Verastem, Inc. (VSTM)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of certain events could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those discussed below and elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for our fiscal year ended December 31, 2025. Please also refer to the sections under headings “Forward-Looking Statements” and “Risk Factors” in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for our fiscal year ended December 31, 2025.

OVERVIEW

We are a biopharmaceutical company committed to developing and commercializing new medicines to improve the lives of patients diagnosed with challenging RAS/MAPK pathway-driven cancers. We market AVMAPKI FAKZYNJA CO-PACK (avutometinib capsules; defactinib tablets) in the United States (“U.S.”), the first treatment specifically FDA-approved for adults with KRAS-mutated LGSOC who have received prior systemic therapy.

Our pipeline includes clinical-stage programs, preclinical research programs and externally partnered research programs. Our focus is on novel small molecule drugs developed both as monotherapy and in combination, which inhibit critical signaling pathways in cancer that promote cancer cell survival and tumor growth, including targeting RAS directly with KRAS G12D inhibition, targeting the pathway downstream with RAF/MEK inhibition, and targeting the parallel pathway that drives resistance with FAK inhibition. Our goal is to expeditiously develop and deliver transformative therapies that truly change outcomes for people living with RAS/MAPK pathway-driven cancers.

COMMERCIAL PRODUCTS

AVMAPKI FAKZYNJA CO-PACK

AVMAPKI FAKZYNJA CO-PACK is the first treatment specifically approved by the FDA for adults with KRAS-mutated recurrent LGSOC who have received prior systemic therapy. AVMAPKI (avutometinib) inhibits MEK kinase activity while also blocking the compensatory reactivation of MEK by upstream RAF. RAF and MEK proteins are regulators of the RAS/RAF/MEK/ERK (MAPK) pathway. Blocking RAF and/or MEK activates FAK, a key mediator of drug resistance. FAKZYNJA (defactinib) is a FAK inhibitor and together, the avutometinib and defactinib combination was designed to provide a more complete blockade of the signaling that drives the growth and drug resistance of RAS/MAPK pathway-dependent tumors.

The combination is being evaluated in an ongoing international Phase 3 trial, RAMP 301, in recurrent LGSOC with or without a KRAS mutation. The trial was fully enrolled, as of December 2025, and serves as a confirmatory study for the initial indication and has the potential to expand the indication regardless of KRAS mutation status. The results will also be leveraged for potential geographic expansion. We expect to report a topline readout of the primary endpoint in the RAMMP 301 trial in middle of 2027.

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CLINICAL PIPELINE

VS-7375, an Oral KRAS G12D (ON/OFF) Inhibitor

VS-7375 is a potential best-in-class, potent, and selective oral KRAS G12D dual ON/OFF inhibitor. VS-7375 has a differentiated profile compared to other RAS inhibitors. Based on preclinical data, VS-7375 offers dual, potent inhibition of both ON and OFF states of KRAS G12D. We believe this correlates with better in vivo efficacy and durability versus ON-only RAS inhibitors. VS-7375 has demonstrated a high affinity for KRAS G12D with long residence time (18-24 hours) in preclinical models. We believe this correlates with a more rapid and durable suppression of pERK signaling (which controls growth and cell survival) when compared to other ON-only KRAS G12D inhibitors in tumor cell lines. The selective inhibition of VS-7375 to KRAS G12D has shown, in preclinical models, to spare T cell proliferation to maintain a normal healthy immune response, versus a RAS-multi-inhibitor, which impairs T cell proliferation at increasing concentrations of drug. The once daily (“QD”) oral dosing of VS-7375 achieves exposures corresponding to maximal tumor regressions across preclinical models for pancreatic, lung and colorectal cancers. Verastem announced in April 2025 that the U.S. Investigational New Drug (“IND”) application for (VS-7375-101) was cleared and initiated a Phase 1/2 clinical trial in June 2025 in patients with advanced KRAS G12D mutant solid tumors, including PDAC, non-small cell lung cancer (“NSCLC”) and colorectal cancer (“CRC”).

