Verastem Oncology Announces Pricing of $55.0 Million Public Offering of Common Stock, Warrants and Pre-Funded Warrants

Rhea-AI Summary

Verastem Oncology (Nasdaq: VSTM) has announced the pricing of a $55.0 million public offering of common stock, warrants, and pre-funded warrants. The offering includes 13,333,334 shares of common stock and warrants at $3.00 per share, and 5,000,000 pre-funded warrants with accompanying warrants at $2.999 each. The warrants have an exercise price of $3.50 per share and will expire in 18 months.

The company plans to use the proceeds for the potential launch of avutometinib and defactinib in LGSOC, continued clinical research and development, working capital, and other corporate purposes. Guggenheim Securities and Cantor are acting as joint book-running managers for the offering, which is expected to close on July 25, 2024.

Positive

• Raised $55.0 million in gross proceeds through public offering
• Funds to be used for potential product launch and clinical development
• Warrants provide additional potential funding through exercise

Negative

• Potential dilution of existing shareholders due to new share issuance
• Warrants may create downward pressure on stock price
• Additional capital raised suggests possible cash flow concerns

Insights

Financial Analyst

Verastem Oncology's public offering is a notable move for the company on several fronts. The offering price of $3.00 per share and $2.999 per pre-funded warrant indicates a strategic move to attract a broader investor base, including those interested in pre-funded warrants, which can be a more attractive option due to the lower exercise price. The total $55.0 million expected from the offering is a significant cash infusion that will support the launch of their key drugs, avutometinib and defactinib, as well as fund ongoing research. This capital raise could strengthen Verastem’s balance sheet, giving them more leverage to advance their clinical trials and expand their pipeline. However, the dilution of existing shares is a potential downside, which could initially put downward pressure on the stock price. The joint book-running managers, Guggenheim Securities and Cantor, bring reputable financial backing, enhancing investor confidence. The 18-month expiration period for the warrants, coupled with the immediate exercisability, could lead to future volatility as investors decide when to exercise their options.

Market Research Analyst

The timing of this public offering is particularly telling, as it aligns with upcoming milestones for Verastem Oncology. The use of proceeds to fund clinical research and potential product launches in LGSOC (Low-Grade Serous Ovarian Cancer) indicates that Verastem is betting heavily on the success of avutometinib and defactinib. If these products perform well in the market, the return on investment could be substantial. Additionally, the offering under a shelf registration statement suggests that Verastem is prepared for rapid capital raising, which is important in the biopharmaceutical industry where timing can make a significant difference. This move positions Verastem to be agile in responding to clinical trial outcomes and competitive pressures. However, the success of this offering largely depends on investor perception of Verastem's clinical pipeline's potential and timing, which can be highly unpredictable.

Oncology Doctor

From a clinical perspective, the earmarking of funds for avutometinib and defactinib in LGSOC is vital. LGSOC is a challenging condition with limited treatment options and any advancement here can be a major breakthrough. The potential launch of these drugs signifies that Verastem is progressing well in their clinical trials. However, the pressure to deliver positive trial results increases with this funding, as the market will be closely watching for any clinical updates. The targeted use of these funds also highlights the company's focused approach on high-impact areas, which can be reassuring for investors looking for clear strategies and goals. The involvement of reputable book-running managers further underscores the credibility of this offering, providing an added layer of confidence in the potential success of Verastem’s clinical endeavors.

BOSTON---(BUSINESS WIRE)-- Verastem Oncology, (Nasdaq: VSTM), a biopharmaceutical company committed to advancing new medicines for patients with cancer, today announced the pricing of an underwritten public offering of 13,333,334 shares of its common stock and accompanying warrants to purchase up to 13,333,334 shares of its common stock at a combined offering price to the public of $3.00 per share and accompanying warrant. In lieu of common stock to certain investors, Verastem Oncology offered pre-funded warrants to purchase up to an aggregate of 5,000,000 shares of its common stock and accompanying warrants to purchase up to 5,000,000 shares of its common stock at a combined offering price to the public of $2.999 per pre-funded warrant and accompanying warrant, which represents the per share public offering price for the common stock less the $0.001 per share exercise price for each such pre-funded warrant. The warrants have an exercise price of $3.50 per share, are exercisable immediately and will expire 18 months from the date of issuance. The warrants will be exercisable, at the option of each holder, in whole or in part by delivering a duly executed exercise notice and by payment in full of the exercise price for the number of shares of common stock purchased upon such exercise. Cashless exercise of the warrants are limited to certain circumstances as defined within the warrant.

