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Edited Transcript of VSTM earnings conference call or presentation 1-Aug-19 8:30pm GMT

Q2 2019 Verastem Inc Earnings Call

Cambridge Aug 6, 2019 (Thomson StreetEvents) -- Edited Transcript of Verastem Inc earnings conference call or presentation Thursday, August 1, 2019 at 8:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Brian Stuglik

Verastem, Inc. - CEO & Director

* Daniel W. Paterson

Verastem, Inc. - COO & President

* John Doyle

Verastem, Inc. - VP of IR & Finance

* Robert E. Gagnon

Verastem, Inc. - CFO & Chief Business Officer

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Conference Call Participants

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* Alethia Rene Young

Cantor Fitzgerald & Co., Research Division - Head of Healthcare Research

* George B. Zavoico

B. Riley FBR, Inc., Research Division - Analyst

* Matthew David Cross

JonesTrading Institutional Services, LLC, Research Division - Research Analyst

* Robert Cummins Hazlett

BTIG, LLC, Research Division - MD & Biotechnology Equity Research Analyst

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Presentation

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Operator [1]

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Good afternoon, and welcome to the Verastem Oncology Second Quarter Financial Results Conference Call on Thursday, August 1, 2019. (Operator Instructions) Please be advised that this call is being recorded at the company's request and will be available in the company's website for a period of 90 days from today.

At this time, I would like to introduce Mr. John Doyle, Vice President of Investor Relations and Finance at Verastem Oncology. Please go ahead.

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John Doyle, Verastem, Inc. - VP of IR & Finance [2]

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Welcome, everyone, and thank you for joining us this afternoon to discuss Verastem Oncology's financial results and corporate highlights for the second quarter of 2019. I'm joined today by Brian Stuglik, Chief Executive Officer; Dan Paterson, President and Chief Operating Officer; and Rob Gagnon, Chief Financial and Business Officer.

During today's call, Dan will provide some introductory comments, including introducing our new CEO, Brian Stuglik. Brian and Dan will discuss the key corporate updates from the quarter, and Rob will provide an overview of our second quarter financial results. Dan will then provide some summary remarks before opening the call up for your questions. Earlier today, we issued a press release detailing our second quarter 2019 financial results. The release is available on our website at verastem.com.

Before we begin our formal comments, I'll remind you that we will be making forward-looking assertions during today's call that represent the company's intentions, expectations or beliefs concerning future events, which constitute forward-looking statements for the purpose of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. All forward-looking statements are subject to factors, risks and uncertainties such as those detailed in today's press release announcing this call and our filings with the SEC, which may cause actual results to differ materially from the results expressed or implied by such statements.

In addition, any forward-looking statements represent our views only as of the date of this recording and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligations to update any such statements. We refer you to the disclosure notice section in our earnings release we issued today and the Risk Factors section of the annual report on Form 10-K for a discussion of important factors that could cause our actual results to differ materially from these forward-looking statements.

With that, I would now like to turn the call over to Dan Paterson. Dan?

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Daniel W. Paterson, Verastem, Inc. - COO & President [3]

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Thank you, John. Good afternoon, everyone, and thank you for joining us on today's call. First, I'd like to officially welcome Brian Stuglik to the Verastem Oncology executive team. Brian was appointed Chief Executive Officer earlier this week. He served on our Board of Directors since 2017, and he's been serving as a strategic adviser to our commercial team to accelerate the COPIKTRA launch initiatives since May of this year.

Brian brings over 30 years of experience in the oncology pharmaceutical sector and has a long history of successfully acquiring, developing and launching important oncology products across multiple tumor types and therapeutic approaches. Prior to joining Verastem, he spent the majority of his career at Eli Lilly and Company, culminating in his role as Global Vice President and Chief Marketing Officer, Oncology Global Marketing, advancing Lilly Oncology from a single approved product to a portfolio of marketed or late-stage compounds across more than 10 cancer types. As you can see, Brian brings deep commercial and leadership experience to the company, and we believe his contributions will be invaluable as we work to accelerate the adoption and growth of COPIKTRA and execute on our broader corporate objectives.

