Verastem, Inc. Amends Note Purchase Agreement, Adds Revenue‑Linked Notes

What Happened
Verastem, Inc. announced Amendment No. 3 (dated August 6, 2026) to its Note Purchase Agreement with funds managed by Oberland Capital (filed on Form 8‑K Aug 7, 2026). The amendment keeps the existing $75.0 million Initial Notes issued Jan 13, 2025 and establishes a new separate series of Revenue Notes with up to $75.0 million in aggregate purchase price to be issued in two tranches. The first Revenue Notes tranche of $50.0 million is expected to be issued on August 28, 2026 (subject to customary conditions); an additional $25.0 million tranche may be issued by May 15, 2027 if certain sales targets are met.

Key Details

• Initial Notes: $75.0M outstanding (issued Jan 13, 2025); interest = max(Term SOFR, 4.29%) + 3.71% (capped at 9.75%), quarterly payments, with up to 50% of interest payable-in-kind for early interest periods. Initial Notes maturity = 7th anniversary of Jan 13, 2025.
• Revenue Notes: up to $75.0M total; $50.0M Second Purchase expected 8/28/2026; optional $25.0M Third Purchase available through 5/15/2027 if prior calendar quarter worldwide net sales of avutometinib + defactinib ≥ $40.0M.
• Payments on Revenue Notes are revenue‑linked: purchasers receive quarterly Revenue Payments equal to an initial 4.50% of net sales of the combination products (including certain IP damages tied to lost sales). If total Revenue Payments by Dec 31, 2031 reach 100% of the funded amount, the percentage automatically drops to 1.75%; otherwise Verastem owes a contingent make‑whole equal to the unfunded balance as of that Test Date.
• Maturity and redemption: Revenue Notes mature June 30, 2033. Early repayment formulas scale from 135%–185% of funded amount (with offsets for Revenue Payments and make‑whole), subject to caps and reductions if the Test Date condition is met. Up to 25% of certain repayment amounts may be payable in common stock under specified IP sale/license prepayment scenarios.
• Security and covenants: obligations remain secured by a first‑priority lien on substantially all assets (including related IP); no financial covenants; customary affirmative and negative covenants limit disposals, change of control, incurrence of debt, dividends, stock buybacks and certain transactions.

Why It Matters
This amendment gives Verastem additional financing capacity tied directly to future sales of its combination products (avutometinib + defactinib), which can provide capital without a straight fixed‑rate loan payment schedule. For investors, key implications include new claims on product revenue (the Revenue Payments), long‑dated obligations through mid‑2033, continued asset liens (including on IP), and potential equity issuance (up to 25% of certain repayments) that could dilute shareholders in specific prepayment scenarios. The Test Date provisions also create a substantial contingent liability if the revenue targets are not met by Dec 31, 2031. The company also posted an updated corporate presentation (Exhibit 99.1).