The gross proceeds from the offering, before deducting underwriting discounts and commissions and other estimated offering expenses payable by Verastem Oncology, are expected to be approximately $55.0 million. The offering is expected to close on July 25, 2024, subject to customary conditions. All of the securities to be sold in the offering are to be sold by Verastem Oncology.

Guggenheim Securities and Cantor are acting as joint book-running managers for the offering.

Verastem Oncology intends to use the net proceeds from the public offering to fund the potential launch of avutometinib and defactinib in LGSOC, continued clinical research and development of product candidates, and for working capital and other general corporate purposes, which may include capital expenditures, research and development expenditures, clinical trial expenditures, potential commercial launch expenditures, milestone payments under collaboration and in-license agreements, and possible acquisitions.

A shelf registration statement on Form S-3 relating to the public offering of the securities described above was declared effective by the Securities and Exchange Commission (SEC) on November 20, 2023. The offering is being made by means of a written prospectus and prospectus supplement that form a part of the registration statement. Before you invest, you should read the preliminary prospectus supplement relating to and describing the terms of the public offering, the accompanying base prospectus, and the related registration statement and other documents that Verastem Oncology has filed with the SEC for more complete information about Verastem Oncology and the offering. An electronic copy of the preliminary prospectus supplement and accompanying prospectus relating to the offering is free and can be found by visiting EDGAR on the SEC website at www.sec.gov. An electronic copy of the final prospectus supplement and accompanying prospectus relating to the offering will be available on the SEC website at www.sec.gov or may be obtained, when available, by contacting Guggenheim Securities, LLC, Attention: Equity Syndicate Department, 330 Madison Avenue, 8th Floor, New York, NY 10017, or by telephone at (212) 518-9544, or by email at GSEquityProspectusDelivery@guggenheimpartners.com; or Cantor Fitzgerald & Co., Attention: Capital Markets, 110 East 59th Street, 6th floor, New York, New York 10022.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or other jurisdiction.

About Verastem Oncology

Verastem Oncology (Nasdaq: VSTM) is a late-stage development biopharmaceutical company committed to the development and commercialization of new medicines to improve the lives of patients diagnosed with cancer. Our pipeline is focused on RAS/MAPK-driven cancers, specifically novel small molecule drugs that inhibit critical signaling pathways in cancer that promote cancer cell survival and tumor growth, including RAF/MEK inhibition and FAK inhibition.

Forward-looking statements:

Certain of the statements made in this press release, including those relating to Verastem Oncology’s public offering, are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue,” “can,” “promising” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such statement. Applicable risks and uncertainties include, without limitation: our ability to successfully complete the offering on the timeline and with the terms and conditions satisfactory to us; the anticipated use of proceeds therefrom; the possible adverse impact on the market price of our shares of common stock due to the dilutive effect of the securities to be sold in the offering; capital market risks; and the impact of general economic or industry conditions. There can be no assurance that we will be able to complete the public offering on the anticipated terms, or at all. As a result of these and other factors, we may not achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on these forward-looking statements, which apply only as of the date of this press release. Other risks and uncertainties include those identified under the heading “Risk Factors” in Verastem Oncology’s Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the Securities and Exchange Commission (SEC) on March 14, 2024 and in any subsequent SEC filings, including the registration statement and prospectus supplement related to the offering, which are available at www.sec.gov and www.verastem.com. The forward-looking statements contained in this press release reflect Verastem Oncology’s views as of the date of this release, and Verastem Oncology does not undertake and specifically disclaims any obligation to update any forward-looking statements whether as a result of new information, future events or otherwise, except as required by law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240723132805/en/

For Investor and Media Inquiries:

Julissa Viana

Vice President, Corporate Communications and Investor Relations

investors@verastem.com or

media@verastem.com

Source: Verastem Oncology

FAQ

What is the size of Verastem Oncology's (VSTM) recent public offering?

Verastem Oncology (VSTM) priced a public offering of approximately $55.0 million, consisting of common stock, warrants, and pre-funded warrants.

What is the price per share for VSTM's common stock and warrants in the offering?

The combined offering price for VSTM's common stock and accompanying warrants is $3.00 per share and warrant.

When is the expected closing date for Verastem Oncology's (VSTM) public offering?

The public offering for Verastem Oncology (VSTM) is expected to close on July 25, 2024, subject to customary conditions.

How does Verastem Oncology (VSTM) plan to use the proceeds from the offering?

VSTM intends to use the proceeds for the potential launch of avutometinib and defactinib in LGSOC, clinical research and development, working capital, and other general corporate purposes.

What is the exercise price and expiration period for the warrants in VSTM's offering?

The warrants in VSTM's offering have an exercise price of $3.50 per share and will expire 18 months from the date of issuance.