In April 2026 we branded the trials as the VS-7375 TARGET-D Clinical Trial Program. TARGET-D 101 (VS-7375-101) is a Phase 1/2 dose escalation, dose expansion and combination-evaluation trial. In the TARGET-D 101 Phase 1/2 study, the Company cleared multiple monotherapy dose levels, including the 1200 mg QD dose with no dose-limiting toxicities (“DLTs”) and no major toxicities. Patients continue to be evaluated at the 1200 mg QD dose level. The Company also cleared multiple dose levels in combination with cetuximab with no DLTs. The Company completed targeted enrollment in patients with pancreatic and lung cancer monotherapy cohorts and the colorectal cancer combination cohort with cetuximab in the Phase 1/2 study. Following feedback from the FDA, the Company amended its Phase 1/2 trial protocol to separate out disease-specific Phase 2 registration-directed trials for KRAS G12D mutated second line (“2L”) PDAC, 2L/ third line (“3L”) NSCLC and 2L or later CRC.

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Expected key milestones:

GENFLEET THERAPEUTICS (SHANGHAI), Inc

We shared updates from GenFleet Therapeutics, our partner developing VS-7375, known as GFH375, in China.

FINANCIAL OPERATIONS OVERVIEW

As of June 30, 2026, we had an accumulated defi

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K. The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of certain events could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those discussed below and as set forth under “Risk Factors.” Please also refer to the section under the heading “Forward-Looking Statements.”

OVERVIEW

We are a biopharmaceutical company committed to developing and commercializing new medicines to improve the lives of patients diagnosed with challenging RAS/MAPK pathway-driven cancers. Verastem markets AVMAPKI FAKZYNJA CO-PACK (avutometinib capsules; defactinib tablets) in the U.S., the first treatment specifically FDA-approved for adults with KRAS mutated recurrent LGSOC who have received prior systemic therapy. AVMAPKI FAKZYNJA CO-PACK received accelerated approval in the U.S. on May 8, 2025. We are also conducting RAMP 301, a Phase 3 trial designed to evaluate avutometinib plus defactinib versus Investigator’s Choice of Treatment (“ICT”) in patients with recurrent LGSOC with and without a KRAS mutation. This trial will serve as a confirmatory study for the initial U.S. indication and has the potential to expand the indication regardless of KRAS mutation status. Results of the RAMP 301 trial may also support future regulatory filings in Europe and Japan.

Our pipeline includes clinical-stage programs, preclinical research programs and externally partnered early-stage programs. Our focus is on novel small molecule drugs developed both as monotherapy and in combination, which inhibit critical signaling pathways in cancer that promote cancer cell survival and tumor growth, including targeting RAS directly with KRAS G12D inhibition, targeting the pathway downstream with RAF/MEK inhibition, and targeting the parallel pathway that drives resistance with FAK inhibition. Our focus is to expeditiously develop and deliver transformative therapies that truly change outcomes for people living with RAS/MAPK pathway-driven cancers.

Our operations to date have been focused on organizing and staffing our company, business planning, raising capital, identifying and acquiring potential product candidates, undertaking preclinical studies and clinical trials for our product candidates and initiating U.S. commercial operations following the approval of COPIKTRA through our ownership period ending in September 2020 and in anticipation of and following the approval of AVMAPKI FAKZYNJA CO-PACK in May 2025.

We have financed our operations to date primarily through public and private offerings of our common stock, pre-funded warrants and warrants, offerings of convertible notes, sales of common stock under our at-the-market equity offering program, our Note Purchase Agreement, former loan agreements, the upfront payments and milestone payments under our license and collaboration agreements with Sanofi, CSPC, and Yakult, the upfront payment and milestone payments received under the Secura APA, and sales of Series B Convertible Preferred Stock. Additionally, we have also financed a portion of our operations through product revenue, including from AVMAPKI FAKZYNJA CO-PACK, beginning with our U.S. commercial launch in May 2025 and from COPIKTRA, from its U.S. commercial launch in September 2018 through our sale of the COPIKTRA license in September 2020.

