Good afternoon, and welcome to the Verastem Oncology Investor Conference Call on Thursday, May 9, 2019. [Operator Instructions]. Please be advised that this call is being recorded at the company's request and will be available on 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, sir.

Welcome, everyone, and thanks for joining us this afternoon to discuss Verastem Oncology's financial results and corporate highlights for the first quarter of 2019. I'm joined today by Robert Forrester, our President and Chief Executive Officer; Joe Lobacki, our Chief Commercial Officer; Dan Paterson, our Chief Operating Officer; and Rob Gagnon, our Chief Financial Officer. During today's call, Robert will provide some introductory comments, Joe will provide an update on the commercial COPIKTRA program, Dan will review a few clinical program development highlights, and Rob will discuss the highlights of our first quarter financial results. Robert will then provide a brief closing summary before opening the call up to your questions. Earlier today, we issued a press release detailing our first 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 in 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 actual results to differ materially from these forward-looking statements. With that, I would now like to turn the call over to Robert Forrester. Robert?

Thanks, John. Good afternoon, everybody, and thank you all for joining us on today's call. I'll start today by discussing the COPIKTRA launch. As many of you know, our lead oncology drug, COPIKTRA, also known as duvelisib, received its first marketing approvals from the U.S. Food and Drug Administration in late September 2018. In the first quarter of 2019, which reflects the second full quarter of sales, COPIKTRA net revenues were $1.7 million, a 38% increase over the fourth quarter of 2018. As a reminder, COPIKTRA is an oral inhibitor of PI3K and was the first dual inhibitor of both PI3K-delta and PI3K-gamma to be approved in the U.S. It is administrated twice-daily - oral capsule that patients can take at home under the guidance of their physician. COPIKTRA is approved for the treatment of patients with relapsed or refractory chronic lymphocytic leukemia or small lymphocytic lymphoma after at least 2 prior therapies. COPIKTRA also received accelerated approval for the treatment of patients with relapsed or refractory follicular lymphoma after at least 2 prior systemic therapies. The entire commercial team has been working diligently to overcome certain headwinds in the field, which Joe will discuss in more detail in a few minutes. However, we believe we continue to make substantial progress on the COPIKTRA launch. While we continue to expect 2019 revenues overall to be modest. We believe the groundwork we have laid over the past several months we have increasingly positive impact through 2019 and into 2020. Before I turn the call over to Joe to provide a commercial update, I'd like to take a moment to touch on a new corporate development. As we announced in our earnings release earlier today, Joe will be stepping down from his current role as Chief Commercial Officer during 2019 to pursue other professional opportunities, including Board of Director roles. We have commenced a formal search for his successor, but Joe intends to serve in his current role until a replacement is identified and appointed. During his transition, Brian Stuglik, who's a member of our Board of Directors and is the former Chief Marketing Officer of Lilly oncology, will be providing strategic oversight and advisory support for commercial organization. Joe has played an invaluable role in building the commercial organization to date, including launching COPIKTRA on the same day it was approved and achieving reimbursement with 92% of targeted health plans. He has played a central role in Verastem Oncology's transition from a development stage R&D company into the commercial organization we are today. Joe's leadership and guidance have been a vital part of our growth as a business. And for that, we sincerely thank him. His many contributions have created a strong foundation that has well-positioned to company for sustainable growth and success. I'll now turn it over to Joe.