I'll now turn the call over to Brian to say a few words. Brian?

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Brian Stuglik, Verastem, Inc. - CEO & Director [4]

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Thank you, Dan. I'm honored to join you and Rob and the entire team as CEO. Verastem Oncology is an exciting story in the oncology field with a lot of potential for value creation, particularly with COPIKTRA.

Having worked alongside the commercial team for the past few months, I have great confidence in the company's ability to realize the full commercial and clinical potential of COPIKTRA as well as the broader pipeline. And I look forward to leading the team as we refine and implement strategies designed to maximize the value-creation opportunities we have here for the benefit of our many stakeholders, especially patients living with cancer.

To that end, last week, we executed a new strategic ex U.S. partnership, an exclusive license with Sanofi to develop and commercialize COPIKTRA in Russia and CIS, Turkey, the Middle East and Africa. Rob will discuss the financial details of the transaction a little later in the call. But I would like to highlight that this newest alliance adds to the impressive consortium of global partners who are actively advancing COPIKTRA in important global markets.

Sanofi brings world-class capabilities in developing and commercializing important medicines, making them an ideal partner to bring COPIKTRA to patients in the licensed territories. Collectively, the Sanofi partnership, along with Yakult in Japan and CSPC in China, allow us to focus our internal efforts on our core areas of strength, executing on the U.S. COPIKTRA launch and expanding the COPIKTRA footprint into additional indications.

Before I turn the call back over to Dan, I can provide a few updates on the COPIKTRA commercial launch. In the second quarter of 2019, which reflects the full third quarter of sales, COPIKTRA net revenues were $3 million, an 81% increase compared to the first quarter of 2019. These figures include the full formal marketing campaign for COPIKTRA in FL, which commenced in March. Based on these results, we are increasing our revenue guidance for this year to be in the range of $12 million to $14 million versus previous guidance of $10 million to $12 million.

In addition to increased quarterly revenues, the number of prescribing physicians increased by over 50% in the second quarter. And the company has now achieved reimbursement coverage for COPIKTRA with virtually all of the targeted insurance plans.

As you can see from these encouraging numbers, the team has made significant inroads. We are extremely pleased to see these early signs that our physician education efforts are having an impact and overcoming the historical misperceptions around PI3K inhibitors, namely through strong key opinion leader engagement, increased podium presentations and new requests for investigator-sponsored research. Overall, we are encouraged by the breadth of reach the team is achieving with hematologic oncologists. And we look forward to building on this strong momentum for the remainder of 2019.

There is a lot of work ahead. That said, I am confident that we can build a successful, high-value and sustainable business with the foundation that is currently in place at Verastem Oncology. The currently approved COPIKTRA indications are the anchor for the broader COPIKTRA program and the foundation for the broader and future potential of Verastem Oncology to help many of our patients through the innovation and development of this novel cancer therapeutic.

As Dan mentioned, I've been working with the leadership team since May 2019. We have been focusing on building momentum for COPIKTRA. And today, we're also outlining a new plan to achieve a fully integrated, sustainable biopharma company.

And now I'd like to turn the call back to Dan to outline that plan in greater detail and provide some highlights from the clinical development front. Dan?

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Daniel W. Paterson, Verastem, Inc. - COO & President [5]

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Thanks, Brian. It's great to have you on board. Verastem Oncology is dedicated to developing and commercializing medicines that improve the survival and quality of life of patients battling cancer. To accomplish that goal, we need to run a successful business and we need to generate value for all of our stakeholders. To that end, today, we're articulating a new corporate plan that we believe will allow us to fulfill our vision of a fully integrated, sustainable biopharma company and achieve both short- and long-term growth.

