VSTM - Verastem: Market Overreaction Creates A Dip Buying Opportunity
2024-06-10 10:51:25 ET
Summary
- Verastem's stock has dipped by about 70% following updated clinical data in low-grade serous ovarian cancer and pancreatic ductal adenocarcinoma.
- Reasons for the dip include a lower than previously reported ORR in LGSOC, plans for NDA submission for just KRAS-mutant patients, and serious adverse events in the PDAC study.
- Despite the dip, there may be a trading opportunity as the FDA has agreed to a rolling submission and VSTM still believes a submission for wild type KRAS is possible.
- Beyond LGSOC VSTM has produced very promising interim efficacy results in additional indications, including pancreatic and lung cancer.
- The major risk is that VSTM will soon have to raise cash, likely by late 2024 or early 2025.
Thesis overview
Verastem ( VSTM ) is a clinical stage biotech developing small molecule inhibitors targeting the RAS signaling pathways, which is overactivated in more than a third of cancers. The stock has dipped by about 70% following updated clinical data in low-grade serous ovarian cancer ((LGSOC)) and in pancreatic ductal adenocarcinoma ((PDAC)). The following are the most likely reasons:
- Objective response rate ((ORR)) in LGSOC was lower than reported earlier.
- VSTM has announced plans for a rolling NDA submission but only for KRAS-mutant ((KRASmt)) subset of patients, which is 1/3 of the already small LGSOC patient population.
- Serious adverse events were reported in 29% of patients in the PDAC study.
- VSTM will soon need to raise cash (estimated cash runway into mid/late Q1 2025).