Thank you, Robert, and thank you to everyone who dialed in for today's call. As Robert mentioned, I will be transitioning out of my role as Chief Commercial Officer over the course of this year. This decision was largely driven by my desire to focus my time and attention on different professional endeavors. I joined Verastem Oncology to build out the commercial and medical affairs teams, including the distribution network and foundational systems and policies and to secure payer reimbursement. All of these initiatives are largely complete. In order to continue supporting the ongoing launch and growth of COPIKTRA, I plan to serve in my current role until the successor is identified and appointed. I believe that with the current commercial team in place, the company is well-positioned to deliver on the future success of COPIKTRA in 2019 and into 2020. I'm also confident that with the clinical success to new combinations of tumor sites, COPIKTRA has the potential to grow well beyond the base we're establishing in relapsed or refractory, CLL/SLL and FL. I'm very proud of the commercial organization that has been built to support COPIKTRA, and I'm fortunate to have spent this time working with such a talented and dynamic team. I look forward to closely following the company's future success. And I will provide a brief update on the commercial COPIKTRA program. Today, we are reporting $1.7 million in net COPIKTRA revenues for the first quarter of 2019, an increase of 38% from the prior quarter. We also made substantial progress on the reimbursement front as we're now tracking at over 92% of targeted health plans, listing and providing reimbursement for COPIKTRA. The first two quarters of the launch have been dedicated to securing reimbursement and educating physicians about the benefits and safety profile of COPIKTRA.…

Thanks, Joe. Now I'd like to briefly summarize certain first quarter items from the clinical development front. In March, 4 abstracts were presented at the 23rd Annual International Congress on Hematologic Malignancies, that build upon the growing body of data in support of COPIKTRA and CLL/SLL and FL. A key abstract at the meeting highlighted data from the Phase III DUO study evaluating COPIKTRA compared to ofatumumab in patients with relapsed or refractory CLL/SLL after at least two prior therapies. This is the labeled indication for which COPIKTRA received approval in September 2018. In this analysis, COPIKTRA demonstrated progression-free survival of 16.4 months compared to PFS of 9.1 months for patients treated with ofatumumab. COPIKTRA also demonstrated an overall response rate of 78% compared to 39% for patients treated with ofatumumab. The other 3 COPIKTRA posters from ICHM, which were previously presented at The American Society of Hematology 2018 annual meeting, featured long-term efficacy and safety data from patients treated with COPIKTRA for greater than 2 years. Data from the Phase III DUO crossover extension study in patients with relapsed or refractory CLL/SLL and data describing certain prognostic and immune-related factors associated with the response to COPIKTRA from the Phase II DYNAMO study in indolent Non-Hodgkin Lymphoma. In the pooled long-term efficacy and safety analysis, the subset of 46 patients who received duvelisib monotherapy achieved an overall response rate of 89% with a median PFS of 40 months. In general, the AE profile for patients treated for greater than two years was similar to the profile in patients on treatment for less than 2 years and were able to manage most adverse events through dose reductions and dosing holds, which allowed these patients to continue deriving benefit from treatment. \In the DUO crossover extension study, the 90 patients who crossed…

Thank you, Dan. Since we issued a press release earlier today outlining our first quarter financial results, I'll just review the highlights beginning with our cash position. As of March 31, 2019, Verastem Oncology had cash and investments of $211.7 million compared to $249.7 million of cash and investments, as of December 31, 2018. In April 2019, we announced an amendment to refinance our existing loan and security agreement with Hercules Capital, changing key terms to our agreement, including a lower overall interest rate and extended principal repayment timeline and an increase to the borrowing limit from $50 million to $75 million, of which $35 million has been drawn to date. Net product revenue for the first quarter 2019, as Robert and Joe mentioned, was $1.7 million, which resulted from the commercial launch of COPIKTRA following receipt of FDA marketing approval on September 24, 2018. Research and development expense for the first quarter of 2019 was $9.8 million compared to $10.9 million for the first quarter of 2018. The $1.1 million decrease or 11% was primarily related to lower consulting fees associated with activities to file a new drug application for COPIKTRA in the 2018 quarter and the site closures from the Phase III DUO and Phase III DYNAMO studies. All of these lower costs were partially offset by an increase in costs related to our Phase II PRIMO study for the treatment of patients with relapsed or refractory PTCL. Selling, general and administrative expense for the first quarter 2019 was $26 million compared to $9.8 million for the first quarter 2018. The increase of $16.2 million or 165% between these 2 periods was primarily due to higher personnel and related costs as well as promotional and consulting costs in support of the commercial launch of COPIKTRA. Interest expense for the first quarter 2019 was $4.9 million, which includes a full quarter of interest related to the convertible notes. Net loss for the first quarter 2019 was $38.1 million or $0.52 per share compared to a net loss of $21.1 million or $0.41 per share for the first quarter 2018. Now that we have 7 months of COPIKTRA launch behind us and greater visibility into the product adoption and update, we believe we're in a position to provide revenue guidance for the current fiscal year. For 2019, we expect net product revenue from sales of COPIKTRA to be in the range of $10 million to $12 million. This estimate is based on product revenue to date, current run rates and near-term expectations. Please note we will not be providing guidance for metrics related to the COPIKTRA launch, including patient numbers, prescription numbers, et cetera. With that, I will now turn the call back to Robert for closing remarks.