Going forward, we'll be working towards the following key corporate objectives. First, in 6 months' time, our goal is to have COPIKTRA revenues on a positive upward trajectory aimed at closing the gap between revenue and commercial spend. Next, in 2 years' time, our goal is to achieve cash flow breakeven for both the commercial and clinical COPIKTRA program. And finally, in 5 years' time, our goal is to broaden the indications for COPIKTRA and have at least one additional marketed product, along with a robust pipeline of assets in development. Verastem Oncology has strong capabilities in marketing COPIKTRA and advancing duvelisib into other high unmet need indications. And now with this 6-2-5 plan in place and Brian leading the executive leadership team and contributing his deep commercial expertise, we believe we have the right team in place to achieve these goals.

Shifting gears now to the clinical development front. The internal development team, along with our external collaborators, have been very active this year at generating and presenting supportive clinical data to the ongoing duvelisib development expansion programs. In a study led by Dr. Ian Flinn and presented at ASCO, new dose modification data demonstrated that dosing interruptions of a median of 15 days resulted in similar response rates and progression-free survival to the 16.4 months shown on the COPIKTRA label.

Going forward, you'll begin to hear more about studies that are being conducted to investigate alternative dosing regimens. These studies are part of our broader clinical development strategy. We recognize that cancer is a complicated disease. And we believe that alternative dosing regimens may hold the key to keeping patients on drug longer and potentially achieving better clinical outcomes.

At EHA 2019, Dr. Jacqueline Barrientos presented a poster which highlighted that treatment with COPIKTRA rapidly increased lymphocytes and resulted in shrinkage of lymph nodes with 86% of patients achieving a lymph node response. Notably, the data were similar in high-risk patients. COPIKTRA also resulted in resolution of lymphocytosis at up to 21 weeks.

And finally, at the 2019 ICML Meeting, Dr. Steven Horwitz, lead investigator of the company's ongoing Phase II PRIMO study, gave an oral presentation highlighting supportive data from 2 Phase I clinical studies evaluating duvelisib in patients with relapsed or refractory peripheral T-cell lymphoma or PTCL, an aggressive form of non-Hodgkin's lymphoma. Across both studies, patients treated with duvelisib demonstrated preliminary but compelling clinical activity, including a positive trend in response rates. The preliminary safety profile of duvelisib in patients with relapsed or refractory PTCL was considered reasonable and consistent with prior studies.

The company-sponsored PRIMO study is an open-label, multicenter Phase II clinical trial evaluating the efficacy and safety of duvelisib monotherapy in patients with relapsed or refractory PTCL. The goal of the ongoing Phase II PRIMO study is to provide guidance on a duvelisib monotherapy dosing regimen in patients with relapsed or refractory PTCL and to further characterize its efficacy and tolerability in this population. We recently completed the dose optimization phase of the study and have commenced the dose expansion phase of the study. PRIMO is expected to enroll approximately 120 patients in total. And we expect to report data from the initial dose optimization phase later this year.

Another ongoing trial of note is an investigator-sponsored Phase I/II study evaluating duvelisib in combination with venetoclax, an oral selective inhibitor of BCL2 in patients with relapsed or refractory CLL/SLL. The primary objectives of the Phase I portion of this trial are to determine the maximum tolerated dose and the recommended Phase II dose of venetoclax for this combination regimen.

As I mentioned earlier, we've been receiving significant interest from physicians seeking to initiate investigator-sponsored studies evaluating duvelisib in numerous clinical settings. We saw the initiation of 2 such ISTs during the second quarter, including a Phase II study evaluating intermittent dosing of duvelisib in patients with relapsed or refractory CLL/SLL. This study is being led by Dr. Alexey Danilov, a leading hematologist who specializes in lymphoma and CLL, and is being conducted at the Oregon Health and Science University School of Medicine in Portland, Oregon.

