Verastem Oncology, a biopharmaceutical company committed to advancing new medicines for patients with RAS/MAPK pathway-driven cancers, secured a new credit facility for up to $150 million along with an equity investment of $7.5 million with Oberland Capital Management. In addition, the company entered a strategic collaboration with IQVIA to leverage IQVIA’s infrastructure and established commercialization solutions to complement its launch strategy for the investigational combination of avutometinib plus defactinib for the treatment of recurrent KRAS mutant low-grade serous ovarian cancer (LGSOC) planned for mid-2025.
“The Oberland Capital transaction, coupled with our strategic partnership with IQVIA, enables us to launch avutometinib plus defactinib for recurrent LGSOC from a position of financial strength and with commercialization solutions to accelerate our launch,” Dan Paterson, president and CEO of Verastem Oncology, said. “The additional capital will help us create a commercial revenue stream to support our pipeline with new approaches for patients needing treatments for complex and rare cancers.”
Under the terms of the note purchase agreement with Oberland Capital, Verastem will issue an initial $75 million of notes at closing. The company then has the ability to access up to an additional $75 million in notes upon achievement of certain pre-determined milestones related to the potential regulatory approval and commercialization of avutometinib plus defactinib for the treatment of LGSOC. The notes carry an interest-only period of six years and will bear interest at a floating rate, which is subject to both a floor and a cap. The note purchase agreement also provides for revenue participation pursuant to which Oberland Capital will initially be entitled to 1.0% of the first $100 million of net sales in each calendar year of certain of the company’s products, subject to pro-rata increase upon potential future draw downs.
In addition, the company has entered into a stock purchase agreement with affiliates of Oberland Capital for the private placement of 1,416,939 shares of the company’s common stock issued at closing, representing $7.5 million of gross proceeds based on the trailing 30-trading days volume-weighted average price or VWAP of $5.2931 per share. Additionally, Oberland has the option to participate in certain future equity offerings that may be consummated by the company within the three years from closing, for up to $2.5 million at the same price per share in such offering. A portion of the proceeds from the notes and equity investment will be used to fully repay amounts owed under the company’s existing loan with Oxford Finance ($42.7 million), which has been terminated.
The company had a preliminary unaudited cash, cash equivalents and short-term investment balance of $88.8 million as of Dec. 31, 2024. Taking into account the initial $75 million of notes and $7.5 million of equity to be purchased by Oberland Capital at closing, and the repayment of amounts owed under the company’s existing loan with Oxford Finance, the company would have had pro-forma cash, cash equivalents and short-term investment balance of $128.6 million as of Dec. 31, 2024. Both the actual and pro forma Dec. 31, 2024 balances stated herein are preliminary, unaudited estimates and subject to revision upon completion of the company’s closing and audit processes and do not present all information necessary for an understanding of the company’s financial condition as of, and its results of operations for the fiscal year ended Dec. 31, 2024.