Thanks, Rob. I will now review our key upcoming goals and priorities for 2019 before opening the call to Q&A. Looking ahead, our key priorities include: one, continuing to execute on the commercial launch of COPIKTRA and CLL/SLL and FL; two, identifying a Chief Commercial Officer to succeed Joe; three, initiating a confirmatory Phase III study evaluating duvelisib for the treatment of patients with relapsed or refractory FL, The confirmatory study is expected to start later this year; four, initiating additional investigational studies of duvelisib as monotherapy and in combination with other anticancer agents, such as checkpoint inhibitors in both hem and solid tumor malignancies; five, expansion in the Phase II PRIMO study for patients with PTCL, which preliminary data are expected by the end of this year; six, executing another ex-U.S. partnership with duvelisib; seven, advancing our focal adhesion kinase inhibitor, defactinib, which is currently being evaluated in 4 separate clinical collaborations in combination with immunotherapeutic agents for the treatment of several different cancer types, including pancreatic, non-small cell lung, ovarian and mesothelioma. And finally, presenting and publishing additional duvelisib and defactinib data. As a convenient oral monotherapy and novel mechanism of action, we believe that COPIKTRA is an attractive treatment option for patients with CLL/SLL and FL, and we plan to advance the drug into other high unmet need lymphoid malignancies. We look forward to providing you with further updates on our ongoing progress with the commercial launch of COPIKTRA. With that, we will now open the call up for your questions. Operator?

[Operator Instructions]. Your first question comes from the line of Robert Hazlett from BTIG.

This is Jake Colby on the line for Bert. I guess, I was just wondering on the guidance, it's a bit lower than we were looking for. Is there any additional color you can provide on the pushes and pulls that when into this range?

Yes, I'll ask Rob to address that. We just thought this was the right time now to provide that guidance. So Rob, over to you.

Yes. So this - you're right, this is the first time we are providing guidance as a company on revenue and now that we're 7 months into the launch, we felt that it was the right time to comment on what we are seeing for the full year 2019. There's certainly been headwinds that we've been facing, which we outlined in the prepared remarks. And our estimate for this year is really based on the traction that we're currently seeing in the market and our plans to continue the acceleration of the commercial rollout over the coming months. It's also based on the revenues to date, what we're seeing in run rates in our near-term expectations. If you look at other drugs within this indication, for example, I'll mention VENCLEXTA, they had $30 million of sales in the first 12 months post launch and the second year was $114 million. And so we also looked at other drugs in this space as a reference point. And I'll just - I'll end it by saying we remain very confident in the unmet need of third line of treatment for CLL/SLL and FL. There are approximately 20,000 patients in those indications. We believe COPIKTRA can achieve sales of between $200 million and $300 million per year. And as we've discussed previously, the ramp to peak sales in these third line indications would be around the 4 to 5 year timeline.

