UPDATED: Westphal's Verastem concedes lead drug flopped in PhII mesothelioma study

Verastem CEO Robert Forrester

A little more than a month ago Verastem ($VSTM) had to mount a hasty defense of its lead drug defactinib (VS-6063) after an abstract hit the Twittersphere outlining poor efficacy and serious adverse events in its study for non-small cell lung cancer. This morning, though, the biotech could do little except acknowledge that the same drug had failed its most advanced study for mesothelioma.

Verastem says that it stopped enrolling patients for its "registration-directed" study after investigators concluded that they could detect no difference between the drug arm and a placebo group in the trial.

The company's battered stock went into meltdown mode, eventually plunging 65% on the news this morning.

"With the aggressiveness of this disease, the use of single agent VS-6063 as a maintenance treatment following chemotherapy where all patients had residual disease was not sufficient," said interim CMO Lou Vaickus. CEO Robert Forrester added that the company would be redirecting its resources (the company still had $132 million in the bank at the end of H1) toward its other studies for defactinib, VS-4718, and VS-5584.

Verastem frequently asserted that it was pursuing a game-changing approach to treating cancer, focusing on cancer stem cells and their role in driving the disease. VS-6063 was a FAK inhibitor, central to that argument.

Verastem was founded by Christoph Westphal, the high profile investor who sold Sirtris to GlaxoSmithKline ($GSK) for $720 million. GSK made little progress with the assets, though, opting to shut down the company and absorb the research work into its operations around Philadelphia.

Westphal, now executive chairman at the biotech, was one of the first to benefit from the opening of the biotech IPO window three years ago. But Verastem now serves as an example of the high risk associated with drug development, as well as the harsh realities involved when the lofty expectations used to sell an IPO meet the reality of a serious clinical flop.

- here's the release