Verastem Switches CEOs as Westphal Steps Into Chairman Role
[Updated, 7:50 pm ET]Christoph Westphal co-founded Verastem in August 2010, invested in it, ran it as chairman and CEO in its early days, and took the company public last year. Now he’s officially stepping back a bit from the day-to-day responsibility of running the show.
That’s the message Westphal gave Wednesday as he stepped down as CEO of Cambridge, MA-based Verastem (NASDAQ: VSTM) and promoted president and COO Robert Forrester to be the new CEO. Westphal will get a new title as executive chairman. The changes will take place on July 1.
“I think everybody kind of watching the company knew that this was coming,” Westphal says. “To be clear, I think we’ve built a tremendous platform and team at Verastem putting in a great position to execute our late stage clinical trials.”
Westphal added that he is Verastem’s largest investor (holding a total of 17.5 percent of its stock as of April 25, through both personal shares and his role as a partner at Longwood Fund, according to a proxy filing). Westphal adds that he is on a current 10b5-1 plan that governs his holdings. Such plans allow a company’s major stockholders to sell a predetermined number of shares at a specifically determined time. Executives often like to use these plans to get some cash returns from their stock holdings, while avoiding the perception that as an insider, he or she might be acting on non-public information through making trades before potentially big share-moving events, like quarterly earnings reports. [Westphal later clarified that he is using the 10b5-1 plan to buy Verastem shares at regular time points].
“I think everybody understands that this is a pretty strong sign from us that we think that the company is in a great position,” he says.
Westphal says that his role will be pretty much “identical” to what it has been.
“I’m focused on the scientific, clinical, and strategic opportunities as well as investor relations,” he says. “Robert’s running the company and frankly he has been running the company in the past.”
Westphal says that he has no plans to take any other operating roles somewhere else, and that the change doesn’t mean he’ll be spending more time at Longwood Founders Fund, the Boston-based investment firm he started along with Michelle Dipp and Rich Aldrich. The three worked together at Sirtris Pharmaceuticals, which was sold to GlaxoSmithKline for $720 million in 2008 (Aldrich was also a founding employee of Vertex Pharmaceuticals).
Forrester held executive titles at Coley Pharmaceutical Group, CombinatoRx, and Forma Therapeutics before joining Verastem in May 2011 as COO. He was named Verastem’s president in January.
The changes come as Verastem heads into its most important phase of development. Verastem’s plan is to isolate cancer stem cells—sometimes called tumor-initiating cells—and then identify small molecule compounds that can specifically target them and kill them. While the concept is long on promise and short on proof so far, Verastem will get its shot to prove itself in a large-scale clinical trial shortly. Verastem’s most advanced drug, VS-6063, will begin a pivotal study this year in patients with mesothelioma, a rare form of lung cancer often found in people exposed to asbestos.
According to Forrester, the trial will start in the middle of the summer and test between 350 and 400 patients, about a third of which will come from the U.S., one third from the U.K., and the remaining patients from major European countries, Australia, and potentially Japan. Verastem will also have data on VS-6063 in an early-stage study in ovarian cancer later this year.
“This is a really important time for the company,” Forrester says.
To date, Wall Street has taken a show-me approach with Verastem, despite the fact that Nasdaq Biotechnology Index has sizzled, up more than 24 percent this year. The company debuted in January 2012 at $10 per share, and now trades at about $9. Verastem’s shot at value growth, then, begins with the mesothelioma trial.
“There’s a huge opportunity over the next few years to not only help the patients but also create significant value for investors as the clinical proof that these cells are important and that we have drugs that can target them [emerges],” Forrester says.