Okay. That's really helpful. And I guess just sort of following up on sort of the confidence in maybe overcoming some of this headwinds with the groundwork you're laying. Can you just provide any sort of qualitative or quantitative metrics you're tracking? And I guess in physician awareness and overcoming that PI3K headwind?

Yes. No. It's an important question, Jake. And none of it was unexpected. The headwinds that we are already seeing are the negative perceptions around PI3K. And the lack of clinical experience here in the U.S., particularly amongst the community where many of the patients are residing. So we see 2019 as the sort of foundation year. We're doing all the fundamental work we need to do and then to lead into a much more important 2020. But we are seeing green shoots. And let me just talk about a couple of those. First of all, we're seeing increased podium presence. The PI3K is back on the podium as a point of discussion and totally relevant to many different disease type. So that's good news. We're seeing increased K1 engagement and that's across the board. And that's really coming through in things like IST proposals. We've had significant number of IST proposals. Dan talked about some of the ISTs that are ongoing. You should expect to see some additional ISTs starting shortly and over the rest of this year. So across the board, we are seeing signs of evidence of that we are actually making good progress with our educational programs and to address some of these headwinds. Then hopefully, this will then begin to translate into sales as we move into - certainly into next year, I mean, hopefully towards the latter part of this year.

Your next question comes from the line of Sean Lee from H.C. Wainwright.

My first one is, you mentioned in the prepared remarks, you mentioned you would be looking to explore ex-US opportunities. Could you provide us a little bit more color on that?

Yes so, as you know, Sean - great to hear from you. Thank you for a question. We have worldwide rights to duvelisib and we're very focused on the U.S., of course, as the primary market for us. We already have partners, as I think you know, in China and Japan with CSPC and your call, maybe I can ask Dan to comment about the rest of the territories, ex-U.S.

Yes. So we have a number of discussions ongoing. We would anticipate having at least one other partnership by the end of the year. And I will comment on both Yakult and CSPC. We've been working very closely with them on advancing duvelisib in both of those territories.

Just a follow up, could you provide maybe a bit of timeline on those?

You mean for Yakult and CSPC?

Yes, for China and Japan.

Obviously. I mean, those - we work very closely and we always don't have control over what they're doing. But maybe, Dan, you can provide a bit more color on that.

Yes. We neither have control - direct control over what they're doing or necessarily going to give guidance on what they're doing where they necessarily haven't given guidance. So we'll probably give guidance later this year.

I would say that they both are highly motivated and moving swiftly. From what we can tell, they're very, very engaged. We certainly see that on a daily basis here. So they're very motivated to bring duvelisib to patients in China and Japan.

Great. My second question is on the defactinib program. Could you provide us with a bit of an update on that? When can we expect to see some more clinical results?

Yes. So defactinib, as I think you know, is in 4 separate programs All of which are funded largely by our collaborators. So you've got a program going on in the U.K., with Cancer Research UK, in non-small cell lung cancer, pancreatic and meso. You also have another pancreatic study going on here with Wash U and Merck with pembro. And then there's an advanced tumor - solid tumor program going on with Chugai [ph], The Royal Marsden in London. And then there's an ovarian program going on with platinum and taxane out in UC San Diego. So that's the sort of - the four programs that we have going on. So maybe, Dan, you want to comment on how they are progressing and what can we expect on them?

They are all progressing, and we would expect data from a number of those programs at medical meetings later this year.

Your next question comes from the line of George Zavoico from B. Riley.

My first question is about the overall landscape in this space, in the relapsed refractory CLL/SLL space, in particular. And in particular, I mentioned venetoclax because it's a drug that's seen a lot of increased penetration. So I'm very intrigued by the trial that's going on in combination. Can you comment a little bit about how that might impact where COPIKTRA might be used? I mean, it seems like that would at least advance it into second line, perhaps. What - how are you thinking about that strategically?

