Verastem Slashes Half Its Workforce After Cancer Drug Fails in Mid-Stage Trial
October 9, 2015
By Alex Keown and Mark Terry, BioSpace.com Breaking News Staff
BOSTON -- Verastem, Inc. will cut 50 percent of its workforce, laying off approximately 20 employees, following the failure of its Phase II clinical trial of VS-6063 in patients with lung cancer, the company announced Thursday afternoon.
The company announced in September the drug, an oral compound that targets cancer stem cells by inhibiting focal adhesion kinase (FAK), failed to achieve efficacy. FAK activity is a key component in helping cancer stem cells grow and survive.
Verastem said it expects to save $4.9 million in operating expenses. The layoffs are expected to cost the company $825,000 spread over the fourth quarter of 2015 and the first quarter of 2016.
Robert Forrester, president and chief executive officer of Verastem, called the terminations a painful decision.
“I would like to convey my utmost gratitude to the employees who are departing Verastem for their dedication to trying to help develop novel therapeutics for patients and their many contributions to the company,” Forrester said in a statement.
The employees will receive severance pay and outplacement assistance, the company said.
Verastem reported $132.1 million in cash and cash equivalents at the end of the second quarter 2015.
The decision comes less than a month after shares of Verastem stock plummeted 70 percent after the Phase II trial was halted. Verastem’s stock closed at $1.98 per share, but had fallen in after-hours trading. The stock has steadily declined since a high of $12.10 posted in March before plunging Sept. 25 from $5.67 per share to $1.85 per share. In August, the company addressed another stock drop spurred by rumors of the soon-to-be-announced failure on social media outlets. At the time though, the company said that while the data was embargoed until a later conference, “Verastem believes the study has met its goals, with encouraging outcomes that the company plans to explore in future studies.”
In September, the company halted the mid-stage trial, saying the “use of single agent VS-6063 as a maintenance treatment following chemotherapy where all patients had residual disease was not sufficient.”
“There remains a significant unmet medical need for new treatment options for patients suffering from this very complex, difficult-to-treat cancer,” Lou Vaickus, interim chief medical officer of Verastem, said in a statement.
After the cancer drug failed in the mid-stage trial, Verastem indicated it will redirect its efforts toward two other drugs for solid tumors, VS-4718 and VS-5584. Additionally, the company has another experimental drug, VS-6063, which is being studied for use in lung and ovarian cancers.
Verastem was co-founded in August 2010 by Christoph Westphal based on research from MIT biologist Robert Weinberg. Westphal headed Sirtris Pharmaceuticals, which he sold to GlaxoSmithKline for $720 million in 2008. Verastem launched an initial public offering (IPO) in 2012. In 2013, Westphal stepped down as chief executive officer of Verastem and became executive chairman. In 2014, he co-founded Flex Pharma , a company that focuses on treatment for muscle cramps. He also founded Longwood Founders Fund, a venture fund, with Rich Aldrich and Michelle Dipp. In addition, he has helped found Alnylam Pharmaceuticals , Momenta Pharmaceuticals, Inc. and Acceleron Pharma.