And also a Phase I study evaluating safety and dosing regimens for duvelisib in combination with nivolumab for the treatment of patients with Richter's syndrome or transformed FL. This study is being led by Dr. Jennifer Woyach and is being conducted at Ohio State University Comprehensive Cancer Center. As a reminder, the physicians control all aspects of these trials, so we'll not be providing guidance on any related items, including data timing on their behalf.

In addition to these ongoing trials, we're also working towards initiation of 2 key company-sponsored trials. One is a randomized Phase II open-label intermittent dosing study, which will be named TEMPO and will be evaluating the effect of a planned 2-week dosing holiday on tumor response and safety in patients with relapsed or refractory indolent non-Hodgkin's lymphoma, who have received at least one prior systemic therapy. We've received IRB approval for this multicenter study, which is expected to enroll approximately 100 patients and will commence during the third quarter of 2019. Additionally, we're in final preparation phase for the confirmatory Phase III trial aimed at converting the accelerated approval of COPIKTRA in FL into a full approval. We're working with the FDA on final details, and we look forward to commencing this study later this year.

With that, I'd like to turn the call over to Rob for the financials.

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Robert E. Gagnon, Verastem, Inc. - CFO & Chief Business Officer [6]

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Thank you, Dan. Since we issued a press release earlier today outlining our second quarter financial results, I'll just review the highlights, beginning with our net product revenue.

Net product revenue for the 3 months ended June 30, 2019, was $3 million, which reflects the third full quarter of recorded sales for COPIKTRA. The company did not have any product revenue for the 3 months ended June 30, 2018, as the FDA approved COPIKTRA on September 24, 2018. License and collaboration revenue for the 2019 quarter was $0.1 million compared to $10 million for the 2018 quarter. The 2018 quarter included license revenue of $10 million related to the upfront payment received in connection with the license and collaboration agreement with Yakult in June 2018.

Research and development expense for the 2019 quarter was $11.3 million compared to $12.4 million for the 2018 quarter. The decrease of $1.1 million or 8% was primarily related to a decrease in consulting fees as a result of activities to file the new drug application for COPIKTRA in the 2018 quarter and lower R&D costs associated with the development of COPIKTRA as a result of site closures in the company's Phase III DUO and Phase II DYNAMO studies throughout 2018 and 2019 as patients continued to complete treatment. All of these lower costs were partially offset by an increase in costs related to the company's Phase II PRIMO study for the treatment of patients with relapsed or refractory PTCL.

Selling, general and administrative expense for the 2019 quarter was $29.3 million compared to $15.8 million for the 2018 quarter. The increase of $13.5 million or 85% was primarily due to higher personnel and related costs as well as promotional and consulting costs in support of the launch of COPIKTRA, which includes executive and nonexecutive separation costs and debt advisory costs of $2.7 million. Interest expense for the second quarter 2019 was $5.2 million, which includes 2 full quarters of interest related to the convertible notes.

Net loss for the second quarter was $42.2 million or $0.57 per share, basic and diluted, compared to $18.4 million or $0.30 per share for the 3 months ended June 30, 2018. Non-GAAP adjusted net loss for the second quarter was $35.7 million or $0.48 per share compared to non-GAAP adjusted net loss of $16.7 million or $0.27 per share for the 2018 quarter.

Supplement our GAAP financial results, we have prepared and presented non-GAAP financial measures to help provide additional transparency and period-over-period comparability with respect to the company's operating performance. We use these measures, among other factors, to assess and analyze operational results and trends and to make financial and operational decisions.

A reconciliation between the non-GAAP financial measures and the most comparable GAAP financial measures are included in the tables accompanying the press release. The reconciling items include executive severance and separation costs as well as significant noncash charges and expenditures reflected in the income statement related to stock-based compensation, noncash interest expense and amortization of acquired intangibles.

As of June 30, 2019, Verastem Oncology had cash and investments of $187.3 million compared to $249.7 million of cash and investments as of December 31, 2018. During the second quarter, we amended our existing loan and security agreement with Hercules Capital, changing key terms to our agreement, including a lower overall interest rate, an extended principal repayment time line and an increase to the borrowing limit from $50 million to $75 million, of which $35 million has been drawn to date.