As you know, we have long patent life on duvelisib. We have probably, effectively, 13 to 14 years of patent life with extensions. So we have time to really broaden the clinical utility of duvelisib, to bring duvelisib to patients who can really benefit. We obviously have to move quickly because the time goes fast and the patients are waiting. And one of the ways of moving forward is in combination with standard of care and novel therapies. And one of the most important combinations is with venetoclax. We have the strongest synergy pre-clinically that we have seen with all of the combinations that we're looked at with venetoclax. It is a critical combination. And I think it allows us the opportunity to move into many different tumor types, starting CLL, but beyond that, we can imagine moving into different tumor types beyond that, too. But with that, maybe we'll allow Joe to comment a bit further.

Yes, so for the CLL/SLL landscape, what we're seeing is oral therapies are moving kind of upfront. So we're starting to see ibrutinib as a first-line agent; venetoclax as a second line agent. And that really leaves a third line space wide open. There aren't a lot of a lot of other choices. And we see physicians now using - going back to chemotherapy, doing the CD20 by itself. And there are better options there. So that's a lot of what our oncology account managers, our sales force, is doing right now to identify - help physicians identify that there's a need in the third line space and how COPIKTRA can fill that need. So the market is changing. I think that's to the benefit, as you mentioned, to COPIKTRA going forward. And I agree with Robert. I think the - as the market looks at it, combinations is the way to go with an oncology. They're starting to look at combining the various agents together. I agree, I think the combination we have with venetoclax is extremely interesting and showing synergy. And I think showing something different about the mechanism of action of COPIKTRA as well. So that helps. Any of that data really gets out and differentiates the product for us. So CLL is a great spot, but don't forget FL as well. So there's still a high unmet need within the third line, FL. And that's a place where right now only PI3Ks exist for treatment. So ibrutinib is not active in FL. Venetoclax hasn't been active in FL through group studies. So a lot of that is the physician's choices around PI3K. So this new launch that we have - or going in with more materials for physicians around this post 2 prior therapies with the FL has been very well received. So we continue to see growth in that as well. So this opening it up of CLL and identifying this third line need, as well as the need that is already identified by physicians from PI3K and FL are really adding to our growth.

Okay. And by the way, thanks, Joe. And good luck in your next endeavor.

Thank you, George.

Venetoclax, are you getting - are you working with a - is there a sponsor? Are you working with a developer on this? Or is it independent of them?

I'll let Dan comment [indiscernible] trial.

So this is investigator-sponsored study so the relationship is between us and the investigator and the investigator and the other company.

And that's with Dana-Farber.

Yes, Dana-Farber with Matt Davids.

With Matt Davids who's making good progress. Obviously, it's within his control as to when he will provide an update on that trial because I mean, if they say it's an important trial, it allows us to get into probably some more aggressive tumor types, too, and subtypes, and I think that's important.

Okay. Then one quick question about defactinib. It sounds like some of these ISTs that you've going are going to deliver some important data by the end of the year. Will that put you in a position, say, sometime in the first half of next year to develop a strategy for perhaps picking which indication you'd like to go after first, and then taking over sponsorship of those trials. Do you expect that to happen next year?

That's a really important question. And we see this as a wonderful way to bring forward the development of this drug in collaboration with our partners. And you're right, as we see data from these trials, it will allow us to start to make decisions on how we best proceed. And that's likely to be the latter part of this year, bumping into next year, depending on the trials. They're obviously going on different timelines, but we do see them as important proof of concept studies. Dan, is there anything else you want to add in addition to that?

No. I mean, by doing these as ISTs, it allowed us to place more bets than if we'd fully funded these studies themselves, so we're looking at them as signal generation. For each of them, we have a sense of where we're going next with a positive signal.

Okay. And the most advanced of those is actually - what? A couple of them are Phase IIs, right? They're not all Phase I?

I would describe them as of sort of proof of concept, Phase I/Phase IIs. I wouldn't put too much store on one being ahead of the other. I think they're all proof of concept within the different disease types. So I think over the next 12 months, we will hope to have some data from these that will allow us to start to make some decisions on whether we should be investing further or not.

