Item 3.02 Unregistered Sales of Equity Securities.
On November 4, 2022, Verastem, Inc. (the “Company”) entered
into an exchange agreement (the “Exchange Agreement”) with Biotechnology Value Fund, L.P., Biotechnology Value Fund II, L.P.,
Biotechnology Value Trading Fund OS LP and MSI BVF SPV, LLC (the “Stockholders”), pursuant to which the Stockholders exchanged
10,000,000 shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), for 1,000,000 shares
of newly designated Series A convertible preferred stock, a “toothless” preferred stock, par value $0.0001 per share (the
“Preferred Stock”) (the “Exchange”).
On November 4, 2022, in connection with the Exchange, the Company filed
a Certificate of Designation (the “Certificate of Designation”) setting forth the preferences, rights and limitations of the
Preferred Stock with the Secretary of State of the State of Delaware. Each share of the Preferred Stock will be convertible into 10 shares
of Common Stock at the option of the holder at any time, subject to certain limitations, including that the holder will be prohibited
from converting Preferred Stock into Common Stock if, as a result of such conversion, the holder, together with its affiliates, would
beneficially own a number of shares of Common Stock above a conversion blocker, which is initially set at 9.99% (the “Conversion
Blocker”) of the total Common Stock then issued and outstanding immediately following the conversion of such shares of Preferred
Stock. Holders of the Preferred Stock are permitted to increase the Conversion Blocker to an amount not to exceed 19.99% upon 60 days’
notice.
Shares of Preferred Stock will generally have no voting rights, except
as required by law and except that the consent of a majority of the holders of the outstanding Preferred Stock will be required to amend
the terms of the Preferred Stock. In the event of the Company’s liquidation, dissolution or winding up, holders of Preferred Stock
will participate pari passu with any distribution of proceeds to holders of Common Stock. Holders of Preferred Stock are entitled to receive
when, as and if dividends are declared and paid on the Common Stock, an equivalent dividend, calculated on an as-converted basis. Shares
of Preferred Stock are otherwise not entitled to dividends.
The Preferred Stock ranks (i) senior to any class or series of capital
stock of the Company hereafter created specifically ranking by its terms junior to the Preferred Stock; (ii) on parity with the Common
Stock and any class or series of capital stock of the Company created specifically ranking by its terms on parity with the Preferred Stock;
and (iii) junior to any class or series of capital stock of the Company created specifically ranking by its terms senior to any Preferred
Stock, in each case, as to distributions of assets upon liquidation, dissolution or winding up of the Company, whether voluntarily or
involuntarily
The Preferred Stock was issued without registration under the Securities
Act of 1933, as amended (the “Securities Act”), in reliance on the exemption from registration contained in Section 3(a)(9)
of the Securities Act.
The Exchange is anticipated to be completed on or about November 9,
2022. Following the Exchange, the Company will have 200,090,850 shares of Common Stock outstanding and 1,000,000 shares of Preferred Stock
outstanding, which are convertible into 10,000,000 shares of Common Stock.
The foregoing description of the Exchange Agreement is not complete
and is qualified in its entirety by references to the full text of the Exchange Agreement, which is filed as an exhibit to this Current
Report on Form 8-K and is incorporated by reference herein. A summary of the rights, preferences and privileges of the Preferred Stock
described above does not purport to be complete and is qualified in its entirety by reference to the Certificate of Designation, which
is filed as an exhibit to this Report and is incorporated by reference herein.