As Brian mentioned earlier, we are raising our expected net revenue guidance from sales of COPIKTRA for 2019 to be in the range of $12 million to $14 million, higher than our previous guidance of $10 million to $12 million. This estimate is based on product revenue to date, current run rates and near-term expectations.

Also as Brian mentioned earlier, there are a few financial details to share around the recently executed license agreement with Sanofi. Under the terms of this agreement, we will receive an upfront payment of USD 5 million and we are eligible to receive aggregate future payments of up to $42 million, if certain development and sales milestones are achieved. We are also eligible to receive double-digit royalties based on future net sales of COPIKTRA in the licensed territories.

In exchange, Sanofi received exclusive rights to develop and commercialize COPIKTRA in all oncology indications. And they will hold the marketing authorization and product license for COPIKTRA in the licensed territories. Sanofi also gained a right to collaborate with Verastem Oncology on certain global development and clinical trial activities.

With that, I will now turn the call back to Dan for closing remarks.

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Daniel W. Paterson, Verastem, Inc. - COO & President [7]

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Thanks, Rob. I'll now review some of our upcoming goals and priorities for the second half of 2019 before opening up the call to Q&A.

Looking ahead, our key priorities are as follows: executing on the 6-2-5 plan; continuing to execute on the commercial launch of COPIKTRA; pursuing regulatory approval in Europe, where we expect to submit our MAA by the end of 2019; initiating the TEMPO study during the third quarter; initiating confirmatory Phase III study evaluating duvelisib for the treatment of patients with relapsed or refractory FL, that confirmatory study is expected to start later this year; conducting the Phase II PRIMO study for patients with relapsed or refractory PTCL for which preliminary data are expected by the end of the year; and based on the immunomodulatory effects seen with duvelisib's dual PI3K inhibition, we're planning studies that will combine duvelisib with PD-1 inhibitors in solid tumors and hematologic malignancies to further explore its effect on the tumor microenvironment. And we look forward to presenting and publishing additional duvelisib and defactinib data in the appropriate forums.

In closing, we believe our new plan and objectives are an important step towards maximizing the value of both COPIKTRA and Verastem Oncology. We're committed to bringing COPIKTRA to patients with these devastating hematologic malignancies, and we're proud of the many commercial and clinical achievements of our programs to date. We realized there's work ahead to make COPIKTRA a commercial success. The feedback that we're getting from physicians is that, as an oral convenient monotherapy with a novel mechanism of action, COPIKTRA is becoming an ever more attractive treatment option for patients with CLL, SLL and FL.

I'd like to sincerely thank the entire commercial team for their ongoing efforts with COPIKTRA and the broader Verastem Oncology team for their unwavering commitment and dedication to bringing this important new treatment option to patients as well as progressing our overall company goals. We look forward to keeping you updated on our progress in the months and quarters ahead, including further acceleration of plans to understand and enhance the physicians' experience with COPIKTRA.

With that, we'll now open the call up for your questions. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Alethia Young of Cantor Fitzgerald.

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Alethia Rene Young, Cantor Fitzgerald & Co., Research Division - Head of Healthcare Research [2]

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Look forward to working with the new team. One, I just want to talk about some of the commentary you made around different dosing strategies. And I guess do you think that, that might help have a commercial impact over time if you're able to make those sorts of changes? And then potentially, a second question on my side is just focusing on like where we think -- have we -- what has the feedback been in the field around kind of the colitis and how people are managing it? And then maybe another one I'll throw in is just on follicular. Have you seen an uptake now that you're able to market it there? So sorry, three questions.