[Operator Instructions]. We have a question from Matthew Cross from JonesTrading.

Just wanted to ask your - you mentioned expanding PRIMO with some additional patients and I was wondering if you could give a little bit more detail around the criteria for these additional enrollments and any changes to the existing protocol and then kind of rationale for this? I guess, particularly also interested in learning how you may square this with potential combination work with romidepsin?

Now that's an important question. Well, as you know, we and our collaborators are excited about the activity we've seen with duvelisib in PTCL. As you know, this is an aggressive tumor with a large unmet need. And thinking of the relapsed refractory patients, they unfortunately don't do well. And so far, the data has been encouraging both for the PRIMO study and also in the combination study with romidepsin. So we will continue to report data from both those trials and from our collaborator, of course, probably the latter part of this year. But with that, maybe we can let Dan comment a little bit further, about PRIMO in particular.

Yes. So as you know, our approved dose is 25 milligram BID, and CLL/SLL and FL. In our Phase I experience where we saw the original signal for PTCL, the majority of those patients were treated at 75 milligram BID. We believe based on the PK, 25 milligram should be sufficient. But what we did in the PRIMO study is the initial phase of the study was looking at 25 milligram BID and 75 milligram BID and the expansion will be choosing a dose to go forward in a potential registration-directed study. And so we're hoping to report the initial phase at a medical meeting later this year and then open the expansion, if that single-dose that we choose at a larger number of studies - study sites.

Okay. Great. No, that's very helpful; I appreciate the color. And then just I also wanted to ask if you could comment on some of your optionality here regarding utilization of your existing cash balance. I guess what are your latest thoughts on potentially in-licensing, any additional pipeline assets or - and/or retiring any portion of the outstanding convert?

That's a really broad question. So thank you, Matt. First of all, we're delighted with where our cash position is right now. And as Rob talked about in his prepared comments earlier, as we think about building a business, I mean, that's really what, I think, you're talking about - the 3 top priorities for us. One is the launch, making sure that we do the launch to a world-class level. We get the drug to the patients who could benefit from it and we are early into that and we see 2019 as being that foundation year to really sort of takeoff latter part of the year into 2020. . Second, because of the long IP that we have on the drug and the potential for duvelisib to help patients with other tumor types, we're - you're going to see from us and you're already beginning to see from us, a development plan that takes the drug into new tumor types both the single agent and in combinations, may go into earlier stage patients, may go into higher risk patient populations like Richter's or transformed follicular - PTCL, obviously you know about already, TL PTCL mantle cell marginal zone, even possibly into solid tumors in combination with some of the IO drugs, both in hema and potentially in solid tumors. As well as also maybe around CAR-T, pre- and post- CAR-T may be another area of interest for our drug. So job number two is to maximize the potential for duvelisib. As you know, getting a drug approved is a tricky process. You've got to get - run the gauntlet or the biology and then run the gauntlets of the FDA. Duvelisib has survived both of those challenges. And it now being an approved drug, that makes it a lot easier now to do the expansion of the drug into additional indications. Then the third area is, what else? What other drugs can we bring forward that can benefit from both our developments, our regulatory and our now - our commercial capabilities? Already we have in the portfolio defactinib and there were a couple of questions earlier about defactinib and we'll see whether that is a drug that deserves further investment. And then there could be new drugs that we can bring it at some point in the near term or in the medium or late - longer term. We are actively looking for things, but I'm not going to give any guidance around whether we found anything or whether we'd like to do something shortly or not. But we have a high bar in terms of what we're looking for, and we will be patient to make sure we find something that really fits in well with our skill sets.

There are no further questions at this time. I'll turn the call back to CEO, Robert Forrester.

Thank you all very much indeed for joining us today. And we look forward to updating you soon. Bye-bye.

This concludes today's conference call. Thank you, everyone, for your participation. You may now disconnect.