New Verastem Data Expected In 2014 Print E-mail
By Brian Wilson - Lead Contributor   
Monday, 23 June 2014 08:01

Verastem (VSTM) is a modestly-priced oncology company that focuses on targeting cancer stem cells. Unlike most other cancer drug developers, Verastem focuses on the elimination of the 1-5% of tumor cells that are responsible for regrowth of the tumor after surgical removal.

It wasn’t until recently that researchers have acknowledged the existence of cancer stem cells, but new data suggest that they do exist.  

The flagship drug in Verastem’s pipeline is VS-6063 – a Focal Adhesion Kinase (FAK) inhibitor that is being developed for 4 separate cancer indications. The two most developed programs are the mesothelioma and KRAS mutant non-small cell lung cancer programs, which are both in Phase II testing.

Verastem is expected release interim data from these trials before the end of the year, and some of it could come as early as July 10th (when the company will be holding an R&D day at the Millenium Broadway Hotel in New York.)

Although an interim analysis of the mesothelioma trial (the company’s most important project) would not tell us much that enough about the survival-based primary endpoint, it would be helpful to see an update on other measures of efficacy for this particular trial. If progression-free survival and overall response rates turn up decent, VSTM could rally based on a higher likelihood of success for the Phase II.

But before considering a buy, investors should also realize that the company is currently running a bit low on cash. As of March 31st 2014, the company reported $13.2 M in cash & cash equivalents. Based on its previous rate of cash burn, we expect that the company has around $7 M in cash, which will not be enough to bring Verastem to the end of 2014.

This financial situation isn’t a threat to the long-term performance of VSTM, but it may cause a short-term dip in share price due to a potential ATM offering that would dilute common share count. To avoid this, investors may want to wait for a financing before getting into this stock.

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