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Daniel W. Paterson, Verastem, Inc. - COO & President [3]

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Thanks, Alethia. Thanks for the questions. Why don't we start with the first one on the alternative dosing? I mean I think based on both preclinical data and then the data that we presented at ASCO and EHA around patients who'd had a significant dose interruption based on side effects without having an impact on efficacy as well as data that's come out with other PI3Ks is giving us some confidence that if we have a proactive dose interruption, it'd be an opportunity for the patients to stay on the drug considerably longer. And so the intent would be -- and hopefully, we'll see it in the study and we had mentioned both the IST that's being done in CLL and then the company-sponsored study that we're doing in FL. But by having that dose interruption before the side effects actually occur that, hopefully, we can have patients stay on quite longer.

Second question had to do with whether we're seeing anything around colitis...

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Alethia Rene Young, Cantor Fitzgerald & Co., Research Division - Head of Healthcare Research [4]

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Colitis advancing in the real world, yes.

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Daniel W. Paterson, Verastem, Inc. - COO & President [5]

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Colitis and management. Yes. We've not really seen much in the way of colitis reported to us. Obviously, both our sales force and our MSLs are spending a lot of time out educating the physicians. It's really too early to tell whether there's any feedback that's different from what we had seen in the clinical trials. I will say anecdotally what we hear is physicians who have experienced giving the drug tend to have a much easier time. And so that's why we're spending so much time as part of our launch on the educational efforts.

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Alethia Rene Young, Cantor Fitzgerald & Co., Research Division - Head of Healthcare Research [6]

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Okay. And then a third question was just around -- with follicular now kind of being able to have those conversations, do you feel like that's picking up some momentum with the launch?

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Daniel W. Paterson, Verastem, Inc. - COO & President [7]

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Yes. Obviously, we haven't broken out sales by indication. But I would say now that we're able to actively talk about it, we are seeing more both uptick and then really kind of noise around it out there in the space. And hopefully, we'll see that continue.

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Operator [8]

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Our next question comes from Bert Hazlett of BTIG.

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Robert Cummins Hazlett, BTIG, LLC, Research Division - MD & Biotechnology Equity Research Analyst [9]

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Congratulations on the results. And we too look forward to interacting with the team. Just -- my question is on the trend of R&D spend. There's a number of clinical studies going on that are planned, a number that also can being considered by ISTs. How should we think about the near-term trend in R&D spend? And then maybe with an eye toward some of the company optimization comments that you were making during the prepared remarks, how should we think about that over the long term with regard to COPIKTRA?

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Daniel W. Paterson, Verastem, Inc. - COO & President [10]

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Thanks, Bert. Thanks for the question. Rob, do you want to...

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Robert E. Gagnon, Verastem, Inc. - CFO & Chief Business Officer [11]

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Yes. Let me start there, Bert. Thank you for the question. So we're currently investing about $40 million to $45 million a year in R&D. And we're expecting that trend to continue over the near term. And that would include an expectation around the company-sponsored trials. So that's about the level that we're at right now that we're expecting.

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Robert Cummins Hazlett, BTIG, LLC, Research Division - MD & Biotechnology Equity Research Analyst [12]

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Is that something that we should expect moving into 2020, again with an eye towards some of the company optimization comments. Maybe that's not quite the right language, but some of those comments that you were making in the prepared remarks.

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Robert E. Gagnon, Verastem, Inc. - CFO & Chief Business Officer [13]

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Yes. So we're kicking off our formal planning process now for 2020 or working through that. So we should have an update around top line and bottom line expectations later in the year. But I think in light of the fact that you talked about the optimization and Dan outlined today the plan of 6-2-5, I think I'd like to just add a little bit to this and just highlight for folks that we did finish the quarter with $187 million of cash and investments. And that compares to a level of $212 million at the end of Q1. On a GAAP basis, our net loss was $42 million. And included in that was about $2.7 million related to severance separation costs. And we felt the need that to present a non-GAAP measure for folks so that they could separate and see these charges and also reflect the noncash charges that go through the income statement.