As of December 31, 2025, we had an accumulated deficit of $1,165.0 million. Our net loss was $209.5 million, $130.6 million, and $87.4 million, for the years ended December 31, 2025, 2024, and 2023, respectively. We anticipate to incur significant expenses and operating losses may continue for the foreseeable future as we continue to incur operating costs to execute our strategic plan, including costs related to research and development of our product candidates and commercial activities. As of December 31, 2025, we had cash, and cash equivalents of $205.0 million and received $29.4 million in January 2026 from exercises of warrants. We expect our existing cash resources including proceeds from exercise of warrants in January 2026, along with revenue we expect to generate from sales of AVMAPKI FAKZYNJA CO-PACK, will be sufficient to fund our planned operations through 12 months from the date of issuance of these consolidated financial statements.

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We expect to finance our operations with our existing cash, cash equivalents and investments, through potential future milestones and royalties received pursuant to the Secura APA, through the Note Purchase Agreement, through future product revenues or through other strategic financing opportunities that could include, but are not limited to collaboration agreements, offerings of our equity, or the incurrence of debt. If we fail to obtain additional capital or generate sufficient revenue from our commercialization activities in the future, we may be unable to complete our planned preclinical studies and clinical trials and obtain approval of certain investigational product candidates from the FDA or foreign regulatory authorities.

FINANCIAL OPERATIONS OVERVIEW

Revenue

Product Revenue, net

Product revenue, net, is recognized when earned on gross sales of AVMAPKI FAKZYNJA CO-PACK in the U.S. less provisions for all variable consideration.  These provisions include trade allowances, rebates, chargebacks and discounts, product returns and other incentives. We sell AVMAPKI FAKZYNJA CO-PACK to a limited number of specialty pharmacies and specialty distributors. Although we expect net product revenues to increase over time, the provisions for product sales allowances may fluctuate based on the mix of sales to either specialty pharmacy or specialty distributor customers.  See “Critical Accounting Policies and Significant Judgements and Estimates” below for more information on the components of net U.S. product sales of AVMAPKI FAKZYNJA CO-PACK.

Sales of Intellectual Property

Sales of intellectual property represents revenue generated from the sale of our COPIKTRA license and related assets to Secura. The sale included intellectual property related to duvelisib in oncology indications, certain existing duvelisib inventory, certain manufacturing equipment and, claims and rights under certain contracts pertaining to duvelisib, including net contract prepaid balances.

Costs of Sales - Product

Cost of sales - product consists of costs of AVMAPKI FAKZYNJA CO-PACK on which product revenue was recognized, royalties owed on such sales, and certain period costs including inventory write downs. Prior to the FDA approval of AVMAPKI FAKZYNJA CO-PACK, expenses associated with the manufacturing of AVMAPKI FAKZYNJA CO-PACK were recorded as research and development expense. Certain of the product costs of AVMAPKI FAKZYNJA CO-PACK units sold during the year ended December 31, 2025, were expensed prior to obtaining regulatory approval and, therefore, are not included in cost of sales - product during this period. We expect cost of sales – product to increase in relation to product revenues as we deplete these inventories. There was no cost of sales – product recognized during the year ended December 31, 2024.

Cost of Sales - Intangible Amortization

Cost of sales – intangible amortization represents amortization expense recognized on finite-lived AVMAPKI FAKZYNJA CO-PACK-related intangible assets, which we began amortizing during the second quarter of 2025. There was no cost of sales – intangible amortization recognized during the year ended December 31, 2024.

Research and Development Expenses

Research and development expenses consist of costs associated with our research activities, including the development of our product candidates. Research and development expenses include product/ product candidate and/or project-specific costs, as well as unallocated costs. We allocate external research and development services, expenses incurred by third parties such as CROs, clinical sites, manufacturing organizations and consultants, by project and/or product candidate. We use our employee and infrastructure resources in a cross-functional manner

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across multiple research and development projects. Our project costing methodology does not allocate personnel, infrastructure and other indirect costs to specific clinical programs or projects.

Product/ product candidate/ project specific costs include:

Unallocated costs include:

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The table below summarizes our direct research and development expenses for our product/ product candidates/ projects and our unallocated research and development costs for the years ended December 31, 2025, 2024, and 2023:

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