the Note Purchase Agreement, $31.9 million of proceeds from the exercise of Warrants, $1.2 million of proceeds received from insurance premium financing, and less than $0.1 million of proceeds received from exercise of stock options and employee stock purchase plan, partially offset by the $42.6 million repayment of our Loan Agreement, and $1.0 million of payments for insurance premium financing. Refer to Note 10. Debt to our unaudited condensed consolidated financial statements included in this quarterly report for additional details on the Note Purchase Agreement and Loan Agreement; Note 15. Capital Stock to our unaudited condensed consolidated financial statements included in this quarterly report for additional details on the 2025 Private Placement, the Stock Purchase Agreement and the Warrants; Note 12. Notes Payable to our unaudited condensed consolidated financial statements included in this quarterly report for additional details on the finance agreement with AFCO Premium Credit LLC related to insurance premium financing and the monthly payments of principal and interest related thereto; Note 13. Vendor Financing Arrangement to our unaudited condensed consolidated financial statements included in this quarterly report for additional details on the vendor finance agreement with IQVIA related to the master service agreement.
CONTRACTUAL OBLIGATIONS AND COMMITMENTS
The disclosure of our contractual obligations and commitments was reported in our Annual Report on Form 10-K for the year ended December 31, 2025. Except as previously disclosed in the Company’s subsequent filings with the SEC, including this Quarterly Report on Form 10-Q, there have not been any material changes from the contractual obligations and commitments previously disclosed in such report.
Item 3. 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 $172.8 million as of September 30, 2026, consisting of cash and U.S. Government money market funds. 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.
Our contracts with CROs and contract manufacturers globally 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 September 30, 2026, an immaterial amount of our total liabilities was denominated in currencies other than the functional currency.
As of September 30, 2026, we have borrowed $75.0 million of Initial Notes under the Note Purchase Agreement. The Initial Notes bear interest at a floating rate 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%, which is subject to an overall floor and cap. Changes in interest rates can cause interest charges to fluctuate under the Note Purchase Agreement. A 10% increase in current interest rates would have resulted in an immaterial increase in the amount of cash interest expense for the three and nine months ended September 30, 2026 due to the overall interest rate floor and cap.
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Item 4. Controls and Procedures.
Evaluation of disclosure controls and procedures
Our management, with the participation of our President and Chief Executive Officer (principal executive officer) and our Chief Financial Officer (principal financial and accounting officer), evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2026. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (Exchange Act), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of September 30, 2026, our President and Chief Executive Officer and our Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in internal control over financial reporting
There have been no changes in our internal control over financial reporting during the three and nine months ended September 30, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 1A. Risk Factors.
You should carefully review and consider the information regarding certain factors that could materially affect our business, financial condition or future results set forth under Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 as filed with the SEC on March 4, 2026.
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Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities.
RECENT SALES OF UNREGISTERED SECURITIES
None.
PURCHASE OF EQUITY SECURITIES
We did not purchase any of our equity securities during the period covered by this Quarterly Report on Form 10-Q.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
None.
Item 5. Other Information.
Securities Trading Plan of Directors and Executive Officers
On
Item 6. Exhibits.
The exhibits filed as part of this Quarterly Report on Form 10-Q are set forth on the Exhibit Index, which Exhibit Index is incorporated herein by reference.
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EXHIBIT INDEX
3.1 | | Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2018, 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 for the fiscal year ended December 31, 2018, 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 | | Form of Pre-Funded Warrant (incorporated by reference to Exhibit 10.3 to Form 8-K filed by the Registrant with the Securities and Exchange Commission on April 25, 2025) |
4.2 | | Form of Pre-Funded Warrant (incorporated by reference to Exhibit 4.1 to Form 8-K filed by the Registrant with the Securities and Exchange Commission on November 17, 2025) |
10.1 | † | Amendment No. 3 to Note Purchase Agreement, dated August 6, 2026, by and among Verastem, Inc., RGCM SA LLC and certain funds managed by Oberland Capital Management LLC (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Registrant with the Securities and Exchange Commission on August 6, 2026) |
10.2 | †* | First Amendment to the Collaboration and Option Agreement by and between Verastem, Inc. and GenFleet Therapeutics (Shanghai), Inc. |
31.1 | * | Certification of Principal Executive Officer pursuant to Rules 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2 | * | Certification of Principal Financial and Accounting Officer pursuant to Rules 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1 | * | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
32.2 | * | Certification of Principal Financial and Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
99.1 | * | Press Release issued by Verastem, Inc. on November 5, 2026 (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 | | The cover page from this Quarterly Report on Form 10-Q, formatted in Inline XBRL |
*Filed or furnished herewith.
† | Certain schedules, exhibits and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company will provide a copy of such omitted materials to the Securities and Exchange Commission or its staff upon request. |
#Management contract or compensatory plan, contract or agreement.
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SIGNATURES
Pursuant to the requirements 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.
| VERASTEM, INC. | |
Date: November 5, 2026 | By: | /s/ DANIEL W. PATERSON |
| | |
| | Daniel W. Paterson |
| | President and Chief Executive Officer |
| | (Principal executive officer) |
| | |
Date: November 5, 2026 | By: | /s/ DANIEL CALKINS |
| | |
| | Daniel Calkins |
| | Chief Financial Officer |
| | (Principal financial and accounting officer) |
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