On an adjusted basis, we spent about $35 million -- we spent $35.7 million in the quarter. And as a business, we're running at about $140 million a year in spend, so about $35 million a quarter. Our top priority is executing on the 6-2-5 plan. And as it pertains to 6, 6 months, the next 6 months, our goal is to have COPIKTRA revenues on a positive upward trajectory, really aimed at closing the gap between revenue and commercial spend. And between now and the next 2 years, our goal is to achieve cash flow breakeven for both COPIKTRA commercial and clinical spend. So based off of the COPIKTRA revenues, the cash on hand, it provides us with enough funding to execute on this plan.

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Operator [14]

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Our next question comes from George Zavoico of B. Riley FBR.

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George B. Zavoico, B. Riley FBR, Inc., Research Division - Analyst [15]

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Brian, welcome to the Verastem team. I have a couple of questions. Regarding the uptick in revenue, that's really nice to see, an 80%, 81% increase. I've been following some of the prescriptions on the Bloomberg side and their increase quarter-to-quarter was only 34%. So apparently, they're missing something, either that or there's some other element in there, factors in there, that may not be so clear. So do you mind commenting a little bit perhaps on how much relevance there is to some of those numbers, the prescription numbers that we see?

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Daniel W. Paterson, Verastem, Inc. - COO & President [16]

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Sure. George, thanks for the question. Yes. I think it's important to remember a couple of things when you think of this type of data in a market like this. If you look at prescription data in a pure retail market, it's usually pretty accurate and they've got pretty broad coverage. When you start getting into these specialty markets, especially when you're looking at shorter-term data, so a lot of people look at the weekly data, you have to understand what it is you're looking at. Are you getting the full picture? Or are you getting retail and maybe not institutional? Because it's important to remember, our market is made up of both kind of a specialty distribution channel as well as a specialty pharmacy channel.

And often, the shorter-term reporting of the data may not include both channels. I think it's also important to remember that it's an immature market. And when you look at how these things are projected, they may not be in a place now where it's particularly accurate. We tend to look at more like quarterly results and really the quarterly trend. Obviously, we have our own data because we know where our drug is going. But when you're looking at these outside sources, you have to be a little cautious because these are complicated markets and they're reported in different ways and it's piecing together different parts of the puzzle to be able to do it.

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George B. Zavoico, B. Riley FBR, Inc., Research Division - Analyst [17]

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Okay. I mean the trend was clearly up. It still went up 34%. So the trend is good. But you surpassed that almost threefold. So that's even better for you. And I guess I take your message is just to don't take it literally on that side. Okay. I have another question regarding your combination studies with checkpoint inhibitors with nivolumab, you mentioned. I mean these are pretty expensive drugs.

So two questions are, what's the preclinical data, if any, that you have that suggests that the combination really will enhance the efficacy and durability of response of the CPI alone, the checkpoint inhibitor alone? And are you planning to have any -- or establishing partnerships with, say, Bristol-Myers or Merck to be able to supply the drug, like some other companies have, to save your R&D costs to preserve your capital?

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Daniel W. Paterson, Verastem, Inc. - COO & President [18]

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So the data supporting this preclinically, it's both in our corporate deck. It was presented at SITC, I think 2018 was the date. And it's pretty impressive data. We've been down the path of the partnering for studies. We did that with defactinib, as you may recall, in the ovarian study that we had with PD-L1. For the IST that's being done, and that's the one in Richter's that's already up and running, we're not supplying -- we're supplying duvelisib and the investigator is either getting -- I believe they're having it supplied, it's an IST, so it's not a relationship that we have. In our company-sponsored trial that we're going to do in solid tumors, we're specifically going into an indication where it's on label and we won't have to supply the drug. Longer term, we may go down the partnering path. We felt for this first study, it was more expeditious to just get it up and running and go in an area where it was labeled and we wouldn't have to worry about providing the drug.

