With Pfizer deal Verastem vaults ahead of FAK pack

Five months after an initial public offering, Verastem has put two of its cancer stem-cell targeting agents on the back burner and acquired one more, moves that may have accelerated its clinical development plans by a year. The Massachusetts group paid Pfizer $1.5m for a phase I focal adhesion kinase (FAK) inhibitor, which paired with the in-licensing of PI3K/mTOR inhibitor VS-5584 from S*BIO earlier this year puts Verastem in a position to enter partnering talks as early as 2014.

Whilst the company’s focus on cancer stem cells remains unproven, a great deal of hope surrounds the larger approach of disrupting tumour development and proliferation, as witnessed by the expectations for the PI3K inhibitor class (Therapeutic focus - PI3Ks in the spotlight in 2012, January 27, 2012). Between $68m in venture capital funding raised in 2011 and the $50m in IPO revenue, Verastem believes it has four years to prove it can work.

Wheeling and dealing

Pfizer has not advanced PF-04554878 beyond phase I trials in non-haematological cancers. Renamed as VS-6063 it will be advanced into phase II in mesothelioma in 2013 under Verastem’s current clinical plan. Given the lack of treatment options for the lung disease, most often caused by inhalation of asbestos, a successful phase II readout in 2015 could see the company or its partner filing for accelerated FDA approval.

Successful development of VS-6063 will see Verastem paying out another $2m in milestones, with up to $125m in regulatory and sales milestones possible.

In 2013 two other candidates will enter the clinic in solid tumours – FAK inhibitor VS-4718, one of the original three compounds emerging from the group’s technology to identify drugs that selectively target cancer stem cells, and the S*BIO licensed product.

In the meantime, following a pipeline review the company has pulled back from development of a major part of its organic pipeline - Wnt signalling inhibitor VS-507 and FAK inhibitor VS-5995. Work in Wnt signalling will be part of a development collaboration with Eisai, the second deal Verastem announced this week. Terms of the Eisai collaboration were not disclosed.

Analysts from UBS said the FAK inhibition assets were the nearest to generating proof of concept and potentially a partnership deal, so it is not too surprising to see the company shift its priorities to the in-licensed Pfizer drug and VS-4718.

What gives analysts hope that Verastem can set its products apart and make them attractive partnership assets is a focus on development of companion diagnostics. In mesothelioma the company’s FAK-inhibition assets are more effective against tumours that lack a protein called Merlin – 40% of mesothelioma tumours lack Merlin – which has an established biomarker.

A competing compound, GlaxoSmithKline’s GSK2256098, has shown effectiveness in the lung cancer – 10 of 19 patients in a phase I trail had stable disease following treatment, according to data presented at Asco.

Performance issues

In spite of the deal-making and announcement that its clinical plans had been pushed up, shares were down 10% on the week in early trade today, at $9.94. A scant one-quarter of the company's shares are in free float - not locked up by long term investors - nearly half remain in the hands of its original venture capital backers.

However, the stock is only down 12% since the January offering, a performance that puts it nowhere near the bottom of the table for recent biotech IPOs (Appetite for US IPOs to be tested with riskier propositions, November 29, 2011).

Given that it has licensed its way to the front of the pack in FAK inhibition, a great deal of attention will be paid to Verastem as it advances VS-6063 through the clinic. Success will help validate the company’s strategy as well as support a class of drugs that is almost all still in the laboratory, as well as finally giving its VC backers an exit. That validation lies two years away, however.

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