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George B. Zavoico, B. Riley FBR, Inc., Research Division - Analyst [19]

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Okay. That's great. That saves you a bunch of cash.

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Operator [20]

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Our next question comes from Matthew Cross of JonesTrading.

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Matthew David Cross, JonesTrading Institutional Services, LLC, Research Division - Research Analyst [21]

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Congrats on the stronger quarter of sales and to Brian on his new role. A couple of questions for me here. First off, just following up a little bit on Alethia's question regarding the intermittent dosing studies because I don't think we've heard too much formally about those prior to today. Could you go into a bit of detail on any of the data you've seen specific to duvelisib's tissue distribution and target engagement profile that might support the particular dosing scheme you're implementing here? I guess I'm just trying to better understand, is this really a rationale that's stemming solely from what you've seen in DUO and what you reported last month at ASCO and competitor data or if it's kind of a deeper scientific underpinning that's unique to duvelisib?

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Daniel W. Paterson, Verastem, Inc. - COO & President [22]

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Yes. I wouldn't say that there's anything specific to duvelisib. And we do have data obviously around target engagement. And we think it's important to have an interruption in dose that allows to not have continuous coverage of the target in order to have the effect. And we take some comfort from the data that we reported from the DUO study that shows when you have a dose interruption of a median of 15 days, where you don't have target engagement anymore, that you don't have any difference in the efficacy.

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Matthew David Cross, JonesTrading Institutional Services, LLC, Research Division - Research Analyst [23]

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Got it. And then I guess obviously for the data that you're citing there, most of the response seems to be maintained. Is there a particular AE of interest or group of AEs that you're looking to maybe reduce by kind of reducing that level of target engagement or the consistency of doing so?

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Daniel W. Paterson, Verastem, Inc. - COO & President [24]

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Yes. I would say it's really the I-O-type side effects, so things like colitis, some of the effect on the immune system. These drugs work by shutting down Tregs. And that's where you get the efficacy and that's where you get some of these well-described side effects that you see in these drugs. You see them in PD-1, you see them in PD-L1. It's the natural on-target effect of impacting the immune system.

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Matthew David Cross, JonesTrading Institutional Services, LLC, Research Division - Research Analyst [25]

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Okay. Great. I appreciate you kind of helping set the bar there. And then I imagine, part of the challenge of commercializing thus far has been pushing for adoption of a new single-agent therapy in these later-line patients, where idelalisib has made patients a little bit particularly cautious. So I was hoping to get an update on how the combo trial of duvelisib and venetoclax is progressing in terms of enrollment and the latest on when that study is expecting to complete.

And I think maybe more importantly, given that the venetoclax combos are becoming as common in hematological -- in the hematological space as checkpoint inhibitor combos elsewhere, could you remind me about any kind of mechanistic differentiation that might set duvelisib apart here? Are you seeing downstream MCL1 knockdown? Or is this really another angle entirely on the venetoclax resistance?

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Daniel W. Paterson, Verastem, Inc. - COO & President [26]

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Well, the original concept came from just the synergy that we saw between the 2 agents preclinically. I'm probably not the best one, and I'm not sure we'd have anyone on the call to answer the specific science downstream. As far as an update on the trial itself, it is an IST. So while we hear anecdotally how it's going, we don't have a specific guidance on when we're going to be able to see data presented by the investigator or what the actual accrual is. Matt, we could certainly -- can have Jon Pachter follow up specifically with you on the downstream science, if you'd like.

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Matthew David Cross, JonesTrading Institutional Services, LLC, Research Division - Research Analyst [27]

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Fair enough. Yes, that would be great. And I'll look forward to an update from you guys later down the line.

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Daniel W. Paterson, Verastem, Inc. - COO & President [28]

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Great. I think that ends the question-and-answer period. Thank you, everybody, for your attention during the call.

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Operator [29]

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Ladies and gentlemen, this concludes today's conference. Thank you for your participation, and have a wonderful day. You may all disconnect.